Lessons from a Royal commission
TRADE WARS We’ve gone from ‘ leap of faith’ to ‘ breach of faith’ since a high-powered Trudeau panel encouraged Canada to enter into trade pact with U.S., by Gregory J. Inwood
Prime Minister Paul Martin recently called the American refusal to comply with NAFTA rulings over softwood lumber a “ breach of faith.” The phrase is a telling sequel to the one coined 20 years ago by Donald Macdonald when he famously advised Canada to take a “ leap of faith” into the continental embrace. We find ourselves today in perilous circumstances. The Martin Liberal government is uncharacteristically talking tough. The coincidence of a looming election seems to have stiffened the spine of the man The Economist labelled “ Mr. Dithers.” The business community and press are reacting with nervousness to the possibility of the Canadian government actually standing up to the Americans. With the twisted psychology of an abused partner, they claim American assaults on the Canadian economy are somehow an indication of affection and caring. The U. S., after all, is our “ best friend.” Can the lessons of a royal commission of 20 years ago help guide us through our current conundrum? The final Trudeau administration created the Macdonald Commission ( the Royal Commission on the Economic Union and Development Prospects for Canada) in 1982, which reported to the first Mulroney administration in 1985 that Canada should take a “ leap of faith” into a continental partnership in defiance of more than 100 years of Canadian history. The commission got off to a shaky start with the premature announcement of its birth, courtesy of an embarrassing leak to the press. That the government was going to embark on one of those generationdefining inquiries that looks into everything under the sun caught even the Pierre Trudeau cabinet off guard.
Moreover, the appointment of former minister Donald S. Macdonald as chair was widely seen as a consolation prize for his frustrated leadership ambitions, nipped in the bud by Trudeau’s surprising decision to “ un- retire.” And controversy swirled around the fact that Macdonald was paid the outrageous sum of $800 per day. His ungracious response was to point out that he could earn twice that in his Bay Street law practice. The appointment of Macdonald certainly did not portend free trade. After all, he had a reputation as a protégé of Walter Gordon, the archnationalist minister in Lester Pearson’s government. And Macdonald had himself charted nationalist courses as minister during the Trudeau government’s most nationalist phase, including the failed “ Third Option” policy of diversifying trade away from the United States.
After holding the largest public consultation exercise and commissioning the largest body of social science research to that point in time, the Macdonald commission produced its weighty three- volume report with a signature recommendation — free trade — that caught the country off guard. More than 1,100 groups and citizens made deputations to the commission. Among those non- business groups that commented on economic development strategies for Canada, close to 100 per cent either opposed free trade or suggested alternative strategies. More surprisingly, perhaps, close to 50 per cent of business organizations took the same perspective. Combined with the fact that 60 per cent of Canadians voted in the 1988 election against the only party advocating free trade, this means the Canadian government embarked upon a policy choice that lacked widespread popular support.
Within the Macdonald Commission, a combination of old- boy academic and intellectual networks produced an impressive 72 studies in which, overall, the advice of mainstream economics was heavily privileged concerning development strategies for Canada.
Indeed, so embarrassingly one- sided was the advice flowing to the commissioners that two “ re- luctant nationalist” political scientists had to be conscripted to draft some counter- arguments to free trade, though not so forcefully as to knock it off course. These were incorporated into the commission’s report as a sort of “ manufactured dissent.”
Surprising though all this may be, what is really important in the current context is that the commission neglected to account for the realpolitik of the American Congress over trade disputes.
Subsequently, our trade negotiators, by their own admission, caved in to the Americans on a number of key issues just to get a deal. We are living with the consequences today over softwood lumber and other issues.
Alas, the “ leap of faith” having long since been taken, we find ourselves in a continental world where might makes right and the “ breach of faith” is now a regularized aspect of our relationship with the Americans, glaringly revealing the hollowness of NAFTA for Canadians. Now, of necessity, we must look beyond the North American partnership to markets abroad.
Martin has hinted that diversification of trade may be the leverage needed to get a better deal with the Americans. Macdonald himself recently wrote “ intelligent strategy therefore dictates that China and India, as well as other emerging economic powers, deserve our special care and attention in what is going to be a very competitive period to come.” And a decade of Team Canada trade missions has laid the groundwork for further multilateralism in trade.
It has been a generation since the Macdonald Commission did its work. Is it possible that as we contemplate the forces of American obstinacy and the rising of new global trading powers that we should consider a new inquiry into the state of the economic union — one that assesses both our continental and global positions with more realism? Gregory J. Inwood teaches in the Department of Politics and Public Administration at Ryerson University. His new book Continentalizing Canada: The Politics and Legacy of the Macdonald Royal Commission, has just been published by the University of Toronto Press.