CANADA AND THE UNITED STATES

CANADA AND THE UNITED STATES

The United States and Canada share a unique legal relationship.U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. The two nation’ mutual,
largely unguarded 5,000-mile border does much
to explain why: each is the other’s largest trading
partner, amassing $218 billion in trade in 1992;
cross-border travel is easy; and they work
together on common concerns about the quality
of water and air. However, the relationship has
not always been so cooperative. Although envi-
ronmental treaties date to 1902, economic pacts
have taken nearly a century to come to fruition.
Traditionally, both countries warily put protec-
tionism ahead of mutual interest, and they have
retaliated in kind against tariffs, duties, and
other barriers to free trade. Only in 1988 did the
two enter into the U.S.-Canada Free Trade
Agreement (FTA) (Pub. L.No. 100-449, 102 Stat.
1851), a groundbreaking pact designed to elimi-
nate these barriers. It paved the way for the
historic NORTH AMERICAN FREE TRADE AGREE-
MENT (NAFTA) in 1993.
Early relations between the two countries
were rocky. In the mid-nineteenth century, trade
foundered on stubborn protectionist policies;
each country feared the economic success of the
other at its own expense. The 1854 Elgin-Marcy
Reciprocity Treaty (10 Stat. 1089) was intended
to open up trade in natural resources but it
barely lasted a decade. Its failure prompted
Canada to spend fruitless years trying to loosen
U.S. trade restrictions before formulating, in
1879, a national policy of high tariffs by which it
hoped to force the United States back to the
negotiating table. But the table remained empty
for nearly a century. The only trade agreement
between the two nations was the GENERAL
AGREEMENT ON TARIFFS AND TRADE (GATT), a
100-nation agreement first reached in 1947. The
generality of the GATT accords did little to
address the specific issues facing these two trad-
ing partners and it caused Canada, in particular,
frustration. But U.S. prosperity throughout the
mid-twentieth century meant it could afford to
ignore Canadian complaints.
The two were more willing to negotiate on
environmental concerns. The landmark agree-
ment in this area is the Boundary Waters Treaty
of 1909. It established the International Joint
Commission (IJC) to deal with the issues of
water resource management, a set of concerns
referred to as transboundary issues because of
the two nations’ common border. Made up of
technical specialists from various federal, state,
and provincial governments of the United States
and Canada, the IJC has authority to approve
joint projects and to investigate complaints.
Since the 1970s its duties have expanded as the
result of the Great Lakes Water Quality Agree-
ments that established goals for restoring the
damaged ecosystem of the Great Lakes. Contem-
porary concerns facing the IJC include water
levels, POLLUTION, acid rain, and climate
changes, with a growing emphasis on the use
and maintenance of river systems. Critics gener-
ally agree that the success and innovation of this
commission represent a model for international
cooperation.
Despite progressive solutions to environ-
mental problems, it took the United States and
Canada until the late 1980s to forge better eco-
nomic ties. The slow progress toward open trade
was due to mutual suspicions, greed, and a long
history of retaliatory actions. This hindrance
stood in stark contrast to the countries’ cultural
similarities and cooperation in other areas. They
had been allies in both world wars and both
remained key members of the NORTH ATLANTIC
TREATY ORGANIZATION (NATO). But war is an
unusual circumstance; military allies can still be
less than friends in trade. Then, the last half of
the twentieth century unexpectedly changed
everything—domestic industrial decline,
brought on by a rise in international competi-
tion, toppled the United States from a position
of preeminence and made Canada more impor-
tant to its plans for long-range prosperity.
Canada underwent a great change in its histori-
cally isolationist outlook as it too suffered eco-
nomically. The 1984 election of a conservative
Canadian government led by Prime Minister
Brian Mulroney was a watershed event. Mul-
roney’s victory was based on promises of open-
ing U.S. markets to Canadian business. Both
sides wanted to remove the barriers of high tariffs, antidumping fees, and countervailing duties
(forms of protectionism that limited the expan-
sion of each nation’s markets) in order to create
new jobs and wealth.
On January 2, 1988, negotiations between
the administrations of President RONALD REA-
GAN and Prime Minister Mulroney resulted in
the signing of the FTA. In succeeding where pre-
vious generations had failed or not even tried,
Reagan declared that the FTA would remove an
“invisible barrier of economic suspicion and
fear.” The pact had five broad goals: (1) elimi-
nate barriers to trade in goods and services, (2)
improve fair competition, (3) liberalize invest-
ment conditions, (4) establish procedures for a
joint administration of the agreement, and (5)
lay the foundation for future cooperation. The
FTA also relaxed U.S. immigration rules for
Canadians, allowing freer travel across the bor-
der for businesspersons.
On the administrative level it created a
temporary body for resolving disputes, the
binational Extraordinary Challenge Commit-
tee, which was given a seven-year commission
to hear appeals. Not surprisingly, this issue had
been the most troublesome during the negotia-
tions preceding the FTA; it proved slightly
problematic in practice, too, with the United
States generally losing its complaints. Nonethe-
less, the FTA was seen as a boon for U.S.
business as a whole, removing Canadian
restrictions that had long been a sore point and
emphasizing the resolution of disputes outside
courtrooms.
The FTA’s success laid the groundwork for
an even more ambitious trade agreement
between the United States, Canada, and Mexico,
the much-anticipated NAFTA, enacted in 1993.
NAFTA’s changes were to be phased in over 15
years, and its purpose is to liberalize trade
between the three countries in hopes of emulat-
ing the economic cooperation long enjoyed by
European nations. In practice, its broad aims
proved highly controversial.
Just looking at the numbers, however, sug-
gests that NAFTA has been an unqualified suc-
cess in expanding trade between the United
States, Canada, and Mexico. The United States
has nearly doubled its trade to its NAFTA part-
ners in the time since the agreement was signed.
As for Canada, its merchandise exports to its
NAFTA partners since the implementation of
NAFTA increased 95 percent, from $117 billion
to $229 billion.
This is not to say that NAFTA has resolved
all trade issues between the United States and
Canada. A good example is a recent dispute over
softwood lumber. U.S. lumber producers claim
Canadian softwood lumber is subsidized by
Canada illegally and that companies sell at
below production costs. Because of these complaints,
the United States placed a tariff of up to 29 percent on Canadian softwood lumber
exports. The results have costs jobs in Canada
and driven up home building prices in the
United States. As of 2003, it was expected that
only the World Trade Organization could
resolve the dispute.
Relationships between the United States and
Canada are not just about trade. Particularly in
the days since September 11, 2001, they have
been about security issues as well. After the
attack on the United States, many Americans
expressed concern about what they viewed as
the lax security and border enforcement on the
Canadian side of the border. At the same time,
Americans recognized the immediate assistance
Canada provided the United States during the
post-attack period when the area of the continental
states constituted a no-fly zone and many
planes were rerouted to Canadian airports.
In response to those concerns, in December
of 2001 the Canadian and United States governments
signed a “smart border” accord. The
accord featured an action plan with 30 points
designed to secure the cross-border flow of
goods and people, protect infrastructure, and
improve information sharing and coordination
to enhance these objectives. Among other items,
the accord includes development of a system for
pre-approving goods, factories, carriers, drivers
and trucks for electronic pass-through clearance
at border checkpoints.While the accord has not
succeeded in quieting all security complaints
from the United States, it has helped smooth
things out.
Security is not the only concern regarding
cross border traffic. In mid-2003 Canada was
considering the decriminalization of marijuana
which caused American law officials to worry
about whether the drug trade would increase as
a result on the Canadian side of the border. U.S.
Drug czar John Walters has warned that Canadian
laxity on marijuana could lead to tighter
control being placed on the cross-border flow of
people and goods.
There have been other tensions over the
Canadian government’s refusal to support the
war in Iraq. Yet despite these problems it seems
clear that Canada and the United States have
more common interests than disputes. At the
beginning of the twenty-first century, Canada
and the United States continued the economic
integration that NAFTA put on the fast track,
and seemed likely in the future to become more
interdependent than ever.
FURTHER READINGS
“Dispute Resolution under Chapter 19 of the United States–
Canada Free-Trade Agreement: Did the Parties Get
What They Bargained For?” 1995. Stanford Journal of
International Law (winter).
“The Effect of the United States–Canada Free Trade Agreement
upon United States Immigration Law.” 1988. Practicing
Law Institute (October 1).
“From Customary Law to Environmental Assessment: A
New Approach to Avoiding Transboundary Environmental
Damage between Canada and the United
States.” 1995. Boston College Environmental Affairs Law
Review (winter).
McKenna, Barrie. February 3, 2003. “Canada Turns on the
Charm to Woo the U.S.” The Globe and Mail.
“The North American Experience Managing Transboundary
Water Resources: The International Joint Commission
and the International Boundary and Water Commission.”
1993. Natural Resources Journal (spring).
Rae, Robert K. 2000. “The Politics of Cross Border Dispute
Resolution.” Canada United States Law Journal.
“United States–Canadian Free Trade: Economic Repercussions
of the CFTA and NAFTA on the United States,
Canada, and the Great Lakes Region.”Great Lakes Symposium
1994. University of Toledo Law Review.
CROSS-REFERENCES
General Agreement on Tariffs and Trade; North Atlantic
Treaty Organization.