Letter to the Speaker of the House of Representatives and the President of the Senate Transmitting the Canada-United States Free Trade Agreement

July 25, 1988

Dear Mr. Speaker: (Dear Mr. President:)

Pursuant to section 102 of the Trade Act of 1974, I herewith transmit the final legal text of the United States-Canada Free-Trade Agreement, which Prime Minister Brian Mulroney and I entered into on behalf of our Governments on January 2, 1988.

With this truly historic agreement, I am submitting the proposed United States-Canada Free-Trade Agreement Implementation Act of 1988, which will revise domestic law as required or appropriate to implement this Agreement and fulfill our international obligations. Further, in accordance with section 102 of the Trade Act of 1974, I am submitting a Statement of Administrative Action that:

outlines proposed administrative actions to implement the Agreement;

explains how the implementing bill and proposed administrative actions change or affect existing law; and

provides reasons as to why the implementing bill and proposed administrative actions are required or appropriate

to carry out the Agreement.

Finally, I am submitting a statement of reasons as to how the Agreement serves the interests of U.S. commerce.

With this Agreement and its implementing bill, we set a new standard for exemplary teamwork between the Congress and the Executive branch. The Administration and many congressional committees have cooperated closely in drafting the bill I am submitting today. No one branch of our government has dictated the terms of this bill; rather, we have all cooperated for the greater good of the Agreement, which so manifestly serves our national economic interests. I compliment and thank the Congress for its substantial contributions to this process, and particularly for the timeliness of its efforts in this regard. I believe this cooperation fully reflects the responsible way in which ``fast track'' legislative procedures for trade agreements were intended to be used.

The United States-Canada Free-Trade Agreement is one of the most comprehensive agreements on trade ever negotiated between two nations. It provides for the elimination of all tariffs, reduces many non-tariff barriers, liberalizes investment practices, and covers trade in services. For example, the Agreement:

significantly liberalizes Canada's foreign investment regime;

provides secure, nondiscriminatory access to Canadian energy supplies, even in times of shortages;

establishes the critical principle of national treatment with respect to trade in over 150 services, which will

ensure nondiscriminatory treatment of U.S. services providers under future Canadian laws and regulations;

removes essentially all existing Canadian discrimination faced by U.S. financial institutions operating in Canada;

facilitates the temporary entry of U.S. business persons and professionals into Canada;

freezes coverage of the United States-Canada ``Auto Pact'' and limits future Pact-like provisions;

eliminates Canadian duty remission programs linked to performance requirements;

removes the current Canadian embargo on imports of used motor vehicles and aircraft;

expands opportunities to sell U.S. goods to the Canadian Government by extending the coverage

of the GATT Government Procurement Code bilaterally to purchases between $25,000 and the Code threshold

(currently about $156,000);

provides that owners of U.S. television programs should be compensated for the retransmission of their programs in Canada;

eliminates Canadian export subsidies on agricultural trade to the United States;

prohibits Canadian Government and public entity sales for export to the United States of agricultural goods at prices below cost;

generally exempts meat products of one country from the other country's meat import quota laws;

increases Canadian poultry and egg minimum import quotas;

sets conditions for the removal of Canadian import licensing of wheat, barley, and oats;

establishes a forum for discussing the possible harmonization of technical regulations on agricultural trade;

facilitates the recognition by one party of the other's testing facilities and certification bodies in the area of technical standards; and

removes barriers to the sale of U.S.-produced wine and distilled spirits in Canada.

While I have highlighted here major benefits for the United States, the Agreement of course provides reciprocal benefits for Canada. Thus, the Agreement is a win-win situation for both countries. It will create more jobs and lower prices for consumers on both sides of the border. The overall result will be increased competitiveness and a higher standard of living in both countries.

Moreover, the Agreement looks to the future by providing a concrete example of the kind of market-opening steps the entire world should be pursuing. It thus supports U.S. efforts at trade liberalization in the Uruguay Round of multilateral trade negotiations.

With this Agreement and the free-trade area it establishes, we are poised to make a great leap of progress. Already Canada and the United States generate the world's largest volume of trade. Canada is by far our largest trading partner. The United States exports more to the Province of Ontario alone than to the entire country of Japan. United States citizens are by far the principal foreign investors in Canada, and Canadians, on a per capita basis, are even greater investors in this country. This two-way traffic in trade and investment has helped to create more than a million jobs, expand opportunity for both our peoples, and augment the prosperity of both nations.

With this Agreement, we are tearing down the tariff walls that block the flow of trade and generally eliminating the tangle of restrictions and regulations that inhibit our commerce and economic cooperation. As this Agreement takes effect, Americans and Canadians will be more able to conduct business, invest, and trade where they like. Two proud, independent, and sovereign nations -- Canada and the United States -- will pull together, as partners, toward a future of economic growth and prosperity.

With this Agreement, we reject ``beggar-thy-neighbor'' policies in order to build with our neighbors; we put aside special interests in favor of the common interest; we break free from limitations of the past not only to enhance our prosperity today, but also to build a better tomorrow for the generations to come in the 21st century.

With this Agreement, both the United States and Canada will be better prepared to compete in the global marketplace of the 21st century. Therefore, in the interest of strengthening our economy, creating jobs, reducing consumer burdens, and advancing U.S. efforts in multilateral trade negotiations, I urge prompt approval and implementation of the United States-Canada Free-Trade Agreement by the Congress.

Sincerely,

Ronald Reagan

Note: Identical letters were sent to Jim Wright, Speaker of the House of Representatives, and George Bush, President of the Senate.