SELF-DESTRUCTIVE SELF-SUFFICIENCY.

Maybe you're thinking things can't get any worse. Oh, yes, they can.

Any hope for a vaccine-inspired economic recovery rests on a resurgence in global trade, particularly for a trade-dependent country such as Canada. Standing in the way, however, is the currently ascendant notion that every country — Canada included — must become self-sufficient in anything that might be considered a national necessity. Once derided as dangerous protectionism, today such policies are quaintly called “restoring” or “localization.” Whatever the term, it's the path to economic ruin. And we're threatening to do it to ourselves.

COVID-19 has wreaked havoc on international trade. The World Trade Organization's most recent statistics show merchandise trade down 20 per cent and services down 30 per cent. Lockdowns are clearly playing a role. But growing political interest in walling off domestic economies through export restrictions, subsidies to local manufacturers and import-replacement programs, such as U.S. President-elect Joe Biden's planned “Buy American” procurement policy, pose a much greater threat in the future.

The OECD recently used economic modelling to reveal the risks involved from this new form of protectionism. The results show sustained growth in trade-discouraging policies could result in an average five per cent drop in GDP over five years across the 22 countries and regions studied. Of particular interest to Canadians: we fare the worst. Our GDP is projected to fall a cumulative 13 per cent, or US$224 billion; a far poorer outcome than comparator nations such as Australia (nine per cent drop) or the U.S. (seven per cent drop).

“The findings are clear that localization will be very costly,” says Frank van Tongeren, head of the OECD's economic modelling unit, in an interview from Paris. “And the hardest-hit countries will be the ones that depend most on international trade and that currently have low border protections. Canada falls into both those categories, which is the reason for its big negative effects.”

Despite the risks, however, the notion that restoring or localization is not only a virtue but a national necessity has become as popular at home as abroad. In one example of many, last year the federal and Ontario governments handed

AS THE OECD RESULTS SHOW, CANADA STANDS TO LOSE THE MOST IF THE WORLD TAKES A PROTECTIONIST TURN.

out $46 million in subsidies to 3M Canada to build a new medical mask plant in Brockville, Ont. Premier Doug Ford boasted at the time that “never again are we going to rely on foreign countries and foreign leaders to supply our country … we are self-sufficient (in masks).” Federal Conservative Leader Erin O'Toole is similarly promoting a “Canada First” stance on trade, calling for “more self-sufficiency” in domestic manufacturing capacity. “It is more efficient and affordable to make masks and gowns and ventilators in China,” O'Toole said in a major speech last year. “But as we have learned to our cost, it is not in our national interest.”

O'Toole seems to be suggesting there's a saw-off between trade and national security — that we must choose between sourcing things cheaply overseas to save a few bucks, or making all that we need at home to guarantee our own safety. Such a proposition may seem intuitively appealing to many nationalist-minded Canadians. But it's a false and crippling choice.

If Canada decides it must make all the masks, ventilators and whatever else it needs at home, other countries will inevitably do the same — cutting our economy off from global supply chains. With a third of Canada's GDP dependent on trade, this is a game we cannot win. As the OECD results show, Canada stands to lose the most if the world takes a protectionist turn.

As for supply issues, the shortages of personal protective equipment during the first few months of the pandemic should not be seen as a repudiation of the gains from trade. Even if Canada had been entirely self-sufficient in masks and gowns in early 2020, the massive and unexpected increase in demand would have exhausted domestic supplies just as it did foreign sources. Plus, there's no way to know what products will be crucial in any future crisis. A robust global supply chain is always the best insurance policy.

There are good reasons to worry about becoming overly dependent on a single hostile foreign power. But we don't have to make everything at home to secure our national interests. Excluding China's Huawei from Canada's 5G network makes ample sense, but those needs have since been filled by Ericsson, a Swedish company, and Finnish-based Nokia. It would be ruinously expensive and logistically untenable to demand an all-Canadian 5G network. The same holds true for equally crucial COVID-19 vaccines.

Lacking a domestic production line for mRNA vaccine, Canada has instead contracted with multiple producers around the world. This gives us the ability to choose between competing vaccines of varying effectiveness and supply. As a result, we are in much better shape than countries that sought to rely solely on local production for reasons of security. Australia, for example, was forced to abandon a domestic vaccine candidate due to poor results and must now seek out foreign suppliers. National vaccinations aren't scheduled to begin Down Under until late next month.

Self-sufficiency is fine for backyard tomatoes. But it's no way to run a country.