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A 1911 political poster suggests the imbalance of benefits from reciprocity between the United States and Canada

In nineteenth and early twentieth century Canadian politics, the term reciprocity was used to describe the concept of free trade with the United States of America. Reciprocity and free trade have been emotional issues in Canadian history, as they pitted two conflicting impulses, the desire for beneficial economic ties with the United States against the fear that closer economic ties would lead to American domination and annexation.

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1880s to 1910s

After Confederation, reciprocity was initially promoted as an alternative to Prime Minister John A. Macdonald's National Policy. Reciprocity meant that there would be no protective tariffs on all natural resources being imported and exported between Canada and the United States. This would allow prairie grain farmers access to the larger American market, and allow them to make more money on their exports. In the 1890s, it also meant that Western Canadian farmers could obtain access to cheaper American farm machinery and manufactured goods, which otherwise had to be obtained at higher prices from central Canada.

In the 1891 election, the Liberal Party of Canada ran and was defeated over its reciprocity platform. Macdonald won with his nationalist slogan, "The Old Flag, The Old Policy, The Old Leader." The Liberals temporarily shelved the concept. When reciprocity came up again in 1896, it was the Americans who proposed it to Wilfrid Laurier's Liberals. The idea excited them, and they immediately began to campaign for it. The Conservatives feared that they would lose the election again due to the valuable agreement, and despite their general belief that it would do Canada good, began to campaign against it.

The Liberal Party went on to win the 1896 election, and some years later it negotiated an elaborate reciprocity agreement with the United States in 1911. However in the 1911 election reciprocity again became a major issue, with the Conservatives saying that it would be a "sell out" to the United States. The Liberals were defeated by the Conservative party whose slogan was "No truck or trade with the Yankees".

Free trade in the 1980s

The concept of reciprocity with the United States was revived in the 1985 when the Royal Commission on the Economic Union and Development Prospects for Canada headed by former Liberal Minister of Finance Donald S. Macdonald issued a report calling for free trade with the US. The Progressive Conservative government of Brian Mulroney acted on the recommendation by negotiating the Canada-US Free Trade Agreement and successfully fighting the 1988 election on the issue.

The downfall of free trade between Canada and the United States of America is that the US companies now had access to Canadian resources as cheap prices through simple transactions. This availability became the appature in which the Canada/ USA Softwood Lumber Dispute would spawn. In this instance, the United States did exactly that; American companies bought softwood lumber taxing it highly while ignoring NAFTA. A fiasco that took over 6 years to resolve.

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