The story of Canada's commerce stretches back to a time long before European explorers arrived, rooted in the complex trade networks that Indigenous nations had set up across North America. This study explores the key commercial interactions that have defined Canada as a nation.

With the European arrival in Canada, driven by their quest for riches, a new era of major economic activities began. They exploited the rich fisheries of the Grand Banks, engaged in the fur trade with Indigenous peoples, and searched for quicker routes to Asia through the north, all in an effort to more efficiently exploit the continent's extensive resources.

These initial efforts were backed by wealthy sponsors ready to invest in these ventures with high risks and potential high rewards. The Canadian narrative is woven not just from the tales of explorers and settlers but also from those of business people, backers, and industrial magnates.

This inquiry into Canada's commercial growth tackles essential questions: Who founded Canada's earliest bank or stock exchange? How did it influence international trade norms? And why did wheat become a critical part of the Canadian economy at one point?

A closer look at Canada's business history unveils the dynamic and significant shifts that define today. It puts Canada's evolving global stance into perspective and underscores the need to appreciate the country's economic past to fully grasp contemporary global economic dynamics.

1965: The Auto Pact

n 1965, the landscape of trade between Canada and the United States was transformed with the signing of the Auto Pact by Prime Minister Lester Pearson and President Lyndon Johnson. This pivotal moment came after the early 20th-century introduction of automobiles had initially complicated trade relations, with cars being subject to the same tariffs as horse-drawn vehicles, inadvertently hampering Canada's burgeoning auto industry.

By 1960, Canada found itself at a significant trade disadvantage with the United States, primarily due to imbalances in the automobile sector. This led to the formation of a Royal Commission, which recommended that Canada focus on specializing its production lines and boosting exports to remedy this issue.

The Canada-U.S. Automotive Products Trade Agreement, as the Auto Pact was officially known, marked a critical shift, allowing for the duty-free exchange of automobiles and heralding a new era in trade that was unprecedented in the previous thirty years. This agreement not only facilitated a trade surplus for Canada by 1970, erasing a $618-million deficit from 1964, but it also reduced auto prices and expanded the industry thanks to improved efficiencies. By the late 1990s, Canada's vehicle production was almost double its sales, with the majority being exported to the U.S.

The Auto Pact also reoriented Canadian automobile and parts production towards North American and international markets by removing tariffs while still imposing production quotas. This change fostered substantial growth in assembly operations within Canada and enabled Canadian auto parts companies like Magna, Linamar, and Wescast to thrive globally.

Ultimately, the Auto Pact was a crucial precursor to free trade with the United States, setting Canada on a path towards a globalized and border less economic future.

1967: The Emergence of the Athabasca Oil Sands

In the 18th century, fur trader Peter Pond encountered what he described as "springs of bitumen" in the northeastern part of Alberta, not realizing the significant role they would play in Canada's future.

Today, the Athabasca oil sands are recognized as one of the world's largest oil reserves, positioning Canada as a key figure in the global energy landscape. With an estimated 170 billion barrels of recoverable oil, these sands have the potential to fulfill the United States' oil demands for two decades and enable Canada to export oil not only to the U.S. but also to China.

Initially referred to as tar sands—a misnomer since they contain no actual tar—the oil sands began to attract attention in the early 20th century. In 1913, Sidney Ellis, a federal government engineer, started to experiment with a method involving hot water flotation to extract oil from the sands. This method set the groundwork for future extraction techniques, though early attempts at commercial development were not profitable.

The landscape began to shift in 1962 with the Alberta government's declaration of a strategy for the oil sands' methodical development. This led to the establishment of the first commercial oil sands operation by Great Canadian Oil Sands (now known as Suncor) in 1967, situated on the Athabasca River's banks north of Fort McMurray. The 1970s saw the initiation of Syncrude, a consortium that included Imperial Oil and Petro-Canada, which started its operations near the Suncor plant and shipped its first barrel of oil in 1978.

Since those initial days, the investment in the oil sands has reached into the billions, with spending surging from more than $4 billion a year in 2000 to $13.5 billion by 2010. A significant portion of this investment has been directed towards cutting-edge technologies aimed at reducing the environmental impact of mining and processing operations.

The development of the oil sands has significantly altered Canada's economic and international standing. The nation's economic focus has shifted westward, driven by a migration of thousands from Eastern Canada seeking employment in the oil industry. Furthermore, increasing demand from China, highlighted by Chinese investments in the oil sands, indicates a future where China may become one of Canada's primary oil export markets, alongside the United States.

1989: The Advent of the Free Trade Agreement

Since its foundation, Canada has established itself as a nation deeply engaged in commerce, primarily with the United States. The trade relationship between these two nations has experienced its share of fluctuations over the years.

The journey toward easing trade barriers began with the Reciprocity Treaty of 1854, which faced termination by the U.S. in 1866 due to opposition from its protectionist factions. The collapse of negotiations for a new pact led Canada to implement a protective tariff in 1879.

The quest for less restricted trade persisted, culminating in Prime Minister Wilfrid Laurier's 1911 deal with Washington that proposed reduced or abolished duties on numerous goods. However, the agreement was never ratified and became a contentious election topic, resulting in a setback for free trade that lasted nearly eighty years.

The Great Depression plunged Canada into its darkest economic era, exacerbated by protective tariffs from both nations that hampered economic expansion.

From the mid-1930s through 1980, efforts were made to liberalize trade on both bilateral and multilateral fronts.

By 1985, the Royal Commission on the Economic Union and Development Prospects for Canada recommended a bold move into a free trade agreement.

After extensive negotiations, Prime Minister Brian Mulroney and U.S. President Ronald Reagan officially signed the Free Trade Agreement (FTA) in October 1987. The 1988 election saw the FTA as a central issue, with detractors warning of potential losses in Canada's sovereignty. Nevertheless, the concept of free trade ultimately prevailed.

The FTA was implemented on January 1, 1989, and was later embraced and expanded to include Mexico by a new Liberal government in 1993, forming the North American Free Trade Agreement (NAFTA).

This agreement significantly boosted trade between Canada and the United States, making them each other's primary trading partner by the early twenty-first century.

The manufacturing sector in Canada underwent considerable changes due to the FTA, notably the quick phasing out of subsidiary operations.

However, the bilateral trade dynamic faced challenges, such as the aftermath of the September 11, 2001 terrorist attacks and recent U.S. policies like Buy American and the hesitation over the Keystone XL Pipeline, causing concern for Canada.