The 7th Republican President elected since a Democrat President dropped two atomic bombs on Japan has not yet blown up our civilization--nor as a petulant half-measure asked Congress to annex Canada the one country no American pundit dislikes or worries about.
Yes, the world is in trouble and yes; we are all over the map about how to fix it. Having merely survived six months without Barack Obama we might stop being so pleased with ourselves; and our leaders endless dithering over whether to be more influential on this measly continent or concentrate on impressing other civilizations making history.
For starters, we ought to be more negative about our choices. What Leonard Cohen said about poetry, is equally true about public policy: it’s not our supply of sentiments; it’s the limits that are imposed on us that force us to be creative.
And as a Canadian/California poet who crossed our borders figuratively and literally his entire career, he likely wouldn’t have objected to applying his way working to Canada, as a trading economy. Commerce made his first home Montreal a beautiful, pre-eminent power, not its natural endowments. And as soon as Canada was free to make its own decisions, Canadians have been arguing about trade policy. It’s our turn. Let’s get on with it.
Part 1: Opioids past their due-date
This essay may seem rather mean at first. It ends up, however, on a positive note: suggesting that eliminating tariff and non-tariff barriers within the giant regional economies of the world could be today’s most productive task for free traders and moderate nationalists.
However, before dusting off a vision that’s presently in the attic, let’s look again at four familiar tactical notions.
1. Whether the current President of the United States is an unpredictable philistine is beside the point.
His tweets won’t change anything tangible, let alone Canada’s troubled relationship with the United States. The US is too old an economy and too litigious a democracy for that.
Putting America’s interests first is what all American Presidents are elected to do, and they are free to advance with Canada, amiably or arbitrarily, pretty well whatever that means in Washington.
Furthermore, the closer the embattled President and Congress get to next year’s mid-term elections the more US trade negotiators will be pressed to demonstrate concretely, together, that they are putting America First, crudely if necessary. ‘Going around’ the White House buttonholing better listeners in Washington becomes a fool’s errand.
2. The chemistry (mutually insincere) between our PM and the President has little to do with business confidence and the investment climate (inferior) in Canada.
Getting the photographic and rhetorical distance right may help re-elect Justin Trudeau. However, that won’t change the fact that Canadian provinces are relatively less safe places to invest in than, say, Ohio or California or even Utah, because provinces have relatively less power to assert and protect themselves in Washington, the one capital with the power to disruptive export and domestic industries in both countries.
The additional risks are high for the new capital intensive, high-skill industries that we hope will diversify our economy. They do not have significant cross-border supply chains like the auto assemblers, with entrenched union and corporate lobbies and Congressional representatives to protect them.
At considerable expense to us, Canadian governments mitigate somewhat their lack of continental power with corporate welfare. Nevertheless, subsidies and diplomacy together can’t erase today’s border taxes: a buyer’s-market dollar, without a big government big enough to bluff the biggest government on earth.
3. Integrated continental business interests far better protect us from protectionists in the US than threats of a ‘trade war’ or Ottawa talking points that ‘stand up’ to the craziness in Washington. That business integration, however, also puts paid to ideas that Canada has viable strategic alternatives to the US economy or credible freedom to bite back.
Ever since Canada won the right from Great Britain to write its own foreign policy, its Canada-First PM’s have resolved to make Canada freer by ‘diversifying’ its export markets. Nevertheless, generation after generation, approximately 75% of our export sector jobs and our country’s business cycle still revolve around the prosperity and continued openness of the United States. (Germany and China also have impressive neighbors with dreams just like the ones we have in Ottawa.)
The Canadian Embassy in Washington is distributing a humble little pamphlet that shows Americans how much the iconic American hamburger presently includes ingredients from Alberta, Saskatchewan, and Ontario, as well as from California and Arizona. This pamphlet should also be sneaked into Canada-China conferences, where the password ‘strategic’ now has the punch of a wicked three-martini, expense account lunch.
4. ‘Trade interdependence’ isn’t the same as peace through mutual deterrence: Canadian government retaliatory measures can bother US big business, while US protectionism can throw tens of thousands of Canadians out of high-value jobs.
Like the Paris Accord on Climate Change, the NAFTA was tricky and time-consuming to conclude but can only be dissed by the US. The Trudeau government graciously agreed to “modernize” a relatively young trade treaty, mostly because it had no choice.
Brian Mulroney may exhort that Canada is big enough and popular enough to play a leadership role in worldwide alliances--and, if pressed, say “no” to extremely unpopular American presidents. Really? California and France are as cocky and as anti-Trump as we are. Yet, they aren’t dreaming about shopping around for a new best friend and securing enough customers on enough continents to be free those over-ripe, fly-over American shoppers.
Part 2: Liberalizing world’s great regions, including ours
We can admit to ourselves that we are too integrated to bluff our giant neighbor. Can we consider aloud that considerably more integration would make us safer?
Little changes to NAFTA won’t make Canada secure commercially, nor will resource sales to China. Alternatively, protectionism would severely divide the country and as surely, reduce the pace of Canadian private-sector innovation.
However, there’s another strategic option: outflank 19th century nationalists and 20th century globalizers by getting on with what the FTA didn’t create--not merely less taxes on trade with the US, but a full-fledged Canada-US common market.
Such an agreement could make sense to Canadian and American workers who enjoy little power in the global economy, but who’ve collaborated and competed beneficially across the border for generations. Overwhelmingly, those workers and businesses know when trade is ‘fair’ as well as ‘free’. Re-constructing the common market that was taking shape before 1776 would provide a mighty platform for enforceable, rule-based, free trade expansion.
While the status quo burns the midnight oil tweaking NAFTA, I’d nominate for negotiation a European Union-style union: including the free movement of workers and goods and services, external trade relations, the dollar, and a common security parameter. We could then enjoy free travel across the 49th parallel and equivalent treatment for Canadian and American workers, students, visitors, and investors. Canadians would be on the same team in confronting unfair trade practices, upholding today’s GATT rules and, for instance, in designing effective measures to discipline GHG polluters who trade within and with our new common market.
Looking out over a new century, it wouldn’t be a bad start--certainly better than the opening decades of the last--to let the continents of the globe digests the gale of change we unleashed globally after the last world war.
The latest global alternative for Canada: a free trade deal with China, a super-power without an independent labour movement or workers’ party, would mostly translate into greater power for that state’s business allies. Money doesn’t lead necessarily to power-sharing. ‘Inclusive economics’ take hold in inclusive democracies, not the other way around.
Like the Spaniards and the Dutch in a European Union dominated by a democratic Germany, Canadians have qualified their sovereignty in North America before. However, they’re hardly likely to agree to do so with the new China or, indeed, with the same old Russia or even the UN of today.
Of course, few complex social arrangements are permanent and how one changes is largely unpredictable. An economic union with the US, however, needn’t lead to Fortress America, a greater federation, or fragmentation. Future generations strengthen existing arrangements or, in disrepair, eventually decide to do something dramatically different.
Such an economic union would be imperfect. It would soon lead to calls to alter the NAFTA with Mexico and wouldn’t quell debate about global trade relations, over-heated and rusty sub-regional economies, and how the spoils of economic growth should be shared. Nevertheless, it would have a sophisticated domestic market large enough to keep driving innovation, and it would be sufficiently transparent to adapt with the consent of the people.
I liked the idea of re-uniting our nascent pre-revolutionary federation, without the Crown and slaves. You thought otherwise, even when Barack Obama was President. Fine. But, please don’t look at a common market as a slippery slope; a trap that would soon extinguishment Canada’s identity and emerging reputation as the nicest place on earth. The dots often don’t connect: the Charter of Rights without Quebec’s signature hasn’t lead to Quebec’s separation or a Canadian republic, and NAFTA hasn’t diminished the capacity of the federal government to represent us and ‘nation-build’.
Is thinking regionally a retreat? Would Canada be choosing to be less influential? Would Canada be inviting the United States to stop being a champion of ‘globalization’?
Adam Smith and David Ricardo theorized about an entire world economy much smaller than either Western Europe or the United States, today. Furthermore, the dimensions of the market they imagined allowed for the possibility of democratic politics--for liberals, social democrats, conservatives and reactionaries to fight it out in free elections, for control of effective parliaments.
In this century, we don’t think of free trade merely between the Christian monarchies of Europe and their 18th century colonies. The question for our time is at what pace must ‘globalization’ proceed? And how many participants does our ‘free market’ have to include to be dynamic and still, collectively, responsible for our material destiny?
Western mixed economies can’t place the economic drivers and the body politic too far apart, certainly not in different bowls, especially now, when all the players have the vote.
Having a few public levers as far from our sprawling private economy as Washington and Ottawa has been far enough away to build extraordinarily prosperous, relatively open communities for some 360 million people--literally, a beacon for innovators and an affront to a less free world, whether we’d like to hide or not.
However, in the name of ‘globalization’, moving any of the federal, democratically accountable levers (say: currency, tariff, corporate taxes, immigration, and homeland security policies) literally off-shore wouldn’t be the same as letting a few that are already shared substantively with Washington leave Ottawa formally in a new Canada-US arrangement.
Sesquicentennial Canada has the competence and liberal temperament to negotiate with a successful neighbor that also has never been anything other than a democracy the common market and currency union that a dozen prickly western European powers have in place--and are willing to risk significant political capital to preserve.
Probably, today’s EU grew too big too fast, including holus-bolus east European countries in far different social and economic circumstances than its founding western European members. Bearing that in mind, this proposal doesn’t propose building on NAFTA to create at the same time a full-fledge economic union with Mexico.
Nevertheless, the EU today--the world’s largest economy--was only possible because some half a dozen western European democracies of wildly uneven political clout were willing to breakdown barriers they once thought were essential in protecting their individual national identities. And, throughout the union’s history they have preferred to have Germany inside, rather than outside their common market.
Of course, of course, such an arrangement would leave federal negotiators and the capital’s monetary and macro-economists with that much less to do; leaving Ottawa less beguiling as a mecca for idealistic young Canadians looking for traditional federal government ways to express their Canadian identity.
The post-adolescent mission of making Ottawa stronger because it was weaker than London and now is weaker than Washington has enriched Ottawa conversation and dignified its endlessly trendy intrusions into the affairs of Canada’s strong, creative local governments--and has left Canada’s consumers and economic actors poorer in return.
Mulroney’s free trade agreement didn’t and never could have taken future trade disputes and bilateral trade policy out of the reach of national legislatures and opportunistic politicians. The FTA, however, eliminated tariffs on over 90% of the goods that flow between our two countries. And, for over 25 years, interfering lobbies have left the lion’s share of its multi-billion dollar daily trade flows alone. The more we trade, the more value traders secure in each other’s markets, the safer we’ll be from demagogues that pop up in both our democracies.
The best trade negotiators look forward keenly to the day the negotiation is over, when the actual market takes over. They don’t confuse careerist dithering with actual decisions.
A “modernized” FTA will not make Canada the equal of its super-power neighbor and what I’m suggesting won’t either. Indeed, a manageable common market should give the United States as well as Canadians, a more credible voice in the world. It would be a union of political un-equals to create a common market--a place where hard-pressed consumers and talented Canadian workers needn’t be unequal.