by Thomas Walkom
How can Canada break its dependence on the United States? This question has bedeviled both the left and the right since 1945.
Conservative Prime Minister John Diefenbaker tried to answer it and failed. So did Liberal Prime Minister Pierre Trudeau.
In the 1970s, during one of Canada’s periodic bouts of economic nationalism, the dependency question was front and centre. But by the 1990s, free trade appeared to have made it moot.
Now, spurred by the excesses of U.S. President Donald Trump, it is back on the agenda.
The latest organization to address Canada’s dependency is the Public Policy Forum, a non-partisan think tank funded by governments, business and some unions.
In a report released Thursday entitled “Diversification not Dependence,” it makes a compelling case for Canada to escape the “honey trap” of its reliance on the U.S. by moving quickly to boost both economic and political relations with China.
Written by former journalist Edward Greenspon and former Ottawa mandarin Kevin Lynch, it says the best way to do this is not through an all-encompassing free trade treaty, as Prime Minister Justin Trudeau has suggested. Such treaties can take years to negotiate.
As well, in the just-completed U.S. Mexico Canada Agreement, Ottawa effectively gave Washington the right to veto any future full-blown free trade pact Canada might try to strike with China.
Rather, the authors say, Canada should start small by negotiating sectoral deals with China that are not subject to the U.S. veto – in specific areas such as agriculture, energy, tourism and insurance.
And in areas of mutual benefit, such as fighting climate change, Ottawa should pursue bilateral political agreements with Beijing. China’s aggressive stance on climate change, the authors say, makes it “a natural partner for Canada.”
Neither Greenspon, a former editor-in-chief of the Globe and Mail, nor Lynch, who served as Ottawa’s top civil servant under Stephen Harper, can be accused of being anti-establishment. Yet in this report, they use an analysis usually associated with the nationalist left to describe Canada’s predicament.
In the past, they write, Canada’s dependence on the U.S. was ameliorated by the fact that this country enjoyed “special status” in the American sphere of influence. But even before Trump became president, that special status was eroding.
Under Barack Obama, for instance, the U.S. refused to share the costs of creating a new border crossing at Windsor that Canada deemed essential to its economy.
Meanwhile, even as Canada loses this special status, the authors write, its business class remains too comfortable. Smaller and medium-sized businesses focus on the domestic market. Big business tends to be foreign-controlled and oriented to the U.S.
Overall, Canadian business is allowing itself to be left behind as the U.S. declines and China rises. Little more than 10 per cent of small and medium-sized Canadian businesses export at all and only 1 per cent export to fast-growing economies like China.
As the authors put it: “While Canada is a trading nation, it is not a nation of traders.”
The Public Policy Forum is certainly not the first to call for more trade with China. It is commonplace to say that Asia is the market of the future.
Yet there is a sense of urgency to this report that is unusual.
America, the authors write, will always be important to Canada. Geography makes this so.
Conversely, they have no illusions about China and its variant of authoritarian capitalism.
But the U.S., they say, is no longer the single driver of the world economy. Nor is it reliable. It is turning its back on the idea of a rules-based international system – a system that benefits smaller countries like Canada – while China is progressing tentatively in the opposite direction.
The order is rapidly fading. Canada, they write, has to change too. Quickly.
Torstar Syndication Services