Canada is a trading nation that relies economically on its close relationship with the United States, but is the new trade deal a good deal for Canada? Brian Lee Crowley of the Macdonald-Laurier Institute argues it is while Irvin Studin of the Institute of 21st Century Questions says signing it would be a mistake.

Free trade agreements help reduce two kinds of risk.

One is the risk associated with being especially reliant on one market, such as, in Canada’s case, the United States. The other is removing trade barriers between countries in order to increase commercial exchanges between them. This is Canada’s strategy with, say, the European Union. There is nothing contradictory about pursuing both strategies simultaneously. Both are in Canada’s interest.

The USMCA seeks to reduce the first kind of risk. While geography may not quite be destiny, we are next door to the world’s most powerful and innovative economy, an open market with whom we share a long-standing alliance, common language, standards and more. It’s easy to sell our stuff there and we in turn buy a lot from them. Some 38 states have Canada as their largest trading partner.

The result is a high degree of trade dependence on the U.S. Canada exports roughly one half of everything we make in the private sector, and of that nearly three quarters goes to the United States. This makes American openness to Canadian exports the foundation stone of our prosperity. It is a “problem” many other countries would love to have.

But this happy state of affairs has its downside, exemplified by Donald Trump’s protectionist tendencies. Regrettably, the U.S. is not nearly as dependent on Canada as we are on it.

THE BIG DEBATE: For more opposing view columns from Toronto Star contributors, click here.

Canada barely registers in Washington. Thus, when it is politically advantageous to play the protectionist card for domestic political purposes, Canadian prosperity is frequently the victim, often unintentionally so. We have been side-swiped by American trade policies repeatedly over the years, including by presidents Nixon, Bush and Obama and not just Donald Trump.

So what’s Canada to do? As a top priority, negotiate free trade agreements like the USMCA to reduce America’s scope to act against our trade interests. Because they are a sovereign state we can never eliminate this possibility entirely, but every legally enforceable rule we can get that commits the U.S. to remaining open to Canadian exports is a victory for Canadian workers and companies.

The alternative is a contest of wills and strength every time we disagree. History tells us that thinking we can overpower the U.S. is a dangerous and costly illusion. We benefit when trade takes place under agreed-upon rules, rather than on the basis of relative power. Free trade doesn’t create our dependence on the U.S. That dependence long predates our modern trade agreements with Washington. What these agreements do is to reduce (not eliminate) the power that dependence gives America over us.

Of course this is not the only way to reduce such risk. We can also work to shift trade toward other markets, such as the European Union and Trans-Pacific Partnership. But diversification is easy to say and hard to do. As one historian once remarked, every prime minister comes to office promising to reduce significantly Canada’s dependence on the U.S. market, and every prime minister leaves office having failed in this mission.

We should continue trying, of course. But suppose we succeeded, after decades of effort, in shifting, say, 10 per cent of our total exports to other markets, which in itself would be a remarkable achievement. We would still be sending nearly two-thirds of our exports to the U.S. and the reasons for free trade with the U.S. would remain every bit as irrefutable as they are today.

Moreover, trade diversification comes with its own risks. As Canadians now know, for example, making ourselves dependent on China brings increased risk of Beijing using that vulnerability as a pressure point, kidnapping our citizens, stealing our trade secrets, slamming the door on our pork and canola and abusing us as white supremacists for wanting to follow the rule of law in the Meng Wenzhou case.

Smart policy manages all these risks to the uttermost limits of Canada’s ability. Free trade with the U.S. is not a danger to Canada but the cornerstone of our prosperity for the foreseeable future. USMCA, despite its relatively minor flaws, is far better than the alternatives. It should be adopted.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent public policy think tank in Ottawa.

Is Canada a vassal state? Are we a foolish country? I hope not.

Ratification of USMCA as it reads today would be a strategic mistake of historic proportions for Canada — in soccer terms, an “own goal” that approaches the British folly of Brexit, but at slower speed.

On the very day that Mike Pence visited Ottawa last week to accelerate USMCA, President Trump declared new punitive tariffs on the other signatory state to the agreement, Mexico. I digress.

Ten years from now, the world’s biggest economy won’t be the U.S. It will be China. Period. And 20 years from now, it won’t even be close — China will be the global economic giant without peer. And while it may not yet seem obvious to the man or woman on the street in Toronto or Montreal, this Chinese giant is geographically very close to Canada: Whitehorse, Yellowknife and Vancouver are closer to China than is Sydney, Australia.

Every intelligent country on Earth is preparing itself for success vis-à-vis China as it assumes its place as the most important country of this new century. This is not a hagiography — it is a basic fact of international life today.

The Big Debate

For Canada, our best interest is to position ourselves for maximum benefit from both China to our west and America to our south. That is how a smart country plays the game.

Only a foolish country would allow itself to be boxed into an exclusive economic relationship with only one of these countries (the shrinking economic power) to the explicit exclusion of the other (the rising economic power). And that is exactly what we are presuming to do in USMCA.

Washington has cleverly insisted in USMCA that it hold veto power over Canada’s ability to grow its economic relationship with China. Good on the Americans for realizing their interest in controlling us and frustrating their Chinese competitors.

But why would Canada ever agree to such terms? Why would we shoot ourselves in the foot by self-blocking from the colossal Chinese market just as it surpasses the American market?

Answer: Because we continue to think about USMCA as a transactional (“border relations”) copy of NAFTA, while the Americans have seen the future and designed a trap that blocks us from tapping into it.

If we ratify, the first ones to not respect us will not be the Chinese but the Americans themselves, for they will know that we now have nowhere to go without their permission.

As for the Chinese, there is a good reason why they, like others, are not returning our calls: after USMCA, there is nothing to talk about. It will be Washington that calls our shots, strictly in the American interest.

If I were in Washington, I wouldn’t let those Canucks out of my clutch again. They will have ratified mindlessly. China and other markets will have risen, but Canada will have remained loyal and friendly. Indeed, until our relative poverty grows, we Canadians will not have noticed that much of anything had gone wrong.

So, to ratify or not to ratify? Not to ratify, unless Article 32.10 — the guarantor of our future strategic misery — is stripped. And even then, what’s the rush or need? NAFTA remains in place, there is no prospect of rapid ratification in Congress, and almost no serious country has signed any deal of consequence with this unusually untrustworthy American president.

We Canadians must look beyond our noses — beyond the Twitter noise of the moment, and beyond the seduction of very short-lived political trophies. Ten years from now, Canada may be one of the world’s most important and strategically “plugged in” states, at the intersection of American civilization, a resurgent China and Asia, and a vast Arctic theatre that gives Canada ready access, through the north, to markets exceeding two billion people.

Or, if the vassalizing logic of USMCA plays out, our country could be a rump society and economy living (and locked) at the margins of the no-longer central American project — still wondering whatever happened to have made it so.

Irvin Studin is editor-in-chief and publisher of Global Brief Magazine, and president of the Institute for 21st Century Questions.

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