Trade reveals our differences
The United States, Canada and Mexico find themselves in contentious negotiations over the future of North American trade. The imposition of steel and aluminum tariffs Thursday, with Canada and Mexico exempted for now, has only intensified the focus of these talks. If North American free trade has enriched each partner — and on balance it has — then how did we get to this place? The answers lies as much in culture and politics as in economics.
When Canada and the United States signed the 1988 Free Trade Agreement, Canadians assumed two results were inevitable. First, the Canadian economy would be taken over by its neighbor. Second, the “Americanization” of Canadian culture and politics would inevitably follow. When the North America Free Trade Agreement followed six years later, critics doubled down on these concerns.
The reality has been entirely different.
The Canadian and American economies remain distinct in their mix of industries, models of labor relations, role of government in the economy, and in consumer habits. But there has been substantial mutual enrichment. We travel more to each others’ countries, work crossborder more frequently, trade more, and our economies have grown as a direct result of this. Why then the push to renegotiate?
The answer may lie in the second reality. Canada and the United States have grown apart in almost every other respect, whether it’s politics, immigration or cultural views.
Our two countries are diverging politically. Whatever its historical exceptionalism, the United States looks increasingly like the rest of the Western world — its right wing is increasingly populist, while its party of the left casts about both for generational change and feuds internally over whether to respond to right-wing populism with a leftwing variety.
In contrast, Canada has largely resisted the gravitational pull toward populism. These differences between parties are reflected by differences between the citizens of both countries. Ipsos Global Advisor data shows that two-thirds of Americans believe their society is broken. Less than a majority agree that that is the case in Canada.
The United States and Canada differ on approaches and views toward immigration. Canada takes in a greater number of migrants every year, relative to population. However, most migrants are selected principally on skills, while allowing for generous asylum and family-reunification levels. Most suggested reforms in the United States have only recently cottoned to this approach, though without the balance in the Canadian approach. Once again, policy views are mirrored by public preferences. When asked if immigrants take jobs from “real” Americans, 44 percent of Ipsos respondents agree. The number is 10 points lower in Canada.
Finally, our two countries are diverging culturally. Canada has typically been a more socially liberal country than the United States. For example, it was quicker to adopt gay marriage, abortion restrictions were entirely erased in the late 1980s, physician-assisted suicide is now the law of the land, and marijuana decriminalization is on the horizon. But these differences go beyond legislation. For many years, the polling firm Environics has asked respondents if they agree with the statement that the “Father must be the master in his own house,” a sentiment highly correlated with a number of other conservative and traditionalist attitudes. In 1992, 42 percent of Americans and 25 percent of Canadians agreed. When asked again in 2016, the divergence was even clearer: now 50 percent of Americans agreed, against 23 percent of Canadians. Even if the comparison were limited to the parts of the United States that are more liberal, stark differences remain: 43 percent of respondents in New England and the Pacific states agree that the father must be the master in his house.
Canadians, at least, sense this divergence. In 2002, 58 percent of Canadians reported to Environics that they felt Canada had become more like the United States over the preceding 10 years. By 2017, the number had dropped to just 27 percent.
Canada and the United States still enjoy a deep and mutually productive economic relationship. We share common cultural and political origins. Nonetheless, we are now on the horns of a serious economic conflict. Despite the mutual benefits of trade, there is increasing agitation to renegotiate our trade partnerships, likely with the effect of making trade more, not less, difficult. The reality that in all domains outside of economics, we have become less alike, and that will only increase this challenge.