In 1988, the United States and Canada signed a landmark free trade agreement that eliminated tariffs on goods and services between the two countries. This agreement, known as the Canada-United States Free Trade Agreement (CUSFTA), paved the way for further economic integration between the two countries and established a model for other free trade agreements around the world.
The CUSFTA was negotiated at a time when trade tensions between the two countries were high. Both the United States and Canada had implemented protectionist policies that had stifled trade and created barriers for businesses operating in both countries. The agreement was seen as a way to reduce those barriers and increase economic growth and job creation on both sides of the border.
Under the terms of the agreement, tariffs on most goods and services traded between the United States and Canada were eliminated immediately. This included everything from cars and machinery to agricultural products and textiles. The agreement also provided for the creation of a binational commission to monitor and enforce the terms of the agreement.
However, the agreement wasn`t without its controversies. Critics of the agreement argued that it would harm certain industries in both countries, particularly those that were heavily protected by tariffs. In the United States, there was concern that the agreement would lead to job losses in the manufacturing sector as companies moved production to Canada to take advantage of lower labor costs.
Despite these concerns, the CUSFTA was ratified by both countries and went into effect on January 1, 1989. The agreement was seen as a major victory for free trade advocates, who argued that it would lead to greater economic prosperity for both countries.
In 1994, the CUSFTA was superseded by the North American Free Trade Agreement (NAFTA), which added Mexico to the trade bloc. NAFTA expanded on the CUSFTA by eliminating additional trade barriers and providing for greater protection of intellectual property rights.
Today, the United States and Canada continue to be each other`s largest trading partners. Bilateral trade between the two countries was worth over $718 billion in 2019, according to the Office of the United States Trade Representative. The Canada-US trade relationship is a testament to the success of the CUSFTA and NAFTA in promoting economic growth and job creation across North America.