Knowing history — and not repeating it

The current subject of discussion is the bilateral trade predicament between Canada and the United States. Prime Minister Mark Carney expressed Canada's stance clearly: they cannot accept the offer made by the U.S. and will not concede to what the U.S. is asking for. There are similarities between the current situation and the trade war that occurred between Canada and the U.S. in the fall of 1987.

Just like the recent turn of events, the 1987 trade war saw Canada agreeing to return to free trade negotiations with the Reagan administration. This led to the creation of a deal, albeit with concessions given upfront on energy, foreign investment, and cultural protections. However, the Canadian government did not have much leverage during those negotiations, similar to the current situation.

The U.S. negotiating team, led by Peter Murphy, correctly predicted Canada's reaction to Simon Reisman's (Canada’s chief trade negotiator) public walk away from the bargaining table in late September 1987. They knew Canada would eventually come back to the table, just as they did this time around. Although the U.S. team made some concessions, the deal was not as favorable for Canada as Mulroney had promised.

The current situation, like the 1987 trade war, could lead to a final trade agreement being reached between the two nations. However, Carney warns that Canada must not repeat Mulroney's mistake by not playing hardball with the U.S. by withholding access to Canada's natural resources, such as oil and gas, potash, critical minerals, and electricity. This strategy, similar to the one used in the 1980s, is the only thing that the current American administration understands and respects.