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After 25 years, free-trade deal with U.S. has helped Canada grow up Add to ...

Ed Broadbent, who was leader of the NDP during the free-trade debate, thought it was a rotten deal then, “and I do to this day.”

Free trade brought deregulation, privatization of state-owned companies, weakened protection for labour and the great sloshing of capital from one national market to another – all of it part of the race to the bottom, he believes.

“This approach became ideologically dominant in the Anglo-American world,” Mr. Broadbent maintains. “The trade deal was part of the kickoff of this kind of thinking, and I think it was a mistake.”

Then there were the intended consequences that were never realized. Open competition with the Americans should have forced Canadian firms to become more productive. And spending on research and development should have taken off, as Canadian entrepreneurs plowed profits into product development.

But Mr. Lynch observes that Canadian productivity is only 72 per cent of its American counterparts, and Canada ranks 20th among OECD nations in spending on research.

Nonetheless, he is convinced that the free-trade agreement had a more important, and more lasting, legacy than any number can record.

“It caused a sea change in attitudes,” he believes. The courage needed to take that free-trade leap of faith equipped governments to tackle other seemingly insurmountable challenges: Establishing the goods and services tax, eliminating the deficit, reducing corporate taxes.

Most important, FTA convinced Canadian governments, Canadian businesses and Canadians generally that this country had the knowledge and confidence to compete in any market.

Since the original free-trade deal, Canada has not only joined the North American free trade agreement, it has signed bilateral deals with Israel, Chile, Costa Rica, Columbia, Jordan and the non-European Union states of the European Free Trade Association. An agreement with Panama is before Parliament.

But the real news should come before the end of the year, with the signing of a Canada-European Union free-trade agreement, which will be the largest since the Canada-U.S. deal. Next year, Canada and India hope to conclude a free-trade agreement.

And Canada recently joined the Trans-Pacific Partnership, a set of negotiations that, if successfully concluded, will create the largest trading bloc in the world.

As globalization continues to break down barriers and promote the free flow of capital across borders, for better or worse, Canada stands well positioned to tap the potential of the rising Asian and Pacific economies.

So was it worth it in the end? Twenty-five years later, David Peterson – who lost an election as free trade and a recession reshaped Canada in 1990 – still isn’t sure.

“What you’ve asked me is a totally reasonable question. And I don’t think there’s a clear and easy answer to it,” he confesses. “It helped the resource side of our economy. It has not helped the innovation side, particularly. There was good and bad in it.”

John Turner has advice for Stephen Harper as he works through these negotiations.

“Be very careful in drafting these agreements with Europe or India or wherever that we don’t lock ourselves into a situation where we don’t win,” he warns. “And read the agreement first.”

But Mr. Gotlieb has a far more positive view. He believes competing freely and successfully in the American market helped cure Canada of its insular, fearful anti-Americanism. “We were a frightened nation,” he maintains. “We were frightened by this U.S. embrace.” The free-trade debate marked the high tide of that anti-American fear.

But after the agreement passed, “the waters slowly began to pull back from the shore. And they have never returned.”

Competing successfully in the U.S. market has given a new generation of entrepreneurs the confidence to compete in other big markets.

Mr. Lynch recently met with the leaders of several new startup firms based in the high-tech hub of Waterloo, Ont. “Their view is they’re going to sell their goods and services globally; they can compete with anybody,” he reports.

“They’re flying from Waterloo to Silicon Valley to Israel to Singapore.” They are using their experiences in Canada and North America to sell Canadian business to the world. “And that,” Mr. Lynch believes, “is how we should think about the future.”

Let Mr. Mulroney, who more than anyone was responsible for the deal, have the last word:

“There is a new generation of Canadians with a new attitude,” he believes. “They are confident, they are outward looking. These are the happy warriors of Canada who are out there fighting the good fight and winning most of the time. And they’ve established that they can win because if they can win in the United States they can win anywhere.

“I look back at it now, and I’m pleased with what I see.”

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