Forget NAFTA, create independent economy
Canada has left free-trade pact before and prospered, David Orchard writes.
In 1854 the Canadian colonies entered a free-trade agreement with the United States. In 1866 the Americans cancelled it, believing that the Canadian colonies had become so dependent on the U.S. economically, that they would ask, or beg, for entry into the American Union.
Instead the Canadians decided to take the bold step of independence. They negotiated a union of the Canadian-colonies and began building a Canadian-owned and controlled economy.
Canada’s next major free trade agreement with the
U.S. was in 1988 (FTA), later expanded to include Mexico in 1994 (NAFTA). Under their terms, much of Canada’s economy has been bought up by American owners — everything from Hudson’s Bay Company to Tim Hortons and Stelco. Whole industries have been taken over by U.S. investors, including both our national railways. U.S. corporations have the right to sue Canada for any law or regulation which causes them loss or damage and which they feel contravenes the spirit of NAFTA. (Canada has been sued three dozen times and paid out over $200 million in NAFTA penalties.)
The U.S. government is demanding even greater concessions from Canada in a “renegotiation” of NAFTA, including sweeping rights to buy up what is left of Canada’s economy. It has stated that it is ready to trigger the sixmonth cancellation clause of NAFTA. In response, the Canadian government has spent millions trying to convince it not to do so.
As in 1866, Canada has a choice: To integrate itself even further into the U.S. economy, giving up the dream of Canadian independence, or it can do what it did in
1866, step forward and build a Canadian-owned, world-class economy. It can stop pleading with the U.S. to keep NAFTA and emerge as a significant competitor to our neighbour.
Before Canada signed the FTA and NAFTA, it traded with the U.S. and the rest of the world under the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO). If the FTA and NAFTA were terminated, Canada would return to trading with the U.S. under the WTO, under whose terms we did much better than under the FTA and NAFTA. Under the GATT/WTO, Canada had allies and the U.S. was not able to impose punishing tariffs on our softwood lumber exports or our aircraft industry. It was unable to destroy our wheat marketing system, buy our railways or shut down our steel industry.
Norway, much smaller than Canada, declined to enter the European Union. It retained control of its oil and gas and other industries through publicly owned corporations. Norway has no debt, no deficit, free child care and university education, virtually non-existent homelessness, free dental care for all under 18, generous old age pensions and a $1-trillion surplus in its sovereign wealth fund. Canada after almost three decades of “free trade” with the U.S., has more than $1.2 trillion in federal and provincial debt, large deficits at every level, no national child or dental care, high university tuition, miserly old age pensions, years of massive budget cuts, and giveaway prices for its exports of oil, gas, timber and minerals.
For 150 years, great Canadian leaders have warned that without an economic border with the U.S. we would soon no longer have a political border. We once owned the world’s largest farm machinery maker, Massey Harris, built the world’s largest and most respected marketer of wheat and barley, the Canadian Wheat Board, created a great trans-continental railway system and saw Vancouver’s shipyards produce the beautiful Fast Cat ferry.
Instead of spending hundreds of billions of dollars on foreign-made machinery, electronics, automobiles, ships, fighter jets and passenger aircraft we can build our own, both for the domestic and export market. With Canada’s resources and ingenuity it could create a prosperous economy that would give Canadians multiple benefits, security and pride of ownership. As George Etienne Cartier, the great Quebecois father of the Confederation, put it, “Now everything depends on our patriotism.”