The U.S. has been blessed by sharing its longest border with Canada, our staunch ally and largest trading partner. And since 1989, when the U.S.-Canada Free Trade Agreement took effect, it has been our partner in the effort to make North America a stronger competitor against Japan Inc. and Europe.
But suddenly, Americans have reason to worry about Canada's future. On Oct. 26, Canadians rejected a sweeping series of constitutional changes aimed at resolving grievances--notably those of French-speaking Quebec--threatening to tear Canada apart (page 58). The deal had been endorsed by the three major national political parties, plus virtually the entire business Establishment. Its rejection represents a stunning repudiation of Canada's elite and is a huge step back for Canada.
The vote is also troubling news for U.S. business. Prime Minister Brian Mulroney, a vigorous champion of free trade, will now be seen as a lame duck. That will embolden the many Canadian critics of free trade and of the North American Free Trade Agreement (nafta). Their opposition seems certain to fuel trade tensions with the U.S. and could lead to Canadian rejection of nafta. Because free trade is so vital to the future of this continent, the U.S. should strive to be especially sensitive to Canadian concerns in the months ahead--with the aim of keeping Canada on board.
Longer term, this vote also increases the chances that the Canadian confederation will unravel. Canada remains a united country, but separatists in Quebec are vowing to step up their campaign for independence. While the French-speaking Quebecois have some legitimate concerns, secession would be a recipe for economic disaster that would sharply reduce Canada's role on the world stage. The Canadian "no" vote was unfortunate. But that's no reason to make what would be a far graver mistake.