Fears grew among many politicians that closer economic ties with the United States would lead to political annexation.
[6][7] After the signing of the Auto Pact, the Canadian Government considered proposing free-trade agreements in other sectors of the economy.
However, the United States government was less receptive to this idea, and in fact, wanted to phase out some guarantees in the Pact.
[8] During the next two decades, a number of academic economists studied the effects of a free trade agreement between the two countries.
Other economists on the free-trade side included John Whalley of the University of Western Ontario and Richard Lipsey of the C. D. Howe Institute.
[11] Others were concerned that free trade would have negative effects, fearing capital flight and job insecurity because of international outsourcing, and also that closer economic ties with the "Giant to the South" might risk an erosion of Canadian sovereignty.
A number of government studies drew increasing attention to the possibility of a bilateral free-trade negotiation: Looking Outward (1975), by the Economic Council of Canada; several reports of the Senate Standing Committee on Foreign Affairs (1975, 1978, and 1982); and the 1985 report of the Macdonald Commission (formally, the Royal Commission on the Economic Union and Development Prospects for Canada), chaired by former Liberal politician Donald Stovel Macdonald.
Macdonald declared that "Canadians should be prepared to take a leap of faith"[12] and pursue more open trade with the United States.
They also raised concerns about how Canada's social programs and other trade agreements such as the Auto Pact would be affected.
The Agreement implementation act was given to the Congress for "fast-track" approve by President Reagan on July 26, 1988,[19] meaning that it could be accepted or rejected but could not be amended.
[22] A 2024 study found that Canadian workers adjusted smoothly to the effect of trade liberalization with the United States: workers in sectors that faced import competition with the US were likely to suffer modest negative economic outcomes in the short-run but they made up for this by switching to jobs in Canadian economic sectors that benefitted on easier access to the US market.
The loss of many Canadian jobs, particularly in the Ontario manufacturing sector during the recession of the early 1990s, was attributed (fairly or not) to the Free Trade Agreement.
The agreement has failed to liberalize trade in some areas, most notably the ongoing dispute over softwood lumber.
An agreement was indeed struck with the Democrats under Bill Clinton that created separate side deals to address both of these concerns.