Already the Treaty of Ghent, ending the War of 1812, included a provision for the appointment of "commissioners to divide the islands of Passamaquoddy Bay between the United States and Great Britain" (see John Holmes).
The southern boundaries of the bay are sometimes confused since Deer Island sections off the large open waters of the bay; however, the terminology of the Passamaquoddy Bay Treaty of 1910 specifies that Passamaquoddy Bay runs south of Treat Island (one of the islands that now comprise the city of Eastport, Maine), between Campobello Island and Lubec, Maine: "Now, therefore, upon the evidence and arguments so presented, and after taking into consideration all actions, of the respective Governments and of their representatives authorized in that behalf and of the local governments on either side of the line, whether prior or subsequent to such treaties and award, tending to aid in the interpretation thereof, the High Contracting Parties hereby agree that the location of the international boundary line between the United States and the Dominion of Canada from a point in Passamaquoddy Bay accurately defined in the Treaty between Great Britain and the United States of April 11, 1908, as, lying between Treat Island and Friar Head, and extending thence through Passamaquoddy Bay and to, the middle of Grand Manan Channel, shall run in a series of seven connected straight lines for the distances and in the directions as follows.
The Canadian government believes that it can regulate passage and is considering doing so to prevent the use by supertankers carrying cargo to liquified natural gas plants proposed for the American coast of the bay.
After the War of 1812, the primary smuggled good was gypsum from Nova Scotia, which was usually deposited directly into American vessels on or near the border.
Smuggling was winked at by both officials and locals in the region, who discouraged outside intervention by British or American authorities who wanted to stop or control it.