Writing in the Calgary Herald, MLI managing director Brian Lee Crowley reflects on the difficult fight to complete the Canada-U.S. free-trade agreement that culminated with the 1988 free-trade election. While most Canadians today understand how important free-trade is to our economy, “it was not always so”, writes Crowley. We forget that in 1988 it was “a close run thing”.
Brian Lee Crowley, published November 13, 2013
Calgary will be the site next week of a celebration of one of the most important political events of Canada’s postwar history.
On Nov. 21, 1988, Canadians were voting in an election fought on a single issue: whether to endorse the free trade agreement Prime Minister Brian Mulroney had negotiated with the administration of Ronald Reagan. Next week, the two top negotiators of that agreement, former chief of staff to Brian Mulroney, Derek Burney, and former U.S. treasury secretary James Baker III, will be in town to reminisce about the deal that almost wasn’t.
Canadians now have a generation of free trade under our belts and there is a large consensus that the policy is a cornerstone of Canada’s prosperity. It was not always so. In fact, it is sometimes hard to recall just how hard the deal was to negotiate, how close the negotiations came to failure, and then how close run a thing the 1988 election turned out to be.
Remember that 1988 was not the first election on the issue of free trade with the U.S. In 1911, Sir Wilfrid Laurier, in what was to be the capstone of a career as a lifelong free trader, called an election on the issue of the reciprocity agreement he had negotiated with Washington. He went down to an unexpected defeat at the protectionist hands of Robert Borden’s Conservative party.
That defeat reverberated down the decades. Despite the fact that free trade with the U.S. made eminent sense, Laurier’s defeat on the issue hung like Banquo’s ghost over all debate of the issue. Prime Minister Mackenzie King lost his nerve and abandoned an agreement negotiated in secret with the Americans in the immediate postwar years. Then the ’60s and ’70s marked the high tide of anti-American economic nationalism.
By the time Mulroney and his Progressive Conservative government came to power with a huge majority in 1984, however, opinion was beginning to shift. Negotiations were underway with the U.S. over opening up trade on a sector by sector basis, drawing inspiration from the auto pact that underpinned cross-border trade in vehicles.
But what really turned the tide was the Macdonald Royal Commission on Canada’s economic future. Originally named by Pierre Trudeau and headed by Donald Macdonald, a former senior Liberal party politician, the commission urged Canadians to embrace free trade as an indispensable foundation stone of our future prosperity.
Negotiations with Washington opened after Mulroney urged Reagan to embrace the concept at the Shamrock Summit between the two leaders in Quebec City in March 1985. Soon afterward, negotiations began in earnest under the discipline of a hard deadline: Congress was prepared to give any eventual agreement an up-or-down vote without amendment (so-called fast track negotiating authority), but only if the agreement was submitted to them by Oct. 5, 1987.
By summer 1987, Canadian negotiator Simon Reisman and his opposite number, Peter Murphy, had taken the negotiations as far as they could go at the officials’ level. What remained were the hard issues on which leadership at the political level was required. The Americans wanted more on cultural industries and energy, while Canada’s bottom line was always a dispute settlement mechanism that would depoliticize the enforcement of trade rules in the U.S.
It fell to Burney and Baker to take the deal to the finish line under orders from their respective bosses to get it done. It was a close run thing and the conclusion was worthy of the best Tom Clancy international thriller: Congress had to keep a special office open late into the night on Oct. 4, 1987. The agreed deal, including that all-important dispute settlement mechanism, was delivered there with just minutes to spare.
The legislation to implement the deal was introduced in Ottawa, but eventually became mired down in the Liberal-dominated Senate. To break the logjam, Prime Minister Mulroney called the 1988 election.
Just like the free trade negotiations themselves, the outcome was far from assured. Both John Turner’s Liberals and Ed Broadbent’s NDP opposed the deal and did so with no small measure of vituperation. Mulroney’s Tories went into the election ahead, but stumbled badly after a poor debate performance in which John Turner marked major points in a nationalist attack on Mulroney’s alleged selling out of Canada’s interests. Mid-campaign, the polls were predicting a Liberal government. The Tories clawed back the lost ground and finished with 43 per cent of the popular vote and a handy parliamentary majority. Free trade with the U.S. was a done deal.
But I’m no spoiler. If you want to know the story behind these signal events of our time, you’ll have to come and hear Burney and Baker tell their story. No one knows it, or tells it, better.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute (www.macdonaldlaurier.ca), the organizers of the Nov. 21 gala dinner with Derek Burney and James Baker III to mark the 25th anniversary of the free trade election of 1988.