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The Mulroney Years


             Mulroney's next initiative was much more successful and probably remains his greatest single achievement. After coming to office, Mulroney proposed that Canada sign a free trade agreement with the United States. Canadians had rejected free trade many years ago in an election; however, this time the PM felt that it had a good chance of succeeding. The United States is Canada's largest trading partner and the PM argued that the agreement would ensure that Canada would continue to have tariff-free access to the world's largest and most important markets. The agreement proposed to gradually remove tariffs on goods between Canada and the United States over a ten-year period. Lower tariffs would lead to reduced price and, in theory, higher sales of goods and services on both sides of the border. The agreement exempted things like cultural industries as well as the sale of water from Canada to the United States. It also included a dispute settlement mechanism to look into trade disagreements between the two countries. .
             The opponents of free trade, and there were many of them, argued that free trade would lead to thousands of lost jobs in Canada because American firms would be able to under-cut less competitive Canadian companies and put them out of business. Some also argued that Canada's more generous social system (e.g. welfare, UI) would be compromised by free trade. Supporters argued that free trade would ensure that Canada would have tariff free access to the large market south of the border. They felt that free trade was simply a commercial agreement that would not have an impact on Canada's social programs.
             Eventually an election was fought on the issue of free trade in 1988. It featured Mulroney's Conservative Party against the Liberals" John Turner, who opposed the agreement. The New Democratic Party also opposed free trade. Mulroney won the election mainly because the opposition vote against free trade was split between the NDP and Liberals.


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