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Costs & Benefits: 1978-1988 Costs & Benefits: 1968-1978 Costs & Benefits: 1978-1988 Costs & Benefits: 1989–2007

Free Trade Agreement

The Canada–U.S. Free Trade Agreement, which took effect on January 1, 1989, committed its signatories to eliminate all barriers to trade in goods and services over a 10-year period, except for those in certain protected cultural, agricultural, transportation, basic telecommunication, medical, legal and child care areas, as well as government social programs and services, and to resolve any conflicts under the agreement with a dispute settlement mechanism. Prime Minister Brian Mulroney’s Progressive Conservative government negotiated the treaty to increase economic growth by obtaining secure, stable market access to Canada’s largest trading partner. The United States undertook the agreement for the sake of trade in intellectual property, services and investments, and access to the Canadian market. Critics charged that the agreement’s failure to define a subsidy, as well as other flaws, would allow American firms to impose policy on the Canadian government through the dispute settlement mechanism. Canadian labour unions, women’s groups, church groups, concerned citizens and the New Democratic Party vehemently opposed the agreement, despite its negotiators’ assurances that it protected Canada’s social programs, its policy autonomy and its industries. Mulroney responded to public indignation by calling an election in 1988, which he won, and the treaty became law in spite of concerns that it threatened the integrity of Canadian medicare.

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    Date Created: March 31, 2010 | Last Updated: April 21, 2010