The Free Trade Debate is Turning Into a Shouting Match
Why has Canada's recently concluded free trade agreement with the United States caused such bitter debate? This article attempts to uncover the main reasons for the current uproar.
Canada is a highly industrialized economy with a small home market. It is therefore enormously dependent on foreign trade. About 30 per cent of Canada's GNP is devoted to exports. The United States is Canada's biggest trading partner, accounting for nearly 80 per cent of our exports (and 90 per cent of Ontario's exports).
Canada's main objective in the free trade deal is not to expand that trade further (although that is not excluded) but to ensure that the current level of trade with the U.S. will not be curtailed by American protectionist measures. As stressed by the Macdonald Commission's report on Canada's economy, the free trade issue concerns security of access to our largest market. It observed, "The greater the amount of trade with any one partner, the greater the need for a certain and secure relationship with that partner."
It is clear that Canada needs American markets. But does the U.S. want a free trade deal? The American economy is seriously imperiled by a massive and mounting trade deficit, which has fanned the flames of protectionism smoldering there. That protectionist mood poses a grave threat to our trade with the Americans.
Canadians opposing the free trade deal claim it will eliminate jobs and jeopardize our political independence. For example, Canadian Auto Workers union president Bob White warns that the Canada-U.S. pact pushes us towards "a Rambo, dog-eat-dog, survival of the fittest society with no ability to maintain our social programs or ability to structure our own economy" (Globe and Mail, October 5, 1987). Ed Broadbent, leader of the New Democratic Party, has warned that within 25 years the Canadian border will cease to exist; that Canada will have been absorbed by the United States. This same refrain is heard from spokesmen for the Liberal party and the Canadian Labour Congress, such stalwarts of Canadian nationalism as Mel Hurtig, and everyone to the left of that coalition. The Toronto Star, claiming free trade endangers Canada's very survival, has directed a steady barrage of criticism at the agreement. Canadian free trade negotiator, Simon Reisman, accused the Toronto Star of engaging in a campaign of "smear tactics and scare mongering."
Speaking at a gathering of the Council of Canadians, Liberal trade critic Lloyd Axworthy charged that proponents of free trade with the U.S., specifically the government, will use any means to deceive the country. "You are going to see every ounce of political distortion, fabrication, that is possible, and this government is capable of great examples of distortion and fabrication," he said. Axworthy was impressed on his recent trip to Nicaragua with the willingness of the Nicaraguans to risk their lives in their fight against the United States. And here, he said, the Canadian government is voluntarily surrendering its independence to that country (Globe and Mail, October 18, 1987, p. 8).
Bernard Ostry, a long-time government bureaucrat, made this dire prediction: "Without the institutions we have created to ensure the survival of the Canadian arts and a Canadian voice in the media, those arts and that voice would survive only in the way that literature and art have managed to do so in the Soviet Union" (Canada Not For Sale: The Case Against Free Trade, Toronto: General Paperbacks, 1987, p. 65).
So free trade means political and cultural oppression for Canada. We are left to fight the Americans just like the Sandinistas in Nicaragua (now supported by the Soviet Union) and like the Soviet people fight their own oppressive regime. It does get rather confusing. The outrageous claims of Messrs. Axworthy and Ostry, rather than strengthen the case against free trade, demonstrate their ideologically motivated determination to destroy the free trade agreement no matter what.
Evaluation and Prognosis
The free trade agreement with the United States is not everything Canada would wish it to be, and many aspects remain to be ironed out over the next several years. But the basics are there. Canada has managed to ward off the bulk of the protectionist threat, and this is a crucial accomplishment. The new Canada-U.S. trade agreement is a step in the right direction and provides opportunities we should energetically exploit.
Peyton V. Lyon, professor of political science at Carlton University, scoffs at the "opportunistic politicians and labour leaders who claim that free trade will cost Canada its sovereignty, make it the 'fifty-first state,' and lead to total absorption." He writes that free trade arrangements have never been the cause of political or economic mergers elsewhere. "The smaller partners gain the most economically, retain their foreign policy independence, and are obliged to make only minor adjustments in their domestic policies. Why," he concludes, "should it be any different in North America?" (Globe and Mail, October 17, 1987).
The contemporary conflict between proponents of the interventionist state and advocates of a limited state seems to play a significant role in the free trade debate. This explains why the New Democratic Party (from which the Liberal Party is becoming increasingly indistinguishable) and those to their ideological left oppose the free trade deal. Ironically, NDP leader Ed Broadbent's riding of Oshawa, and Bob White's Canadian Auto Workers have vastly benefited from an existing free trade deal with the U.S., the Auto Pact, yet Broadbent and White are two of the most strident opponents of the new trade agreement.
Nevertheless, there are risks for Canada in the free trade agreement, and Canadian initiative and ability will be taxed to minimize the risks and make the best of it. No one can be completely certain of the outcome. But has anyone contemplated the dangers posed to Canada's economy if no agreement were reached? With 30 per cent of our economy going to exports, and 80 per cent of that to the U.S., doesn't that seem a lot riskier? And more of a threat to jobs? It is unfortunate that many have chosen to use this issue as an occasion to vent their principled anti-Americanism and their commitment to the interventionist state.
What are the prospects for the free trade deal? There is still a very strong likelihood that this agreement will be torpedoed. First, the American Congress may very well reject it, as strong protectionist lobby groups are hard at work there. Second, as Professor Michael Bliss pointed out in a letter to the Globe and Mail on October 17, the new Meech Lake accord means that the Liberal-dominated Senate can scupper the deal by refusing its assent. The clamour for an election already beginning will then force an unpopular Conservative government to have this issue settled by Canadian voters. Should that happen, brace yourself for a bitter campaign in which the naysayers will stick to the high ground of defending Canada against an evil American empire intent on swallowing up the entire continent. That strategy has worked before. We can only then hope that the rhetorical overkill of the Messrs. Broadbent, Axworthy, Ostry, and their allies will be seen by ordinary Canadians for what it really is. But don't bank on it.