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International Trade

International trade is the buying and selling of goods and services between members of different countries. This exchange has been a key part of the Canadian economy since the first settlers came. Canadian settlers depended on exports of resources such as timber and grain (see Timber Trade History; Wheat). In the 20th century, Canada’s exports shifted to services, manufactured goods and commodities such as oil and metals.

Since the 1980s, Canada has signed free trade agreements with dozens of countries to increase global trade and investment.

Canada’s three biggest trading partners are the United States, the European Union and China. The United States is Canada largest trading partner by far. However, trade with China grew quickly in the 2010s, and this trend will likely continue.

Click here for definitions of key terms used in this article.

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Pacific Rim Trade Deal Takes Effect

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect after being renegotiated due to the United States’ withdrawal from the deal in 2016. The free trade deal is expected to add $4.2 billion per year to Canada’s GDP and increase Canada’s annual exports to Japan by $1.8 billion. It is expected to be especially beneficial to Canada’s pork, beef and sugar industries, while Canada’s dairy and steel industries have been critical of the pact.

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General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) was an international trade agreement. It was signed by 23 nations, including Canada, in 1947 and came into effect on 1 January 1948. It was refined over eight rounds of negotiations, which led to the creation of the World Trade Organization (WTO). It replaced the GATT on 1 January 1995. The GATT was focused on trade in goods. It aimed to liberalize trade by reducing tariffs and removing quotas among member countries. Each member of the GATT was expected to open its markets equally to other member nations, removing trade discrimination. The agreements negotiated through GATT reduced average tariffs on industrial goods from 40 per cent (1947) to less than five per cent (1993). It was an early step towards economic globalization.

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Automotive Industry

The automotive industry includes the production of cars and car parts (see automobile). Since the early 20th century, it has been one of Canada’s most significant manufacturing industries, as well as a key driver of Canada’s manufactured imports and exports, employment and overall industrial production. (See also Manufacturing in Canada; Industry in Canada.) Though dominated by foreign firms (largely American), Canada boasts a strong domestic parts manufacturing sector that emerged in the last part of the 20th century. Concentrated in Southern Ontario, Canada’s auto sector evolved as a consequence of industrial policies such as protectionism and free trade.

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Canada and NAFTA

The North American Free Trade Agreement (NAFTA) was an economic free trade agreement between Canada, the United States and Mexico. Designed to eliminate all trade and investment barriers between the three countries, the free trade agreement came into force on 1 January 1994. In addition to being one of the most ambitious trade agreements in history, NAFTA also created the world’s largest free trade area. It brought together two wealthy, developed countries (Canada and the United States) with a less developed state (Mexico). The agreement built on the earlier Canada-US Free Trade Agreement (CUSFTA), which came into effect on 1 January 1989. After NAFTA was signed, trade and investment relations between the three countries expanded rapidly, but political co-operation remained weak. NAFTA continued to be controversial, particularly in the United States. In 2017, US president Donald Trump threatened to renegotiate or cancel the deal. More than a year of negotiations produced a revised version of NAFTA called the Canada-United States-Mexico Agreement (CUSMA). CUSMA came into effect on 1 July 2020.

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Canada-United States-Mexico Agreement (CUSMA)

The Canada-United States-Mexico Agreement (CUSMA) is a free trade agreement between Canada, the United States and Mexico. It is a revised and renamed version of the North American Free Trade Agreement (NAFTA). The leaders of the three countries signed CUSMA in November 2018 after 13 months of intense negotiations that concluded in September. Canada was the last country to pass enabling legislation, which received royal assent on 13 March 2020. The agreement came into effect on 1 July 2020.

CUSMA is expected to have only a modest impact on economic growth. However, it could have a major impact on the restructuring of the North American economy. It may also limit Canada’s policy options in moving to a new economy based on knowledge, data and intellectual property.

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Exports from Canada

Exports are goods or services that residents of one country sell to residents of another country. Since its earliest days, Canada’s economic prosperity has relied on exports to larger markets; first through its colonial ties to Britain and later due to its geographic proximity to the United States. Billions of dollars of goods and services cross Canada’s border each year. (See International Trade.) Exports make up about a third of Canada’s gross domestic product (GDP). In 2019, Canadians exported $729 billion worth of goods and services. Almost 75 per cent of Canada’s total exports go to the United States. (See Canada-US Economic Relations.) Other major markets include the European Union, China and Japan.

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Imports to Canada

In international trade, imports refer to goods and services purchased by Canadian residents from residents of other countries. Billions of dollars of goods and services cross Canada’s border each year. In 2019, Canadians imported a total of $768 billion worth of goods and services. Canada’s largest source of imports by far is the United States. (See Canada-US Economic Relations.) The European Union, China and Mexico are also major sources of imported goods and services.

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Reciprocity

Reciprocity was a free trade agreement between the United States and Canada. It mutually reduced import duties and protective tariffs on certain goods exchanged between the two countries. It was in effect from 1854 to 1866 and was controversial at times on both sides of the border. It was replaced in 1878 by the Conservative Party’s protectionist National Policy. It involved levying tariffs on imported goods to shield Canadian manufacturers from American competition. A narrower reciprocity agreement was introduced in 1935 and expanded in 1938. However, it was suspended in 1948 after both countries signed the General Agreement on Tariffs and Trade (GATT).

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John Turner

John Napier Turner, PC, CC; politician, lawyer, prime minister, athlete (born in Richmond, England, 7 June 1929; died 19 September 2020 in Toronto, ON). John Turner is best known for his early political service as federal justice minister (1968–72) and finance minister (1972–75) in the cabinet of Prime Minister Pierre Trudeau, and for the 1988 election battle with Brian Mulroney over free trade. Turner's 11-week term as prime minister in 1984 is the second shortest in Canadian history, after Sir Charles Tupper (10 weeks).

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Brian Mulroney

Martin Brian Mulroney, PCCCGOQ, lawyer, businessman, politician, prime minister of Canada 1984 to 1993 (born 20 March 1939 in Baie-Comeau, QC). Former Progressive Conservative Party leader Brian Mulroney helped his party win the most seats ever (211) in the 1984 election. As prime minister, he signed a landmark free trade deal with the United States and Mexico (NAFTA) and oversaw passage of the unpopular Goods and Services Tax (GST). He also spent much political capital trying unsuccessfully to persuade Quebec to sign the Constitution. (See Meech Lake Accord; Charlottetown Accord.) Mulroney took a strong stance against apartheid and made great strides in protecting the environment. But his historically low popularity led to an unprecedented defeat in 1993, which sent the Conservative Party into disarray for a decade.

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Huawei CFO Arrested in Vancouver

Meng Wanzhou, the chief financial officer of China’s Huawei Technologies and the daughter of its founder, Ren Zhengfei, was arrested at Vancouver International Airport at the request of American law enforcement authorities. Suspected of violating US trade sanctions against Iran, Meng faced extradition to the United States. The Chinese embassy in Ottawa, however, denied Meng had broken any laws and demanded her immediate release. She was released on C$10 million bail on 11 December and confined to one of her two Vancouver homes. Her arrest sparked a diplomatic crisis between China and Canada that saw China detain at least 13 Canadians in retaliation.

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Commodities in Canada

In commerce, commodities are interchangeable goods or services. Many natural resources in Canada are viewed as commodities. They are a major source of the country’s wealth. Examples of commodities include a barrel of crude oil, an ounce of gold, or a contract to clear snow during the winter. Commodity products often supply the production of other goods or services. Many are widely traded in futures exchanges (see Commodity Trading).

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Hudson’s Bay Point Blanket

The Hudson’s Bay Point Blanket is a wool blanket with a series of stripes and points (markers on cloth) first made for the Hudson’s Bay Company (HBC) in 1779. The most iconic design is that which is white with green, red, yellow and indigo stripes; these colours are now used as an emblem for the HBC. While the HBC was not the first to create the point blanket, the company did popularize it among Indigenous and settler communities in Canada. Today, the design from the blanket is used on a variety of clothing, accessories and household items sold by the HBC.

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Canada Agrees to Join Trade Accord with US and Mexico

After more than a year of negotiations with the United States and Mexico, Canada reached a last-minute agreement to sign a new NAFTA deal. The United States-Mexico-Canada Agreement (USMCA) will retain the Chapter 19 dispute resolution clause but will also allow greater access to Canada’s dairy market. The USMCA was set to be signed at the end of November 2018 and then sent to the three national legislative bodies for ratification.

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Pro Pelle Cutem

Pro pelle cutem (a Latin phrase meaning “a pelt for a skin”) is the traditional motto of the Hudson’s Bay Company (HBC). It was adopted soon after the company received its charter in 1670 and has remained on the HBC coat of arms, apart from a brief period of rebranding between 2002 and 2013.

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Indigenous-French Relations

French fishermen, settlers, fur traders, missionaries and colonial agents were among the earliest Europeans to have sustained contact with ​Indigenous peoples in what is now Canada and North America. The relationship between French and Indigenous people of the Eastern Woodlands in the early colonial period was complex and interdependent. France saw Indigenous nations as allies, and relied on them for survival and fur trade wealth. Indigenous people traded for European goods, established military alliances and hostilities, intermarried, sometimes converted to Christianity, and participated politically in the governance of New France. With the transfer of New France to Britain in 1763, diplomatic relations between the French and Indigenous people in Canada ceased. Naturally, social and economic interaction between the European and Indigenous inhabitants of New France continued.