ogy, expressed serious reservations about the impli-
cations of SDI for U.S.-Canadian relations. The best
Mulroney could do was to call Reagan and encour-
age him to press on with the research without Cana-
dian participation. He also promised that Parlia-
ment would not overtly prohibit the involvement of
Canadian companies in the SDI.
Trade Relationships No bilateral issue of the past
half-century evoked in Canadians such strong per-
sonal and political emotions as the debate over free
trade with the United States. Canada first suggested
free trade in 1983; its objectives were to expand
trade and to maintain security of access to the
United States. Free trade acquired bipartisan re-
spectability in Canada with the establishment of a
Royal Commission on the Economic Union and De-
velopment Prospects for Canada, chaired by former
Liberal finance minister Donald Macdonald, to ex-
amine Canada’s economic prospects. In 1985, the
Royal Commission issued its final report, based on
three years of hearings and study. It strongly recom-
mended that Canada and the United States ne-
gotiate a bilateral free trade agreement. Two years
later, Canada and the United States successfully con-
cluded free trade negotiations that covered not only
trade in goods but also trade in services and invest-
Trade Agreement Canada-United States Free
ment (FTA) entered into force in January, 1989.
Neither the United States nor Canada regarded
the detailed FTA as a complete success. The first para-
graph of article 2005 exempted Canada’s cultural in-
dustries from the FTA, but the second paragraph re-
served the U.S. right to retaliate against Canadian
cultural protectionism. On the positive side, the
agreement eliminated tariffs over a ten-year period in
commodity trade in industry and agriculture; liberal-
ized Canadian controls on foreign investment; pro-
vided national treatment for U.S. firms operating in
Canada; and provided limited bilateral access to gov-
ernment procurement contracts in each country.
Most important to Canada was the establishment of
bilateral dispute-settlement panels to circumvent the
political vagaries of U.S. trade laws.
The Reagan administration anticipated few mod-
ifications in U.S. law being necessitated to imple-
ment the FTA. Reagan promised to pursue further
liberalization of Canadian investment controls, to
extend the agreement to energy and cultural indus-
tries, and to eliminate technology-transfer require-
ments and other performance requirements not
barred by the FTA. For the steel industry, the admin-
istration assured Congress that nothing in the FTA
precluded reaching agreement with Canada to re-
duce Canadian steel exports. In the area of govern-
ment procurement, although the agreement liberal-
ized competition, there were major exceptions on
the U.S. side. One provision left unchanged was an
item included in U.S. Defense Appropriations Acts
beginning in 1941 known as the Berry Amendment,
which required the Department of Defense to pur-
chase certain products, such as textiles, clothing,
and certain specialty metals, from U.S. suppliers.
The Canadian energy industry, meanwhile, was anx-
ious to expand its access to U.S. markets; in return,
the United States wanted guaranteed access to Cana-
dian resources.Impact The thawing of U.S.-Canadian relations un-
der the ideologically similar governments of Presi-
dent Reagan and Prime Minister Mulroney led to sig-
nificant and far-reaching developments between the
two nations, most notably the Canada-United States
Free Trade Agreement, which was not, however, final-
ized until after Reagan left office. For better or for
worse, Mulroney’s foreign policy associated his Con-
servative Party with a pro-United States stance in the
eyes of many Canadians, and their later decisions at
the polls were influenced by that association.Subsequent Events The good feelings of the
1980’s between Canada and the United States un-
derwent certain tensions in the 1990’s, as a result of
a less accommodating relationship between Prime
Minister Jean Chrétien and President Bill Clinton,
and a developing ambivalence of Canadians toward
Americans. Disputes over softwood lumber in partic-
ular colored the tenor of trade between the two na-
tions, which nevertheless remained so dependent
on each other that trade continued even as attitudes
changed.Further Reading
Campbell, Bruce, and Ed Finn, eds.Living with Un-
cle: Canada-US Relations in an Age of Empire.To-
ronto: J. Lorimer, 2006. History of U.S.-Canadian
relations that sets them within the context of Eu-
ropean colonialism and imperialism.
Carment, David, Fen Osler Hampson, and Norman
Hillmer, eds.Coping with the American Colossus.
New York: Oxford University Press, 2003. General180 Canada and the United States The Eighties in America