NAFTA Opened Continent For Some Canadian Companies : Parallels A generation after Mexico, Canada and the United States signed the North American Free Trade Agreement, cross-border business is flowing. Some Canadians were fearful of their southern neighbors, but Bombardier Aerospace, with plants now in the U.S. and Mexico, illustrates one way NAFTA changed business.

NAFTA Opened Continent For Some Canadian Companies

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This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.

All this month, we've been examining the effects of the North American Free Trade Agreement, or NAFTA. It's been 20 years since the deal was signed. There's a flowing movement of goods worth more than $1 trillion crossing the borders of the U.S., Canada and Mexico. It's become the accepted way of doing business in North America. But it wasn't always that way. In Canada, free trade was such a contentious issue that it forced a federal election. NPR's Jackie Northam visited our neighbor to the north and she has this report.

JACKIE NORTHAM, BYLINE: It is the ultimate status symbol, the private jet.

FRANK RITCHIE: Yes, this is really where we position the aircraft once they're complete. With the lighting conditions, we want to be able to show them under their best possible conditions. We're seeing it like now...

NORTHAM: Six brand new Challenger corporate jets sit on a showroom floor waiting to be picked up here at the Bombardier Aerospace plant on the outskirts of Montreal. Manager Frank Ritchie watches as technicians polish the gleaming aircraft and make last-minute adjustments. Each one is personalized, from the leather trim inside to the fancy paint job on its exterior.

RITCHIE: We've got something a bit more exotic here in this one, which is a series of dots all over the place.

NORTHAM: That's the final product. But if you go through a side door, you see an enormous assembly line for more than a dozen other Challenger jets.

RITCHIE: This factory floor basically spans close to 900,000 square feet and we're seeing aircraft in different states of build, really.

NORTHAM: Bombardier has been around since 1942 when it began making snowmobiles. It expanded and became the world leader in rail manufacturing and is now number three in aerospace. The company has received loans and tax subsidies from the Canadian government over the years. But Michael McAdoo, vice president of international business development, says NAFTA has helped Bombardier grow. He points to the production of its new Lear Jet 85.

MICHAEL MCADOO: We basically did the bulk of the design in Montreal. The complete fuselage and wing of the aircraft along with all the wiring harnesses are all made in our new facility in Querataro, Mexico. The final assembly is done in Wichita. The Pratt and Whitney Canada engines are attached to the aircraft.

NORTHAM: McAdoo says the elimination of tariffs and trade barriers through NAFTA allows Bombardier to tap into an important supply chain.

MCADOO: We could not have done that aircraft in the way we did it and it would not have been able to be launched without those three parts of the region, each providing something at which it's highly competitive.

NORTHAM: McAdoo says Bombardier does only a tiny amount of business in Canada. The market is simply too small. He says it was critical for the company to secure access to the U.S. market in particular, with 10 times the population. This is what then-Prime Minister Brian Mulroney had in mind back in the 1980s when he first introduced the idea of a free trade agreement to Canadians, says economist Kevin Lynch.

KEVIN LYNCH: The issue was, with the world changing, could we remain a relatively closed economy and grow and prosper, or did we have to expand our marketplace and that meant the United States?

NORTHAM: Mulroney wanted to break Canada's long tradition of protectionism, make it more competitive. But it was a hard sell.

GORDON LAFORTUNE: There was a real feeling that you just couldn't trust the Yanks, to be blunt.

NORTHAM: Gordon LaFortune is a trade lawyer in Ottawa. While he's a big proponent of NAFTA now, he says back then, free trade was a contentious issue.

LAFORTUNE: I think the main concern was there was a fear of the unknown. There was a fear the United States was going to completely absorb Canada and Canadians were going to lose out entirely. The Americans were going to swamp our economy. All of the jobs would go south.

NORTHAM: I'm standing in front of the parliament buildings in the Canadian capital, Ottawa. Directly behind me is an imposing clock tower with gargoyles and a copper-tinned roof. From here, you can see the Rideau Canal, which winds its way through this city. And it was here in parliament where an intense and protracted debate over free trade was fought.


JOHN TURNER: Once you enter (unintelligible)

BRIAN MULRONEY: Mr. Turner, just one second.

TURNER: Once any nation...

MULRONEY: You do not - you do not have a monopoly on patriotism. And I resent the fact and your implication that only you are a Canadian.

NORTHAM: There were heated debates in 1988 between Mulroney and opposition leaders over a free trade deal. The issue ultimately forced a federal election. Mulroney won by a tiny majority, and the free trade deal was signed. Within two years, Canada sank into recession. American companies closed their offices and headed south. But the economy did recover and cross-border trade began to flow. Trade lawyer Michael Woods, who was a NAFTA negotiator, says the trade agreement forced Canadian businesses to step up their game.

MICHAEL WOODS: Some companies went out of business because they couldn't survive in a more competitive environment. And many thrived and, by thriving, became stronger.

NORTHAM: But the widespread fears that the country would be completely subsumed by the U.S. were never realized. And by the time the U.S., Mexico and Canada started talking about NAFTA five years later, it was an easy sell, says economist Lynch, a former clerk of the Privy Council, Canada's most senior civil servant.

LYNCH: One of the most important things the free trade agreement and the NAFTA did was to nudge us into that global marketplace and taking a chance on our abilities to compete. Having gone through the catharsis of the debate on the free trade agreement, people saw the logic of the expansion to Mexico.

NORTHAM: The U.S. now buys more than 70 percent of Canada's exports. Trade with Mexico hit more than $30 billion last year. Jackie Northam, NPR News.

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