Canada’s Historical Search for Markets
British North America enjoyed special privileges in trade as part of the British Empire until the late 1840s. At that point Britain’s commanding lead in industrial production prompted British policymakers to drop tariffs on virtually all goods coming into Britain. The tariff preferences for colonial goods in the UK disappeared. In the Canadas (the United Province of Canada), merchants, traders and others who earned their living from trade then looked to the United States to provide markets for British North American goods. In 1849 some of them issued a manifesto seeking annexation to the United States.
The British response was to negotiate a reciprocity treaty to allow British North American products (mainly natural products) to cross the border with the US duty free. The treaty was in effect from 1854 to 1866 and, combined with US needs for Canadian products in the US Civil War, brought prosperity to Canada.
After the end of the treaty, Canadians continued to seek access to the US market but all efforts failed. Still, north-south trade continued to grow with Canada selling natural products to the US and receiving manufactured products in return. Britain continued to be an important market for Canada but the Canada-US trade slowly but inevitably surpassed it. The Canada-US trade was primarily a trade of convenience. An American reciprocity proposal was turned down by Canada in the 1911 federal election, but trade continued to expand especially during the First World War.
Right after the Great Depression began, the US imposed very high tariffs on goods coming in to the US. Canada was badly hurt by this measure and sought to expand empire trade at the 1932 Ottawa Conference. But Canada still tried to penetrate US tariffs and finally in 1936 a reciprocity treaty in natural products was completed, followed by a second treaty two years later.
These two treaties combined with the Hyde Park Declaration of 1941 further expanded Canada-US trade. Other treaties would follow beginning with the Canada-US Free Trade Agreement of 1989, NAFTA on January 1, 1994. NAFTA has now been replaced by the United States-Mexico-Canada Agreement (USMCA).
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