A Principal Reason for Canada-US FTA in 1989

It has long been thought that increasing returns to scale might be an important reason to have trade between countries: if a firm with increasing returns is able to sell in a foreign market, this expansion of output will bring a reduction in its average costs of production, which is an indication of greater efficiency. Indeed, this was a principal reason that Canada entered into a free-trade agreement with the United States in 1989: to give its firms free access to the large American market.

R. Feenstra, 2004, "Advanced International Trade," p.5