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Economic relations between Canada and the US are of paramount importance to Canada. The US is Canada's most important trading partner (Canada exports 30% of its gross domestic product and almost 70% of Canadian exports are to the US) and the US has provided Canada with much of its investment capital and TECHNOLOGY through FOREIGN INVESTMENT, resulting in a high level of US ownership and control of the Canadian ECONOMY. Canada is also the largest export customer of the US (about 10% of US exports go to Canada, and account for more than 60% of Canadian imports, although the trade in manufactured goods between the 2 countries favours the US) as well as a major source of natural resources for US industry . While access to US markets, investment and technology have benefited Canadians, the resulting commercial arrangements, along with the great disparity in population between the 2 countries, has created serious problems for Canada, including a high level of dependency on and vulnerability to US policies. Recently, US corporate interests have successfully enlisted the support of the US government in widening the Canadian market for US goods and services (eg, banking, data services), in opposing Canadian policies to strengthen Canadian industry (eg, government incentives and grants for Canadian industry, measures to gain Canadian industrial spinoffs for Canadian resource development) and in weakening Canadian measures to control foreign investment (eg, screening of foreign investment, the role of crown corporations, changes to the tax and land regulations to favour Canadian oil and gas companies, and curbs on the role of foreign banks). The key theme that ran through the first 50 years of Canadian-American economic relations was the issue of FREE TRADE. Historically, Canadians opposed to complete free trade have argued that it would entail the eventual loss of political SOVEREIGNTY, lead to greater integration in economic and industrial policy, and further constrain Canada's ability to adopt independent economic policies. Opponents of free trade have contended that even if the US agreed to free trade, the US Congress would use nontariff barriers to hinder any gains that may accrue to Canadians from such arrangements. Supporters argued that only through free trade, and the consequent unimpeded access to US markets, would Canadian manufacturers be able to become efficient producers with large enough sales volumes to support research and development . The debate was renewed as free-trade negotiations were assiduously undertaken by the Mulroney government in 1986-87.
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