Free-trade elections weren’t kind to Liberals

The 1988 federal election is remembered as the Free-Trade Election, but it was actually the third federal campaign in 107 years fought over liberalizing trade between Canada and the United States. The campaign, which concluded on election day 25 years ago on Nov. 21, also marked a stark departure for both the Liberals and Conservatives, as they effectively traded positions on the issue.

Historically, the Liberals were in favour of liberalized trade with the U.S. and the Conservatives were against. That changed in the late 1980s, and then only briefly for the Liberals.

In 1874, the Liberal government of Alexander Mackenzie negotiated a free-trade agreement with the U.S. Although it was ultimately rejected by the U.S. Senate, it won the Liberals the support of prairie farmers who would have enjoyed greater access to U.S. markets. In the late 1870s, Richard John Cartwright, a former Tory MP and banker, became Mackenzie’s finance minister, and he promoted free trade because, he said, protective trade measures “tend to enrich a few.”

In many ways, the Liberals were simply following the lead of the British Liberal Party under William Gladstone which sought freer trade within The Empire and were influenced by the English-born Goldwin Smith, the liberal intellectual and devotee of Adam Smith, who married a Canadian and moved to Toronto.

The Liberals supported tariffs as a source of revenue but philosophically favoured freer trade with both England and the United States. The Conservatives, representing the manufacturing and financial interests of Ontario’s cities, opposed free trade with the United States, claiming it would harm Canadian industry.

In the 1891 election, John A. Macdonald’s Tories made political hay of the Liberal platform of “unrestricted reciprocity” with America which would have eliminated all tariffs, campaigning on their 12-year-old protectionist National Policy to encourage the growth of Canada’s fledgling factories. In the so-called Loyalty Election, Macdonald accused Wilfrid Laurier’s Liberals of willingly annexing Canada to the United States, and won re-election.

In The Destiny of Canada: Macdonald, Laurier, and the Election of 1891, Christopher Pennington said the bitterness of that election and cynical flag-waving of the Conservatives, “cemented a perceived link between free trade and the disloyal policy of annexation” which would influence politics for the next century.

For 20 years, the Liberals continued to support, but seldom pushed, free trade.

In 1911, the Laurier Liberals reluctantly campaigned on reciprocity. Robert Borden won a majority with the assistance of anti-free-trade Liberal dissenters such as Manitoba’s Clifford Sifton, who advised the Borden campaign, and prominent business interests in Toronto and Montreal. Liberals lost seats in the cities where the factories were located despite the fact the treaty lowered tariffs predominantly on agriculture and natural resources, leaving manufacturing mostly untouched.

Patrice Dutil and David MacKenzie, in their Canada 1911: The Decisive Election that Shaped the Country, noted that since at least the 1870s, the Liberals were the party of free trade and the Tories supporters of protectionist policies. They said “free trade was a defining characteristic of Canadian Liberalism” and “more than any other policy,” distinguished the two parties.

In the mid-1980s, that all changed, although the shift began nearly two decades earlier.

Early Liberal skepticism of free trade could be seen in Walter Gordon’s A Choice for Canada: Independence or Colonial Status, a short 1966 book by Lester Pearson’s former finance minister. Gordon supported expanding auto pact-like selective trade liberalization deals to other industries, but his main goal was to “reduce unnecessary imports.” He favoured lowering many tariffs but did not want them eliminated because he favoured “stability” for Canadian businesses, a classic liberal compromise which might have been sold as “free trade if necessary, but not necessarily free trade.”

Gordon’s concerns were prefaced in a 1960 speech, Whither Canada: Satellite or Independent State, when he voiced fear of increasing U.S. influence over the Canadian economy in the form of foreign investment and trade deficits.

Those concerns certainly influenced Gordon’s cabinet colleague John Turner, who would become Liberal leader in the mid-1980s and run against Progressive Conservative Prime Minister Brian Mulroney and his free trade deal in 1988. Turner divided his adult life between the Pearson-Trudeau governments that were increasingly skeptical of closer relations with the U.S. and a corporate Canada that wanted to integrate the two economies.

Turner’s first reaction was noncommittal, merely insisting a Liberal government “was not bound” to the negotiated deal, but by the 1988 election he was referring to the deal as the “Sale of Canada Act” and vowed not to let “Mulroney destroy a 120-year-old dream called Canada.”

The Liberals began the campaign in third place in the polls but eventually overcame the NDP, to become the primary opponent to free trade and the Progressive Conservatives, but with the anti-free-trade vote divided, Mulroney was re-elected and Canada-U.S. trade liberalization was finally a reality.

In 1993, Liberal leader Jean Chrétien campaigned against expanding the agreement to include Mexico but signed on to the North American Free Trade Agreement in 1995. The Liberal party has rediscovered its economic liberalism.

For much of Canada’s history, this country’s relationship with the United States influenced its politics, and seldom more so than on the electoral outcomes of the three free trade elections, all of which saw the Liberals on the losing side.