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Canada-United States Free Trade Agreement

Definition

An agreement reached by negotiators for Canada and the United States on October 4, 1987, and signed by the leaders of both countries on January 2, 1988. The agreement phased out a wide range of trade restrictions between the two nations over a ten-year period.

Analogy

Think of this as two neighboring families (Canada and US) deciding to remove all fences (trade restrictions) between their properties so they can freely share resources like tools or garden produce without any hindrance.

Related terms

North American Free Trade Agreement (NAFTA): An agreement signed by Canada, Mexico, and the United States creating a trilateral trade bloc in North America. It superseded the Canada-United States Free Trade Agreement.

Trade Liberalization: The removal or reduction of restrictions or barriers on free exchange of goods between nations. This includes removing tariff obstacles and nontariff obstacles such as licensing rules, quotas and other requirements.

Bilateral Trade Agreements: These are trade agreements made between two countries to allow access to each other's markets. They come in many forms depending upon level of integration but their common thread is that they are reciprocal.