Brian Mulroney Divided and Reshaped Canada Through Free Trade With the U.S.

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.Credit...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.

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.

Mr. Mulroney in 2009 during his testimony at an inquiry into his dealings with a lobbyist.Credit...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.

Mr. Mulroney’s free trade deal with the United States reshaped Canada’s economy.Credit...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.

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.

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.