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44-634: The Canada–United States Free Trade Agreement ( CUSFTA ), official name as the Free Trade Agreement between Canada and the United States of America (French: Accord de libre-échange entre le Canada et les États-Unis d'Amérique ), was a bilateral trade agreement reached by negotiators for Canada and the United States on October 4, 1987, and signed by the leaders of both countries on January 2, 1988. The agreement phased out

88-704: A Royal Commission on the Economic Union and Development Prospects for Canada (the Macdonald Commission ). The report was released in September 1985 and recommended, among other things, that Canada enter into a free trade agreement with the United States. Progressive Conservative Brian Mulroney was Prime Minister by this time. He accepted the recommendation and pursued what became the Canada–US Free Trade Agreement . Macdonald

132-690: A free trade agreement with the United States. Macdonald was born in Ottawa, Ontario. He graduated from the University of Trinity College in the University of Toronto in 1952. He subsequently attended Harvard Law School (LLM), as well as the University of Cambridge in England (Diploma in International Law). He was first elected to the House of Commons of Canada in the 1962 election as

176-545: A certain region. There are currently 205 agreements in force as of July 2007. Over 300 have been reported to the WTO. The number of FTA has increased significantly over the last decade. Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, received 124 notifications. Since 1995 over 300 trade agreements have been enacted. The WTO is further classifying these agreements in

220-525: A country. The second type is a bilateral trade agreement , when signed by two parties, where each party may be a country (or other customs territory ), a trade bloc or an informal group of countries (or other customs territories). Both countries loosen their trade restrictions to help businesses, so that they can prosper better between the different countries. This definitely helps lower taxes and it helps them converse about their trade status. Usually, this revolves around subsided domestic industries. Mainly

264-630: A free-trade initiative in the 1984 Canadian election campaign. The stage was set for the beginning of free-trade negotiations. US President Ronald Reagan welcomed the Canadian initiative and the United States Congress gave the President the authority to sign a free trade agreement with Canada, subject to it being presented for Congressional review by October 5, 1987. In May 1986, Canadian and American negotiators began to work out

308-536: A geographical area. These countries often have similar histories, demographics and economic goals. The North American Free Trade Agreement (NAFTA) was established on January 1, 1989, between the United States, Canada, and Mexico. This agreement was designed to reduce tariff barriers in North America. The Eurasian Economic Union (EAEU) was established in 2015 and currently consists of five member states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. It

352-760: A high Canadian dollar, provided a mini-boom for these towns. The loss of many Canadian jobs, particularly in the Ontario manufacturing sector during the recession of the early 1990s, was attributed (fairly or not) to the Free Trade Agreement. In the mid-to-late 1990s, however, the Canadian dollar fell to record lows in value to against the US dollar. Cheaper Canadian primary products such as lumber and oil could be bought tariff-free by Americans, and Hollywood studios sent their crews to film many movies in Canada due to

396-633: A line" from the Free Trade Agreement, which at the end of the advertisement was revealed to be the Canada–US border . Although some opinion polls showed slightly more Canadians against the Agreement than in favour of it, Mulroney's Progressive Conservatives benefited from being the only party in favour of the agreement, while the Liberals and NDP split the anti-free trade vote. In addition, future Quebec Premiers Jacques Parizeau and Bernard Landry backed

440-587: A trade deal. The Canadian team was led by former deputy Minister of Finance Simon Reisman and the American side by Peter O. Murphy, the former deputy United States trade representative in Geneva . The agreement between the two countries ultimately created substantially liberalized trade between them, removing most remaining tariffs , although tariffs were only a minor part of the FTA. Average tariffs on goods crossing

484-530: A wide range of trade restrictions in stages, over a ten-year period, and resulted in a substantial increase in cross-border trade as an improvement to the last replaced trade deal. With the addition of Mexico in 1994, CUSFTA was superseded by the North American Free Trade Agreement (NAFTA) (French: Accord de libre-échange nord-américain (ALENA) , Spanish: Tratado de Libre Comercio de América del Norte (TLCAN) ). As stated in

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528-664: Is designed to foster economic integration among its member states and promote economic growth in the region. The Association of Southeast Asian Nations (ASEAN) was formed in 1967 between the countries of Indonesia, Malaysia, the Philippines, Singapore, and Thailand. It was established to promote political partnership and maintain economic stability throughout the region. There are a variety of trade agreements; with some being quite complex ( European Union ), while others are less intensive ( North American Free Trade Agreement ). The resulting level of economic integration depends on

572-553: Is settled on, it becomes a very powerful agreement. The larger the GDP of the signatories, the greater the impact on other global trade relationships. The largest multilateral trade agreement is the North American Free Trade Agreement, involving the United States, Canada, and Mexico. These are between countries in a certain area. The most powerful ones include a few countries that are near each other in

616-682: The Toronto Star , one of Canada's leading newspapers. A number of government studies drew increasing attention to the possibility of a bilateral free-trade negotiation: Looking Outward (1975), by the Economic Council of Canada; several reports of the Senate Standing Committee on Foreign Affairs (1975, 1978, and 1982); and the 1985 report of the Macdonald Commission (formally, the Royal Commission on

660-571: The Act on September 28, 1988. It became Public Law No: 100–449. The exact ramifications of the agreement are hard to measure. Trade between Canada and the U.S., which had already been on the rise, increased at an accelerated rate after the agreement was signed. While throughout the 20th century, exports fairly consistently made up about 25% of Canada's gross domestic product (GDP), since 1990 exports have been about 40% of GDP. After 2000, they reached nearly 50%. A 2016 paper estimates "that CUSFTA increased

704-451: The Economic Union and Development Prospects for Canada ), chaired by former Liberal politician Donald Stovel Macdonald . Macdonald declared that "Canadians should be prepared to take a leap of faith" and pursue more open trade with the United States. Although Macdonald was a former Liberal Minister of Finance, the commission's findings were embraced by Prime Minister Brian Mulroney 's Progressive Conservative Party, even though they had opposed

748-999: The Liberal Member of Parliament for the Rosedale riding in Toronto. In 1967, he was the parliamentary secretary of Paul Martin , Secretary of State for External Affairs. He joined the Cabinet of Pierre Trudeau in 1968 and served successively as President of the Privy Council , Minister of National Defence , Minister of Energy, Mines and Resources and Minister of Finance . As Finance Minister, Macdonald introduced tougher Employment insurance rules in his 1976 budget , and wage and price controls in an attempt to control inflation in his 1977 budget . Macdonald resigned from Cabinet in 1977 to return to his law practice. When Pierre Trudeau announced his resignation as leader of

792-587: The Liberal Party of Canada following his defeat in the 1979 election , Macdonald would have declared his candidacy for the position. However, with the unexpected defeat of Joe Clark 's Progressive Conservative government on a motion of no confidence , the Liberals asked Trudeau to lead them into the 1980 election and cancelled the leadership campaign. Macdonald was not a candidate for the party leadership when Trudeau resigned again in 1984. In 1982, Prime Minister Trudeau appointed Macdonald as chairman of

836-458: The Liberals lost the election. The issue of free trade did not rise to this level of national prominence in Canada again for many decades. From 1935 to 1980, the two nations entered a number of bilateral trade agreements that greatly reduced tariffs in both nations. The most significant of these agreements was the 1960s Automotive Products Trade Agreement (also known as the Auto Pact). After

880-690: The University of Toronto (Doctor of Sacred Letters, Trinity College, University of Toronto). Macdonald married Ruth Hutchison (dec.) in 1961, and their four daughters are Leigh, Nikki, Althea, and Sonja. Nikki Macdonald served as a senior advisor to Jean Chrétien during his time as Prime Minister. In 1988, he married Adrian Merchant Lang, the daughter of Sally Merchant . From her prior marriage to Otto Lang , she had seven children: Maria (d. 1991), Timothy , Gregory, Andrew, Elisabeth, Adrian, and Amanda Lang . They have fifteen grandchildren. Macdonald died at his home in Toronto on October 14, 2018. There

924-475: The University of Western Ontario and Richard Lipsey of the C. D. Howe Institute. Others were concerned that free trade would have negative effects, fearing capital flight and job insecurity because of international outsourcing, and also that closer economic ties with the "Giant to the South" might risk an erosion of Canadian sovereignty. Opponents included Mel Watkins of the University of Toronto and David Crane of

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968-506: The agreement remains decades later, it is no longer at the forefront of Canadian politics. It was superseded by the North American Free Trade Agreement (NAFTA) in 1994, which itself was replaced by the United States–Mexico–Canada Agreement in 2020. The Liberals under Jean Chrétien were elected to office in the 1993 election , partly on a promise to renegotiate key labor and environmental parts of NAFTA. An agreement

1012-518: The agreement which was seen as a factor for the PC party support in Quebec. Mulroney won a governing majority and the agreement was passed into law, even though a majority of the voters had voted for parties opposing free trade. The Free Trade Agreement faced much less opposition in the US. Polls showed that up to 40% of Americans were unaware that the agreement had been signed. The Agreement implementation act

1056-597: The agreement would erode Canadian sovereignty , arguing that Canada would effectively become the " 51st state " of the US if the agreement was implemented. They also raised concerns about how Canada's social programs and other trade agreements such as the Auto Pact would be affected. The legislation to implement the agreement was delayed in the Senate , which had a Liberal majority. Partly in response to these delays, Mulroney called an election in 1988 . The Trade Agreement

1100-645: The agreement, the main purposes of the Canada–United States Free Trade Agreement were: Starting in 1855, while Canada was under British control, free trade was implemented between the colonies of British North America and the United States under the Reciprocity Treaty . In 1866, a year before Canadian Confederation , the United States Congress voted to cancel the treaty. Canada's first Prime Minister, John A. Macdonald , attempted and failed to reinstate reciprocity, after which

1144-552: The border were well below 1% by the 1980s. Instead, Canada desired unhindered access to the American economy. Americans, in turn, wished to have access to Canada's energy and cultural industries. In the negotiations, Canada retained the right to protect its cultural industries and such sectors as education and health care. As well, some resources such as water were meant to be left out of the agreement. The Canadians did not succeed in winning free competition for American government procurement contracts. Canadian negotiators also insisted on

1188-471: The cheap Canadian dollar (see " runaway production " and " Hollywood North "). The removal of protective tariffs meant that market forces, such as currency values, have a greater effect on the economies of both countries than they would have with tariffs. The agreement has failed to liberalize trade in some areas, most notably the ongoing dispute over softwood lumber . Issues such as mineral, fresh water, and softwood lumber trade still remain disputed. While

1232-442: The effects of a free trade agreement between the two countries. Several of them— Ronald Wonnacott and Paul Wonnacott , and Richard G. Harris and David Cox—concluded that Canadian real GDP would be significantly increased if both U.S. and Canadian tariffs and other trade barriers were removed and Canadian industry could consequently produce at larger, more efficient scale. Other economists on the free-trade side included John Whalley of

1276-402: The following types: Lists: Donald Stovel Macdonald Donald Stovel Macdonald PC CC (1 March 1932 – 14 October 2018) was a Canadian lawyer, politician and diplomat. Macdonald was a long-time Liberal party Member of Parliament and Cabinet minister . In the early 1980s, he headed a royal commission (the Macdonald Commission ) which recommended that Canada enter

1320-506: The government of Canada moved to a more protectionist policy, the National Policy . Fears grew among many politicians that closer economic ties with the United States would lead to political annexation . The Liberal Party of Canada had traditionally supported free trade. Free trade in natural products was a central issue in the 1911 Canadian federal election . The Conservative Party campaigned using anti-American rhetoric, and

1364-503: The inclusion of a dispute resolution mechanism. The debate in Canada over whether to implement the negotiated agreement was very contentious. The opposition Liberal Party vociferously opposed the agreement, with Liberal leader John Turner saying that he would "tear it up" if he became prime minister, and the New Democratic Party under leader Ed Broadbent also strongly opposed the agreement. Both parties contended that

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1408-399: The industries fall under automotive, oil, or food industries. A trade agreement signed between more than two sides (typically neighboring or in the same region) is classified as multilateral . These face the most obstacles- when negotiating substance, and for implementation. The more countries that are involved, the harder it is to reach mutual satisfaction. Once this type of trade agreement

1452-480: The likelihood of long-term cooperation. An international organization, such as the IMF , can further incentivize cooperation by monitoring compliance with agreements and reporting third countries of the violations. Monitoring by international agencies may be needed to detect non-tariff barriers , which are disguised attempts at creating trade barriers. Trade pacts are frequently politically contentious, as they might pit

1496-419: The negative externalities of trade liberalization. There are three different types of trade agreements. The first is unilateral trade agreement, this is what happens when a country wants certain restrictions to be enforced but no other countries want them to be imposed. This also allows countries to decrease the amount of trade restrictions . That is also something that does not happen often and could impair

1540-503: The rest of the WTO members. All agreements concluded outside of the WTO framework (and granting additional benefits beyond the WTO MFN level, but applicable only between the signatories and not to the rest of the WTO members) are called preferential by the WTO. According to WTO rules, these agreements are subject to certain requirements such as notification to the WTO and general reciprocity (the preferences should apply equally to each of

1584-410: The signatories of the agreement) where unilateral preferences (some of the signatories gain preferential access to the market of the other signatories, without lowering their own tariffs) are allowed only under exceptional circumstances and as temporary measure. The trade agreements called preferential by the WTO are also known as regional (RTA), despite not necessarily concluded by countries within

1628-615: The signing of the Auto Pact, the Canadian Government considered proposing free-trade agreements in other sectors of the economy. However, the United States government was less receptive to this idea, and in fact, wanted to phase out some guarantees in the Pact. Canadian attention turned to the question of a broader free-trade agreement between the two countries. During the next two decades, a number of academic economists studied

1672-562: The specific type of trade pacts and policies adopted by the trade bloc : Typically the benefits and obligations of the trade agreements apply only to their signatories. In the framework of the World Trade Organization , different agreement types are concluded (mostly during new member accessions), whose terms apply to all WTO members on the so-called most-favored basis (MFN), which means that beneficial terms agreed bilaterally with one trading partner will apply also to

1716-795: The winners and losers of an agreement against each other. Aside from their provisions on reducing tariffs, contentious issues in modern free trade agreements may revolve around regulatory harmonization on issues such as intellectual property regulations, labour rights, and environmental and safety regulations. Increasing efficiency and economic gains through free trade is a common goal. The anti-globalization movement opposes trade agreements almost by definition, although some groups normally allied within that movement, such as leftist parties, might support fair trade or safe trade provisions that moderate real and perceived ill effects of globalization . In response to criticism, free trade agreements have increasingly over time come with measures that seek to reduce

1760-750: The yearly profits of Canadian manufacturing by 1.2%". Often, analyses of the free trade agreement find that its effects on the two countries depend on the difference in value between the Canadian dollar and the US dollar . In 1990–1991, the Canadian dollar rose sharply in value against the US dollar, making Canadian manufactured goods much more expensive for Americans to buy and making American manufactured goods much cheaper for Canadians, who no longer had to pay high duties on them. The phenomenon of "cross-border shopping", where Canadians would make shopping daytrips to US border towns to take advantage of tariff-free goods and

1804-742: Was appointed High Commissioner of Canada to the United Kingdom in 1988. He held that position until 1991, when he returned to his law practice in Toronto. He is also a past member of the Steering Committee of the Bilderberg Group . In 1994, Macdonald was made a Companion of the Order of Canada . He received honorary degrees from the Colorado School of Mines, the University of New Brunswick, Carleton University, and

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1848-412: Was by far the most prominent issue of the campaign, prompting some to call it the "Free Trade Election." It was the first Canadian election to feature large third-party campaign advertising, with supporters and opponents using lobbyists to buy television advertisements. It was also the first Canadian election to use much negative advertising ; one anti-free-trade advertisement showed negotiators "removing

1892-563: Was given to the Congress for " fast-track " approve by President Reagan on July 26, 1988, meaning that it could be accepted or rejected but could not be amended. The United States–Canada Free-Trade Agreement Implementation Act of 1988 was passed by the House of Representatives by a vote of 366 - 40 on August 9, 1988 and by the Senate by a vote of 83–9 on September 19, 1988. President Reagan signed

1936-592: Was indeed struck with the Democrats under Bill Clinton that created separate side deals to address both of these concerns. Bold indicates parties with members elected to the House of Commons . Trade agreement The logic of formal trade agreements is that they outline what is agreed upon and specify the punishments for deviation from the rules set in the agreement. Trade agreements therefore make misunderstandings less likely, and create confidence on both sides that cheating will be punished; this increases

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