The Free Trade Agreement (FTA) was a trade agreement signed by Canada and the United States on January 2, 1988. The agreement, finalized by October 1987, removed several trade restrictions in stages over a ten year period, and resulted in a great increase in cross-border trade. A few years later, it was superseded by the North American Free Trade Agreement, which included Mexico as well.
As dictated by the agreement, the main purposes of the Canadian-United States Free Trade Agreement are as follows:

eliminate barriers to trade in goods and services between Canada and the United States;
facilitate conditions of fair competition within the free-trade area established by the Agreement;
liberalize significantly conditions for investment within that free-trade area;
establish effective procedures for the joint administration of the Agreement and the resolution of disputes;
lay the foundation for further bilateral and multilateral cooperation to expand and enhance the benefits of the Agreement. History
By the 1980s, Canada and the United States were each other's largest trading partners and the Canada-U.S. bilateral trading relationship was the largest in the world.
Brian Mulroney's Progressive Conservative Party was elected to office in the 1984 election. Free trade was not an important issue, but Mulroney and the party both announced their opposition to such a move. In 1985, a Royal Commission on the economy issued a report to the Government of Canada recommending free trade with the United States. This commission was chaired by former Liberal Minister of Finance Donald S. Macdonald, and had been commissioned by the Liberal government of Pierre Trudeau. Mulroney nonetheless embraced the report's findings. U.S. President Ronald Reagan welcomed the Canadian initiative and the United States Congress gave the President the authority to sign a free trade agreement with Canada, subject to it being presented for Congressional review by October 5, 1987. In May 1986, Canadian and American negotiators began to work out a trade deal. The Canadian team was led by former deputy Minister of Finance Simon Reisman and the American side by Peter O. Murphy, the former deputy United States trade representative in Geneva.
The agreement the two countries ultimately reached greatly liberalized trade between them, removing most remaining tariffs. The FTA was not fundamentally about tariffs, however. Average tariffs on goods crossing the border were well below 1% by the 1980s. Instead, Canada desired unhindered access to the American economy. Americans, in turn, wished to have access to Canada's energy and cultural industries.
In the negotiations, Canada retained the right to protect its cultural industries and such sectors as education and health care. As well, some resources such as water were left out of the agreement. The Canadians did not succeed in winning free competition for American government procurement contracts.

Negotiation

Controversy
Once the treaty was announced, it became a source of great controversy in Canada. A wide-ranging group of Canadians came out in opposition to the deal. Led by the Council of Canadians, they argued that the deal would undermine Canada's sovereignty and begin a slippery slope towards Canada losing its political independence.
The 1988 Canadian election was almost wholly dominated by the issue of free trade. The Liberal Party, led by former Prime Minister John Turner, the New Democratic Party, and groups from nationalist organizations such as the Council of Canadians, cultural organizations, community groups, and labour unions strongly opposed the deal. Mulroney's Progressive Conservatives and most business groups supported it, including the Business Council on National Issues. The BCNI sponosored considerable pro-free trade advertising, far more than had ever been spent on a single issue in a Canadian election.
Mulroney's Progressive Conservatives were re-elected with a comfortable but reduced majority. Critics argued that the two parties opposed to free trade actually won a majority of the vote, but because of the first past the post electoral system in Canada, the Progressive Conservatives managed to win a majority of seats in the Canadian House of Commons with 43% of the vote. On January 1, 1989, the agreement came into effect.