On July 2, 1992, the federal government closed the northern cod fishery off Newfoundland and Labrador. Cod stocks that had fed European fleets and outport communities for nearly 500 years had collapsed from overfishing, and the moratorium put roughly 30,000 people in the province out of work almost overnight. Whole communities lost the reason they existed, and many young people moved west to work in Alberta's oil sands. The cod collapse captures the two big themes of this lesson: Canada's economy changed dramatically after 1982, and those changes hit different regions in very different ways.
Free trade: FTA, NAFTA and CUSMA
Since the National Policy of 1879, Canadian governments had used tariffs to protect Canadian factories. Brian Mulroney's Progressive Conservatives reversed course and negotiated the Canada–US Free Trade Agreement (FTA). The 1988 federal election became a referendum on free trade: the Liberals under John Turner and the NDP under Ed Broadbent warned it would cost jobs and Canadian independence. Mulroney won a majority of seats, although the two parties opposed to the deal together won more of the popular vote. The FTA took effect on January 1, 1989. It was expanded to include Mexico as the North American Free Trade Agreement (NAFTA) on January 1, 1994, and after US President Donald Trump demanded a renegotiation, it was replaced by the Canada–United States–Mexico Agreement (CUSMA) on July 1, 2020.
- Guaranteed access to the huge US market, which buys most Canadian exports
- Canadian consumers get cheaper goods
- Competition pushes Canadian firms to become more efficient
- Trade between Canada and the US grew enormously after 1989
- Branch plants could close and move to the US or, after 1994, to lower-wage Mexico
- Pressure to cut social programs and environmental rules to stay competitive
- Deeper dependence on one customer, the United States
- Fears for Canadian culture and control over energy and water
Globalization, technology and recessions
| Trend or event | What happened | Who was affected |
|---|---|---|
| Decline of manufacturing | Factories closed or moved as trade opened and production shifted to Asia and Mexico; manufacturing fell from roughly one job in five in the late 1970s to about one in ten by the 2010s | Industrial towns in Ontario and Quebec; unionized workers; growth in service jobs, often lower paid |
| Goods and Services Tax (1991) | A 7 per cent federal sales tax replaced a hidden tax on manufactured goods; it was later cut to 5 per cent, and several provinces merged their sales taxes with it into the Harmonized Sales Tax (13 per cent in Ontario since 2010) | Consumers saw the tax on almost everything they bought, which made it deeply unpopular at first |
| Tech boom and bust | Nortel and BlackBerry maker Research In Motion became world leaders; the tech bubble burst in 2000–2001 and Nortel went bankrupt in 2009 | Ottawa and Waterloo; investors and pension funds |
| 2008–2009 global financial crisis | A worldwide recession began with US housing and banking failures; Canada's banks avoided collapse, but Ottawa and Ontario helped rescue GM and Chrysler in 2009 | Auto workers and manufacturing communities |
| Digital economy | The internet, smartphones, online shopping and companies such as Shopify (founded in Ottawa in 2004) changed work and retail; Canadian researchers such as Geoffrey Hinton, who shared the 2024 Nobel Prize in Physics, helped build modern artificial intelligence | New jobs in tech hubs; pressure on local stores; uneven internet access in rural, northern and First Nations communities |
| COVID-19 pandemic (2020) | Lockdowns closed businesses; the federal government paid emergency benefits to millions of workers | Service and tourism workers, small businesses; rising government debt |
Regionalism: Ottawa and the regions
Regionalism means people identifying strongly with their region and feeling that the federal government ignores or works against its interests. In the West, many people remembered the Liberal government's National Energy Program (1980), which kept oil prices below world levels and increased Ottawa's share of oil revenue, as a federal raid on Alberta's wealth; Mulroney's government dismantled it in 1985. Western anger fed the rise of the Reform Party (see the national unity lesson). The oil sands boomed in the 2000s, then oil prices crashed in 2014–2015, and fights over pipelines such as Northern Gateway, Keystone XL and Trans Mountain (bought by the federal government in 2018 and expanded in 2024) pitted the oil industry and Alberta against environmental groups, some First Nations and other provinces, while other First Nations sought ownership stakes in pipelines.
| Region | A key issue since 1982 |
|---|---|
| Atlantic Canada | The 1992 cod moratorium and out-migration to the West; offshore oil (Hibernia began producing in 1997) brought new revenue to Newfoundland and Labrador |
| Quebec | Language, identity and constitutional status (see the national unity lesson); hydroelectric development and agreements with the Cree and Inuit |
| Ontario | Loss of manufacturing jobs, especially in the auto sector after 2008; growth of finance and tech in Toronto and Ottawa |
| The Prairies and Alberta | Oil and gas revenue, pipelines, federal climate policy and equalization; Albertans voted about 62 per cent in favour of removing equalization from the constitution in a 2021 provincial referendum, which had no legal effect on its own |
| British Columbia | Forestry and softwood lumber disputes with the US, Aboriginal title, pipelines and trade with Asia |
| The North | Diamond and other mining, Arctic sovereignty, climate change and self-government in Nunavut, Nunatsiavut and Nunavik |