Canada Letter: Brian Mulroney and Free Trade

The former prime minister, who died this week, brought dramatic changes to the country's economy.

View in browser|nytimes.com Continue reading the main story March 2, 2024 Brian Mulroney Divided and Reshaped Canada Through Free Trade With the U.S. By Ian Austen Brian Mulroney first led the Progressive Conservatives to power while I was early in my career as a journalist. But his political life was never something that I covered in any great detail. His decision to negotiate a free trade agreement with the United States transformed Canada's economic history and did, however, consume much of my work life for several years. Brian Mulroney's move toward closer economic ties with the United States was polarizing among Canadians. Justin Tang/The Canadian Press, via Associated Press Mr. Mulroney died on Thursday at 84 at a hospital in Florida after falling at his home there. Alan Cowell has written a sweeping obituary of Mr. Mulroney that documents his many significant achievements but also the allegations of financial misdoing and influence peddling that followed his time in office. Those allegations tarnished his reputation, even among former supporters, and contributed to the eventual demise of the federal Progressive Conservative Party. [Read: Brian Mulroney, Prime Minister Who Led Canada Into NAFTA, Dies at 84] I reported on the free trade negotiations mainly from Washington. In contrast with Canada, where it often seemed as though every molecule of political and public debate was consumed by the talks, the negotiations barely registered there. Nothing in my professional experience polarized Canadians as much as Mr. Mulroney's move toward closer economic integration with the United States. Whatever the economic advantages of free trade, Canadian industry at the time largely consisted of often inefficient branch plants producing a limited range of products to escape import tariffs that were as high as 33 percent on manufactured goods. Workers in those factories, and the communities that depended on them, were rightly worried that shipments from their parent companies' larger and more efficient U.S. plants would sweep away their jobs under free trade. (The auto industry was the exception. In 1965, Canada and the United States entered into a deal that allowed American cars to enter Canada tariff-free in exchange for continued production in Canada, most of which was then shipped to the United States.) Mr. Mulroney's decision to pursue free trade was a reversal of the Conservative Party's legacy. Early in Canada's history, tariffs were comparatively low and mostly intended to raise money for the government. In an era without an income tax, tariffs were effectively a sales tax on imported products. But John A. Macdonald, the Conservative leader and the country's first prime minister, successfully campaigned in the 1878 election on something he called the National Policy, a key element of which was the imposition of high tariffs to create an invisible wall around Canada to protect its industries. It stuck around, more or less, for a century until Mr. Mulroney arrived. One of Mr. Mulroney's sales pitches for a free trade deal was the possibility that it could end seemingly perpetual trade disputes like the one over Canadian softwood lumber exports to the United States. Continue reading the main story ADVERTISEMENT Mr. Mulroney in 2009 during his testimony at an inquiry into his dealings with a lobbyist. Chris Wattie/Reuters While Mr. Mulroney and President Ronald Reagan made a big public show of their friendship, the talks did not go smoothly. When I gathered with a group of reporters one Sunday morning in October 1987 in an ornate meeting room inside the U.S. Treasury building, it was far from certain that an agreement would be announced. But a deal had been struck, and it included a system for resolving trade disputes, the main sticking point, even though it was not exactly what Mr. Mulroney had promised. The year after, the federal election was fought on free trade, and Mr. Mulroney prevailed. The later addition of Mexico to create the North American Free Trade Agreement — and the subsequent globalization of trade after the agreement that created the World Trade Organization slashed many tariffs around the world — left the Canada-U.S. free trade agreement in history's shadow. Continue reading the main story ADVERTISEMENT Mr. Mulroney's free trade deal with the United States reshaped Canada's economy. Christinne Muschi/Reuters But the initial free-trade agreement did have profound effects, good and bad, on the Canadian economy. Jobs did disappear. A 2001 study by the National Bureau of Economic Research in Cambridge, Mass., found that within Canadian industries that had been affected by the biggest tariff cuts, jobs fell by 15 percent from 1989 to 1996. During that same time, imports from the United States of products previously blocked by high tariffs soared by 70 percent. On the positive side, at least in economic terms, the study found that within those industries once protected by tariffs, labor productivity — how much the factories made for each hour of work — rose by a significant, compounded annual rate of 2.1 percent. Increased productivity generally helps reduce prices for consumers and, of course, benefits factory owners and investors. Continue reading the main story ADVERTISEMENT Canada did not, as Mr. Mulroney's critics feared, become the 51st state after free trade. But the pact did fall short on some of his promises. The softwood lumber dispute continues to lurch along decades later. And not every community benefited from the rebound in jobs and factories that eventually came to the economy as a whole. [Read: This City Once Made Much of What Canada Bought. But No More.] Also, as Alan details in Mr. Mulroney's obituary, free trade and several other major changes he brought to Canada during his time as prime minister were ultimately shoved aside in the public's memory. The cause was a story directly involving Mr. Mulroney that I did cover: his acceptance of, as an inquiry found, "cash-stuffed envelopes" during three meetings with a German arms and aviation lobbyist. Trans Canada A wave of car thefts has prompted protective measures in and around Toronto. Ian Willms for The New York Times Vjosa Isai reports that a 150 percent rise in car thefts throughout the Toronto area over the last six years has prompted a "mix of paranoia, vigilance and resentment." Once-secret documents released in a partly redacted form detail how two scientists who worked at Canada's top microbiology lab were enmeshed with institutions in China and indicate that one of them was a "realistic and credible threat to Canada's economic security." Amid a surge in asylum claims from Mexicans arriving in Canada, the federal government has reimposed a visa requirement on most people traveling from that country. An unopened case of more than 10,000 hockey cards that turned up in Saskatchewan has sold for $3.7 million. But, Amanda Holpuch reports, that doesn't necessarily mean that the packages will now be opened. Eight members of the Canadian figure skating squad that competed in the team competition at the 2022 Olympics have filed a case at the Court of Arbitration for Sport demanding that they be awarded bronze medals in the event. Russia was demoted from gold to bronze after a member of its team was given a four-year ban for doping. Anne Carson, a Toronto-born writer who is most commonly described as a poet, is the subject of an unconventional profile in The New York Times Magazine. Kenneth Mitchell, a Toronto-born actor who appeared in the series "Star Trek: Discovery" and the film "Captain Marvel," has died at 49. Chris Gauthier, who grew up in Armstrong, British Columbia, and went on to have a prolific career as an actor, appearing in more than 20 movies and several series, has died. He was 48. Magda Konieczna, who teaches at Concordia University in Montreal, told my colleague David Streitfeld that when it comes to local news, North America has entered a "dystopian future." In the Watching newsletter, our television critic Margaret Lyons writes that "Moonshine," a comedy series about a family that runs a resort and deals drugs in Nova Scotia, is "bright and exciting." (In Canada, it is available on CBC Gem.) Simon Winchester writes in his review of "The Darkest White," which tells the story of an avalanche in British Columbia's Selkirk Mountains that killed seven people, that it is "probably the most unremittingly exciting book of nonfiction I have come across in years." A native of Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported about Canada for The New York Times for two decades. Follow him on Bluesky: @ianausten.bsky.social. How are we doing? We're eager to have your thoughts about this newsletter and events in Canada in general. Please send them to nytcanada@nytimes.com. Like this email? Forward it to your friends, and let them know they can sign up here. Continue reading the main story Need help? 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