A Royal Commission for Post-Pandemic Canada
Presented to the New England Political Science Association 2022 Conference in Bretton Woods, New Hampshire
In a Washington speech during 1969, Prime Minister Pierre Trudeau famously compared the Canada-United States relationship to a mouse in bed with an elephant: “No matter how friendly and even-tempered the beast is, if I can call it that, one is affected by every twitch and grunt.” By calling the United States a beast, Trudeau was admitting that he found dealing with the southern neighbor a chore, an arena in which more things went wrong than went well. However, since the end of the Second World War, Canada has generally enjoyed a close and productive relationship with the United States, one that helped it remain one of the most prosperous countries in the world. This relationship has had two major dimensions to date: military cooperation in the context of the Cold War, the North Atlantic Treaty Organization, and the North American Aerospace Defense Command, and the commercial relationship, buttressed by three separate free trade agreements since 1989. However, as the SARS-Cov-2 pandemic comes--one hopes--to a close over the next years, it has become clear that neither of these paradigms for approaching the United States continues to work in the same way for Canada. It is time for Canada to rethink both its relationship with the United States as well as the strength of its institutions, not just for the immediate post-pandemic period, but for the middle part of the 21st century. A way to do this is through an intensive royal commission on Canada in the 21st century, similar in scope to the Royal Commission on the Economic Union and Development Prospects for Canada of the 1980s (Canada 1985).
There has recently been a series of articles in Toronto’s Globe and Mail, Canada’s newspaper of record, arguing that Canada needs a strategy for navigating the next few years in American politics, citing the possibility of instability if not a civil war (Adams, Coyne, Homer-Dixon, Ibbitson, Marche). The warning of a repeat of 1861-1865 is overheated rhetoric, but as is the case with cliches, such rhetoric begins with something legitimate. The core issue is that Canada currently has no idea of how to deal with the United States, specifically the growing cultural divergence between the two countries, but this question is older than Trump. It goes back at least to the collapse of Bretton Woods and the Nixon shocks of 1971. Part of Canada’s problem is it does not know how to deal with a Republican Party that has consistently moved to the right since nominating Barry Goldwater for president in 1964, but this involves more than the Republicans or what Steven Clarkson (1985) called “the Reagan challenge.”
Managing the Relationship by Managing the Cold War
During the Cold War, Canada had a strategy for managing its relationship with the United States: be a reliable ally during the Cold War. It was not perfect–Canada did not spend enough on defense and let itself be a free rider on American military spending. It was nonetheless a founding member of NATO and a participant in NORAD (Jockel 1987). Canada sat directly between the USA and USSR, and that made its full cooperation with the United States worth something to Washington. It gave Canada some leverage in the relationship. That in turn let Canada focus on several domestic nation-building projects (bilingualism, multiculturalism, constitutional reform, and some others closer to self-indulgent navel gazing), and also let it dabble in economic nationalism, as well as international peacekeeping and maintaining the image as a “helpful fixer” (DeWitt and Kirton 1983). At the same time, Canada could integrate economically with the United States, for example via the Auto Pact in 1964. Canada did not always enjoy living up to its alliance commitments. By 1972 Canada’s involvement in NATO had become what Jockel and Sokolsky call a “bare presence” and the question of Canada’s material commitment to the alliance became an enduring question, through to the present day as Canada still does not spend the alliance benchmark of 2% of its GDP on defense. This matched an increasing skepticism about NATO after the Trudeau government assumed office in 1968. During the final two decades of the Cold War, Canadian governments seemed to find their NATO role a chore (Jockel and Sokolsky 2021: 113), buttressed by public opinion that pushed governments toward liberal internationalism and its trademark manifestation, peacekeeping (2021: 8).
But this involved riding the wave of U.S. hegemony, and as long as the United States was the unquestioned economic leader of the world, it was no skin off Washington’s back to let Canada do it in exchange for the military alliance. But the Vietnam era finally led Washington to confront its limits, and the first piece that affected Canada directly was the collapse of the Bretton Woods system in 1971. Canada had become extremely dependent on the United States as an export market that accounted for well more than half of Canadian exports. Nixon introduced a 10% surcharge on all imports in 1971, without an exemption for Canadian imports. It made Canadians very aware that “when the United States sneezes, Canada catches a cold.” Over the next two decades, Canada’s vulnerability to American protectionist measures became clearer, including the imposition of countervailing duties and measures under Section 301 of the Trade Act of 1974. In 1972, the government of Pierre Trudeau announced a “Third Option| to diversify Canadian exports away from the American market (Sharp 1972). The initiative failed, and the share of Canadian exports going to the United States grew. By the mid-1980s, there was talk of a free trade agreement to reduce the vulnerability of Canadian exports to American protectionism. The Reagan Administration was interested, and the Macdonald Commission endorsed a “leap of faith” that led to the agreement that came into effect in 1989.
Managing the Post-Cold War Through Free Trade
This dovetailed with the end of the Cold War. For the next decade, under the Clinton administration and the Chrétien government, it seemed to work. The United States was the world’s sole superpower, both political and economic, Mexico joined the agreement, which was rebaptized NAFTA, and Canada prospered. But there were troubling signs coming from the United States. The end of the Cold War brought deepening political polarization, already visible by the early 1990s. The September 2001 terrorist attacks in New York and Washington made the United States more adamant about domestic security to a far greater degree than had ever been the case during the Cold War, and Canada felt the thickening border in the wake of false claims that the attackers had entered from Canada. It also became clear that Canada no longer had the degree of leverage with the United States that it enjoyed at the peak of Cold War cooperation. The trade relationship and cross-border supply chains, not being existential, did not carry the same weight as military cooperation. After 2009, Obama’s stimulus packages were full of “Buy American” rules that impinged on cross-border supply chains that Canada assumed a free trade pact would protect.
Trump’s election took all of this to another level. Up to this point the two sides talked whenever an incident arose, and there were several face-saving agreements in which Canada would gain some degree of shielding or exemption from American protectionist measures. Nimijean (2019) argues that the Trudeau government generally managed the Trump period well, but at the price of a complete reorientation of Canadian policy to make “maintaining constructive relations with the United States” a priority to the exclusion of practically everything else. “Trump threaten[ed] the very essence of the post-1980s Canadian political economy” (2019: 44). Not only was there deep stress on the bilateral relationship, the issue of preserving overall Western cooperation took precedence. Keeping the United States engaged with the world was more important than the U.S.-Canada relationship. (The negotiation of the USMCA agreement was not meant to deepen ties–the point was just to keep Washington from abrogating NAFTA.)
Problems continue under the Biden administration. Despite the rhetoric, the United States has not returned to its pre-Trump engagement with the rest of the world. Its domestic political situation has grown worse, and geopolitical factors such as challenges from China and Russia continue to intrude (made worse by the Russian war on Ukraine), on top of the coronavirus pandemic. Canada has not recovered any leverage, and Washington seems uninterested in Canadian views on continental issues. The failure of Canadian lobbying on the Biden Administration’s proposal to grant tax subsidies to electric vehicles only if they were built in U.S. plants, which foundered due to Senator Joe Manchin’s opposition rather than anything Canada did or said, was a particular embarrassment for Ottawa. The disintegration of border cooperation over the COVID pandemic has been another stark example, and there has been no coordination of anti-pandemic measures on a continental level whatsoever since the mutual decision to close the border to nonessential travel in March 2020.
Managing the Post-Pandemic
Canada’s approach to the United States during the neo-liberal post-Cold War era was to integrate economically with the United States. It does not seem to work any longer, since politics easily undoes economic integration. In that case, where does Canada go from here? It looks like Canada will have to come up with its own approach to the United States, as there will not be a dramatic bilateral gesture on a par with the Free Trade Agreement this time to serve as capstone of a new era. Some in Canada have suggested reviving the Third Option, but given trade patterns over the past few decades, it is something Canada would not turn to as a policy, but as more of a last resort if the USA became unviable as a market economically or politically. There is no obvious alternative to the United States to which Canada would turn.
What NATO during the Cold War and free trade during the neo-liberal period had in common is that both advanced Canadian policy by addressing the needs of the United States on a major global issue in a unique way. By playing a central role in the creation of NATO, Canada ensured that there would be a second North American power dedicated to the defense of Western Europe (Jockel and Sokolsky 2021: 11-19). NORAD extended the principle to North American continent under threat from Soviet strategic weapons. The Canada-U.S. Free Trade Agreement of 1987 was the first major such agreement for the United States and set the stage for the signature of dozens of others, opening a new avenue for U.S. trade policy. It is not clear what “big idea” Canada could propose in a future post-pandemic period in which the United States followed America First policies. Generally, such an idea should respond to a global problem that preoccupies the United States, and that lends itself to continental-level action. Possibilities include addressing climate change, bolstering the Western alliance in the face of challenges from China and Russia, and increasing the ability to deal with future pandemics more cooperatively at the multilateral level.
Canada’s relations with the United States, and its foreign policy generally, cannot be fixed without addressing several domestic questions. The pandemic made the decline of Canadian state capacity obvious in a number of respects. One area of this decline is in the formulation and execution of foreign policy, as the foreign ministry has been gutted since 1993 (Cohen 2004) and suffers from revolving-door leadership under the present government. This must be examined in the context of a return to great power politics and what role Canada expects to play as a Western ally going forward.
Canada needs to carry out some intense analysis of its own, and it will need to do this under the constraints of a pandemic, weak national leadership, and atrophied political institutions (Dobson-Hughes 2021), which have decayed since the Cold War ended. While royal commissions are a derided tool of policy analysis and national debate in Canada, they have been useful in the past for concentrating the mind, and it is probably high time for a rerun of the Macdonald Commission. Issues that such a commission must study (Lang 2014; Nimijean and Carment 2021) include the bilateral relationship with the United States, especially coordination to keep the border open consistently, institutional and fiscal reform, productivity, income inequality, reducing carbon emissions and its impact on resource extraction, and even federalism and whether constitutional reform needs to come back onto the national agenda.
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