Whither Canada?
Canada’s continental integration approach to the United States no longer works. There needs to be a major rethinking of how to deal with the continent and the world. Now.
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. 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, 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 called “the Reagan challenge.”
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. 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 a number of domestic nation-building projects (bilingualism, multiculturalism, nation-building and other navel gazing), and also let it dabble in economic nationalism, as well as international peacekeeping and maintaining the image as a “helpful fixer.”. At the same time, Canada could integrate economically with the United States, for example via the Auto Pact in 1964.
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 impacted 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 more evident, 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. 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.
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 a number of face-saving agreements in which Canada would gain some degree of shielding or exemption from American protectionist measures. Not only was there a deeper breakdown of bilateral relations under Trump, 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 the United States 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, on top of the SARS-CoV2 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.
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 more, 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.
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, which have decayed (both domestic political and foreign policy tools–the foreign ministry in particular has deteriorated badly since 1993) 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.
References:
https://carleton.ca/npsia/2021/political-turmoil-in-a-tumultuous-world-canada-among-nations-2020/
https://www.google.com/books/edition/Canada_U_S_Relations_Options_for_the_Fut/8wjNSgAACAAJ?hl=en
https://www.jstor.org/stable/24709464
https://www.mqup.ca/canada-in-nato--1949---2019-products-9780228008415.php
https://www.nytimes.com/2022/01/06/opinion/america-civil-war.html
https://www.penguinrandomhouse.com/books/29354/while-canada-slept-by-andrew-cohen/
https://spectatorworld.com/topic/coming-american-canadian-war-or-something/
https://link.springer.com/book/10.1007/978-3-030-05036-8
https://www.theglobeandmail.com/opinion/article-chaos-is-coming-to-the-us-what-will-canada-become/
https://www.theguardian.com/us-news/2022/jan/03/us-rightwing-dictatorship-2030-trump-canada
https://www.worldcat.org/title/forgotten-partnership-us-canada-relations-today/oclc/1087616098
