The recession that hit the country in the early 1980s led many to believe that prosperity was to be found in free trade, not in protectionism. The Conservative Party, which came into power in 1984, announced its intention to sign a free trade agreement with the U.S.

Historical Context
In the early 1980s, many people believed that Canada's growth would come from a free trade treaty signed with the United States. Since Canada's population was not large enough to support strong economic growth, prosperity was to be found in the export of goods and services to the United States, which was a much larger market. This opinion was strengthened in 1981-1982 when the country went through a terrible recession that strongly shook the foundations of Canada's welfare state. Some believed that protectionism restricted Canada's development and that the solution lied in neo-liberalism and globalization.

Summary of the Conflict
After a prolonged absence, the Conservative Party returned to power by winning the 1984 federal elections. A senate committee had already recommended in 1982 that Canada should sign a free trade agreement with the United States. After much negotiation, a treaty was signed in 1987 between the American and Canadian governments. Before it could take effect, the treaty had to be approved by a law passed in the U.S. Congress and in the Canadian Parliament. This resulted in vigorous debate; the Liberal Party and the New Democratic Party accused the Conservative Party of basically selling Canada to the United States and reducing its sovereignty. There was also a debate between the provinces and Ottawa. While some provinces supported the treaty, such as Quebec, others such as Ontario, were adamantly opposed to it. Lobby groups also became involved in the debate. While some business sectors were in favour of the agreement, union groups were not. The Free Trade Agreement was also scrutinized from the point of view of women who were fighting for better jobs and working conditions. Although the House of Commons, which was controlled by the Conservative Party, adopted a law on the Free Trade Agreement, the Senate, controlled by the Liberal Party, decided to block it. As a result, a federal election was called and free trade became a key election issue. The Conservative Party was re-elected and again brought the Canada-U.S. Free Trade Agreement to Parliament. It was again presented in the House of Commons, and this time, the Senate had to oblige and approved the treaty. The treaty was ratified in 1988 and entered into effect on January 1, 1989.

Concepts
Free trade
Law existing between at least two nations in which customs duties and restrictive measures on commercial trade are eliminated.

Treaty
Legal agreement between two governments for establishing certain rules or decisions.

Exports
Merchandise produced in one country and sold in another.

Welfare state
Doctrine that views the State as a country's main source of development. It contends that the State must regulate human activities and redistribute wealth among its citizens to ensure the nation's prosperity.

Protectionism
Policy of imposing stiff customs duties in order to protect the national economy from foreign competition.

Neo-liberalism
Doctrine that does not view the State as a country's main source of development. In the area of economics, it claims business and not the State creates wealth. As a result, this doctrine rejects excessive State intervention, particularly in the economy. Neo-liberalism condemns protectionism and favours free trade.

Globalization
Movement to increase the interdependency of nations. It calls for, among other things, an increase in social, cultural and economic trade among the world's countries. Some people contend that globalization created under the neo-liberalism doctrine threatens State sovereignty.

Free trade
Law existing between at least two nations in which customs duties and restrictive measures on commercial trade are eliminated.

Treaty
Legal agreement between two governments for establishing certain rules or decisions.

Parliament
Institution that includes the Senate, the House of Commons and the Queen, who is represented by the Governor General. To be enacted, a law must be adopted by the two houses and then sanctioned by the Governor General. This sanction is simply a formality.

Sovereignty
Nation that is not subjected to another nation, establishment or organization.

House of Commons
The lower house of the Parliament where members elected by the general population meet.

Senate
The upper house of the Parliament where senators named by the Canadian Prime Minister meet. Their mandate is to approve the laws passed by the House of Commons.