History of Beer

Fermentation over Free Trade

by Matthew Bellamy

On 3 June 1987, Peter Widdrington, at the Labatt Brewery in London Ontario, wrote to Prime Minister Brian Mulroney requesting a meeting to discuss the issue of free trade between Canada and the United States. Mulroney was eager to see free trade become a reality after more than a century of trade protectionism in Canada. Widdrington was not.

…there was no way Canadian brewers could compete with American brewers in a laissez-faire environment

What concerned Widdrington was the fact that a number of studies had shown that there was no way Canadian brewers could compete with American brewers in a laissez-faire environment. Canadian breweries were operating at a disadvantage.

The Brewers’ Association of Canada concluded that free trade would be the death knell of domestic brewing. As a result, it threatened that if the protective practices were not grandfathered under the new accord, then the brewers of the nation would come out publicly against the entire Free Trade Agreement.

For a while it looked like the brewers had little to worry about.

For two years the free trade negotiations were bogged down and the Americans were often disorganized and unfocused during the negotiations. When Labatt’s lobbyists flew to Washington with Canada’s chief trade negotiator, Simon Reisman the mood on the plane was tense. On the night of April 7, they had dinner with the trade negotiators and came away with the impression that it would be difficult to get a deal given that the two sides were so far apart on the major issues. For now, the brewers were safe.

But just two days before the deadline to get a deal done, a Florida congressman had come up with a solution to the contentious subsidiaries-trade remedies and after a weekend of tough negotiations, a deal was finally reached just a few minutes before midnight on October 3rd.

For the brewers of the nation the deal was spectacular for what it did not do.

Under the terms of the new accord, brewing was one of only three industries to be exempt from the Free Trade Agreement. The brewers’ threat had worked. The trade barriers that protected Canadian brewers were grandfathered into the new accord.