The Canada-US border—one of the world’s most un-economic political inventions—has been effectively untouched by the extensive efforts of conservatives to restore the vitality and influence of markets in North America. They are governing in Ottawa today and have dominated US economic policy since Jimmy Carter. In both capitals, however, vainglorious nationalists keep the border safe.
Right wingers in both countries stand for secure borders and emotional nationalism. In the US, they beat their chests for American exceptionalism. Canadian conservatives keep their distance from American conservatives by talking about making Canada a superpower as well.
The border status quo persists; a minor deal between Harper and Obama is accepted as “good progress” by business and conservative voices in both countries. The old patriot game carries on: US politicians look out for Mexican “illegals” and Canadian politicians, including Harper, threatening to exercise their options in Asia.
One well-read Canadian conservative, finally, is sounding restive. Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, an Ottawa-based think-tank, pointed out recently that the Canada-US relationship isn’t just about trade but also about running a “single integrated economy.”
“. . . NAFTA is not (despite its name) chiefly about trading finished goods between separate national economies. It is about managing a highly integrated continental economy in which Canadians and Americans work together to make things. NAFTA should really be called the North American Integrated Production Agreement (NAIPA).
“Canadians and Americans do not trade with each other as the French and the Japanese do. We make things together and then sell them to each other and the rest of the world. That is why, for example, about two-fifths of the vast “trade” between our two countries takes place within individual companies. They move goods from one plant to another at different stages of production, and those plants are spread about in both Canada and the United States.”
Then, he goes on to identify the fundamental tension between us:
“Politicians respond only to national voters, and so live in a closed political system. Alas, that closed polity is superimposed on an open economy. Government policies that result cannot truly encompass the interests of North Americans, but only of Americans and Canadians separately. Hence we get border thickening in the post-9/11 world and post-recession protectionism in the United States. Canadians’ vulnerability is that we live in another country, but not another economy.
“National policy mismatches inevitably show up at the border. An inefficient border is an annoyance in a trading bloc. But in a production bloc, it is disastrous.”
While the Beyond the Border agreement between Obama and Harper points in the right direction, Crawley concludes that we can do better:
“In thinking about what comes “after NAFTA” we must be capable of the effort of imagination to create institutions that can overcome the political divisions that scar our economic efforts while preserving our national sovereignty.”
Crawley could have gone much further. We should be better integrating business and professional services, human resources, and investment capital, as well as the production of goods. Further, there are several big time-tested institutions already available to better integrate our economies: a common currency, a common labor market, a common security pact that would eliminate the border all together, for instance. Courage, not imagination, is our problem.
However, Crawley has ended this year—for this blogger—on a promising note.
He has re-introduced the explosive word “integration” to Canadians and has acknowledged that the politics of two national democracies—not just two bureaucracies—divide us. This is an important, potentially disruptive step for the manager of a Canadian think-tank.