ABSTRACT
In 1972, the “third option” was born, a policy-driven attempt by a Liberal administration, to diversify away from Canada's historically deep links – some would say dependence – on the US economy. Canada's trade and investment flows were heavily oriented towards the United States, and that orientation showed every sign of increasing and deepening. In 1972, Mitchell Sharp – then Secretary of State for External Affairs in Pierre Trudeau's first majority government – articulated the need for a policy change to counter this gravitational pull from south of the forty-ninth parallel – a “third option”. The first two options – the status quo and increased dependency on the US – were rejected as inadequate. The federal government needed to “pursue a comprehensive long-term strategy to develop and strengthen the Canadian economy and other aspects of its national life and in the process to reduce the present Canadian vulnerability” (Sharp 1972 cited in Kinsman 2002/3: 110). This third option helped shape the policy dialogue into the 1980s. In 1981, “the under-secretary of state for External Affairs, Allan Gottlieb, published an article announcing the rebirth of ‘the Third Option,’ which stressed the diversification of trade and a break of dependency on the United States” (Gottlieb and Kinsman 1981; cited in McBride 2001: 63). This was part of a decade-long moment of officially sanctioned economic nationalism, marked by the creation of the Foreign Investment Review Agency (FIRA), Petro-Canada, and the National Energy Program (NEP). There were many who – along with Gottlieb – interpreted the third option as being in part an attempt to find a “way to diversify trade away from the United States and toward the European Community” ( Kinsman 2002/03: 110).
