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’.
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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.