Brian Mulroney: NAFTA isn't just another trade deal. It's a model for the world
In the words of Ronald Reagan, 'free and fair trade, and not protectionism, is the way to progress and economic advancement'
Brian Mulroney Special to National Post
January 30, 2018 5:37 PM EST
As prime minister, Brian Mulroney established a free-trade deal with the U.S. in 1989 and later helped create NAFTA. He testified Tuesday in hearings before the U.S. Senate Committee on Foreign Relations in Washington, D.C., on NAFTA. These are his prepared remarks:
This story begins at the Shamrock Summit in Quebec City in March of 1985 when President Reagan and I agreed to consider the negotiation of a comprehensive free trade agreement between our two countries.
Growing protectionism in Congress then was leading to growing estrangement in Canada vis-à-vis the U.S. The situation was not an encouraging one.
After a highly successful subsequent state visit to Canada, President Reagan reported to the American people in his weekend radio address: “We also discussed our current efforts to tear down barriers to commerce and establish free trade between our peoples and countries. The enthusiastic reception I received from the Canadian Parliament suggests that a free trade agreement between Canada and the United States is an idea whose time has come. I pledged to Prime Minister Mulroney and the people in Canada that we’re going all out to make this visionary proposal of the prime minister a reality. We’ll do it for the prosperity and jobs it will create in both our countries; but, just as important, it will be an example to all the world that free and fair trade, and not protectionism, is the way to progress and economic advancement.”
For my part, I had to call, and win, a general election in 1988 on the free trade agreement. With an economy one-tenth the size of yours, opposition was ferocious. Both opposition parties, interest groups, important media leadership, etc. rode a wave of anti-Americanism, saying that Prime Minister Mulroney loves America so much that he wants to make Canada the 51st state — with himself as governor, of course.
My response was that the campaign results would prove that there are not enough anti- Americans in Canada to elect a dog catcher, let alone a prime minister.
My government was re-elected with another overwhelming majority in Parliament and the FTA agreement was signed by President Reagan and myself on Jan. 1, 1989.
Predictions were that Canada would get its clock cleaned
Predictions were that Canada would get its clock cleaned and this would be a lose-lose arrangement for both countries.
So what happened?
Trade in goods and services between our two countries exploded by 300 per cent, millions of new jobs were created in both countries and the relationship grew to be the largest such bilateral arrangement between any two nations in the history of the world — almost US$2 billion a day, with trade approaching US$635 billion per year.
Canada became the market of choice for U.S. producers. Canada purchased more American goods and services than China, Japan and the U.K. combined.
At one point a few years ago, there was more two-way trade across the Ambassador Bridge from Windsor, Ont., to Detroit, Mich., than America did with the nation of Japan. And all the while, our trade was in rough balance. In fact, in 2016 the U.S. had a US$7.7-billion surplus in its goods and services trade with Canada.
Moreover, Canada and the U.S. have developed one of the world’s largest investment relationships totalling over US$840 billion.
This was powerful confirmation of the prediction of Sir Winston Churchill who, in a major speech 80 years ago, described the Canada-U.S. relationship in all its glory in the following golden words: “That long frontier from the Atlantic to the Pacific oceans, guarded only by neighbourly respect and honourable obligations, is an example to every country and a pattern for the future of the world.”
When President George H. W. Bush came in, we began negotiations to include Mexico in our trade agreement, renaming it the North American Free Trade Agreement (NAFTA). The foundational document remained the Canada-U.S. FTA with essential changes to accommodate the specific nature of the Mexican economy and political climate at the time.
It was also unique for another reason: It marked the first time in history that a trade agreement would exist between two mature industrialized countries, the U.S. and Canada — both G7 nations — and a developing country, Mexico.
So what has happened since?
Tens of millions of new jobs have been created in the NAFTA countries since the signing of the treaty in 1994
NAFTA now constitutes — with almost 500 million people — the largest, richest and most dynamic free trade area in the world with a combined GDP of almost US$21 trillion a year. With less than seven per cent of the world’s population, NAFTA partners last year represented 28 per cent of the world’s total GDP. Tens of millions of new jobs have been created in the NAFTA countries since the signing of the treaty in 1994 — most of them in the U.S., with some many millions of these jobs coming from trade and investment with your NAFTA partners, and vice versa.
With an unemployment rate of 4.1 per cent — the lowest of any industrialized country in the world — it is increasingly difficult to seriously argue that the U.S. has done poorly with its international trade agreements, which create such vast employment opportunities at home and across North America.
NAFTA did not just happen by accident. It is the result of the leadership and vision of three great American presidents: Ronald Reagan, George Bush and Bill Clinton. I was privileged to know and work closely with all three.
NAFTA did not just happen by accident. It is the result of the leadership and vision of three great American presidents: Ronald Reagan, George Bush and Bill Clinton
They knew that such instruments are much more than documents for accountants to appraise and determine which country gained a little in agriculture compared with another benefitting from automotive parts and another still from energy exports. They understood that such trade arrangements are a vital constituent part of enlightened foreign policy, not isolated variables to be picked apart and analyzed on a profit-and-loss basis. Such agreements succeed only when all parties benefit. And who can deny that was the case here?
Such farsighted and generous U.S. leadership gave the world, for example, the Marshall Plan in which colossal U.S. investments were made to resurrect a Europe, defeated and destroyed after World War Two. Who today would argue that this was an improvident course for the U.S., inasmuch as it has ensured the creation of a united Europe — democratic, prosperous and free from national hostilities — certainly for the first time in modern history, thereby contributing greatly to the national security of the United States and its allies?
I have always believed that the United States of America is the greatest democratic republic that God has ever placed on the face of this earth. Canada is privileged to have the United States as a neighbour and friend and the U.S. should thank its lucky stars every day that it has Canada on its northern border. This is the most successful and peaceful bilateral relationship in world history and one that must be cherished and enhanced by our leadership in a manner that is thoughtful, understanding and wise.
When fear and anger fuel public debate, history teaches us that protectionist impulses can easily become a convenient handmaiden. But history also demonstrates in Europe, North America and throughout Asia, that the best antidote to protectionism is more liberalized trade that stimulates both economic growth and stronger employment. As President Reagan said: “We should always remember, protectionism is destructionism.”
The U.S. should thank its lucky stars every day that it has Canada on its northern border
Another of your successful presidents, Bill Clinton, said: “Leadership is the capacity to look around the corner of history, just a little bit.”
Well, that is the leadership challenge confronting the NAFTA negotiators today: To conduct themselves in such a way — in an atmosphere of robust discussions leavened by a spirit of reasonable compromise — that the product of their successful efforts will be viewed by history as a powerful enhancement of Churchill’s glowing description of our great nations.
If we summon the courage to defend those values that made our countries so successful, then we will have again contributed significantly to building a world that promotes peace and prosperity for all nations, both at home and around the world.
Absolutely true!!!...but, you are now dealing with an administration that wants it all!!..For Canada and the poor Mexicans we are likely going to have to give something back. The TPP is not going fill the void, especially for our lucrative auto sector...Yank negotiators are emboldened. They don’t care what Mulroney has to say. That was then , this is now...
We can't compete with US manufacturers; we've never been able to.
The US has 10 times our population which gives them the advantage with economies of scale. More importantly, trade isn't about "competing against" partners. An adversarial relationship doesn't make for good business.
It's all about exploiting comparative advantage, and trading goods and services for profit. We have our natural resources and significantly weaker dollar.
The US has its population of businesses and consumers, and the buying power of its dollar.
In all fairness, the Trump administration ran on a protectionist agenda. Trump himself is an economic nationalist, and so very hostile to free trade and free markets. Stephen Harper would have had a very hard time with Trump, personally and ideologically.
NAFTA doesn't cede sovereignty. Free trade is free trade, regardless of the number of partners.
Multilateral trade agreements are more difficult to put together, but they have their place. It would be far more complicated, for example, if we had 40 separate trade deals when NAFTA and CETA cover North America and Europe respectively.
What you call "globalist" is actually capitalism. That's what you really mean. As hard as anything close to a free market economic model is, it's far better than the state directed one economic nationalism imposes.
If a private enterprise has an opportunity to expand it's base, reduce costs, make supply chains more efficient etc, it should be free to do so. The government's role is to help open the door new markets, and leave trade to business.
After all, free trade is a business-to-business affair.
Was it NAFTA or union greed or taxes or utility costs? NAFTA or no NAFTA Ontario isn't a wonderful place to compete in a global economy. Without autopact hand outs would there even be an auto sector in Canada.
The deal was written up in the 1980’s (about the time rubix cube was invented).....a lot of things in the world have changed since then.....probably should have put a 10 year re-open clause in it anyways. Did they think people, currencies, and economies would be working the same way for a thousand years.........its not the holy bible
Why would any Canadian government want a free trade deal that includes Mexico so companies in Canada can send work and jobs to Mexico for really cheap labour so companies remaining in Canada can't compete and so Canadians lose their jobs and livelihoods?
Free trade between similar countries with similar laws, standards, wages, and values should be very successful eg. Canada and the US. However, when a dissimilar country, such as Mexico is added, an unfair competitive advantage in favour of that country results. We cannot compete on many levels with Mexico, and worse, China. We have tranferred millions of jobs and trillions of dollars to these countries and for what?
It seems like almost everybody's opposed to our government pursuing environmental and labour standards as terms in the deal.
Those are exactly Mexico's biggest advantages in relocating manufacturing. Of course it's cheaper to produce in a country where you can (comparatively) spare the expense of workplace safety and pollution mitigation. It would be insane for us not to seek to shrink those regulatory differences.
Trevor Gilbert you progressives are the first to lose your minds when other countries even hint that Canada could change its ways to do things better. But you are fine with projecting your intellectually challenged progressive agenda on other countries. it is a trade! agreement, a concept the dull witted drama teacher and his followers can't wrap their tiny brains around. You want sock boy to fly around and get repeatedly told to get stuffed (like he was on his Asian tour) then keep pushing a progressive agenda but keep it separate from trade.
look to the past and realize times have changed, what worked then won't necessarily work today. Its called living in this world and since you guys are in the negotiation use some business sense and common sense. (well, that is wishful thinking we really have no strength against the US guys who know what negotiating is about).
Omg, Mulroney Baloney was one of Canada’s worst Prime ministers. He ruined the country’s economy. Almost all local and small business died out and it’s just gone down there. The problem with a good overhead is that the people on the bottom can never reach it.
This nostalgia trip is heartwarming and all, but we're no longer dealing with a US administration that holds a principled belief in free and fair trade. Lighthizer just said the other day that reciprocal terms on restricting services trade - that American firms be allowed to bid on Canadian work to the same degree that Canadian firms will be allowed to bid on American work - was a "poison pill" provision.
They're going to push for asymmetrical terms until they figure out just how far we'll concede before getting angry enough to risk our remaining access to the US market by retaliating against some of their exports.
Mulroney is full of it. NAFTA decimated the industrial sectors of both Canada and the USA. Only Mexico created jobs. Canadian business exported jobs, as did the USA, to other countries besides Mexico. It's called a "cold shower" and "deindustrialization." But, by all means, continue on with the lies.
As one of the few political wonks and masochists who actually watched the two hour senate committee hearings today, allow me to share a few impressions.
One is that the respect and affection the senior senators on this most prestigious of all senate committees have for Mulroney is obvious and further cements his growing reputation as Canada's greatest living PM. Mind you, one senator might have been laying it on a bit thick by saying that when he was first elected over twenty years ago and was asked which world leader he would most like to meet he said Brian Mulroney. Or maybe he meant it w...See More
Actually, while I am no stranger to sarcasm, I was actually having a senior's moment. In my own defence, I took my annual Cogniciti short term memory test last week and actually improved my results from the previous year. Since like most folks in their 70s, the best I can hope for from year ot year is just to break even so I was thrilled with the result.
Nonetheless, seniors moments will still happen.
I have edited my post substituting Mulroney for Trump.
Or the companies go broke. Remember GM? Union wages and anti corporate hostility aren't sustainable in a global economy. And protectionism won't work for you either as those "good jobs" price products out of the marketplace.
Well, you may or may not like Brian Mulroney's policies but his appraisal of NAFTA in front of a prestigious US body are helpful for Canada. Please contrast them with Steven Harper's remarks on the Canadian negotiating positions, which were flatly disloyal vis-a-vis the country of which he was prime minister.
We need another Mulroney like a hole in the head. That guy is directly responsible for the loss of good paying jobs. Corporate numbers up. Working stiff down. All the while padding his safety deposit boxes with cash for service rendered . You see the Libs and cons working together on this. Strange eh. Guess who they work for. The guy has ruined the words Right Honourable. Should be doing time.
NAFTA wrecked Canada's economy. It 'created' low paying jobs while destroying Canadian owned companies, and 'more trade' isn't better when it just means giving away more and getting less in return while not being able to enforce any kind of environmental or labor standards.
Brian Mulroney should have spent time in jail for the bribes he got and the things he did to this country to get those bribes, but the RCMP threw the case deliberately and made a deal that gave Mulroney immunity so now he can openly brag about getting a briefcase full of money from a lobbyist because the RCMP made him above the law.
Difficult to make a case that life in Canada was so much better pre-NAFTA. NAFTA came into being in 1993. In 1992, per capita GDP (adjusted by purchasing power parity) was about $30K USD. In 2016, it was $43K USD, an all-time high. Unemployment in 1992 was at 11.3%. Today it's at 5.7%. We could certainly parse those numbers and point out areas where things used to be more affordable (university tuition immediately comes to mind). But the big picture is that, on the whole, Canadians have a higher standard of living than they did 25 years ago.
It sounds great, and unfettered international trade should be great. Except for one thing.
Democracy stops at national borders. Business doesn't. Trade restrictions are the only way to limit the power of multinational corporations and the erosion of democratic national control. Of course the political Right makes that sound like a bad thing.
A 300% increase in trade and 10s of millions of jobs created by NAFTA. Hmmm I lived though that era. You think I would have noticed. Especially in Canada with 35 million people, 10 million new jobs would be hard to miss. I don't trust this news at all and his daughter is running for Ontario Conservatives. Great bs and timing.