The Caterpillar plant-closing saga is not simple. Yes, the company’s actions were odious. Caterpillar clearly had no intention of keeping its newly purchased London locomotive plant open — and closed it as soon as the company’s preferred location, Indiana, passed anti-union laws.

And yes, Canada’s governments behaved shamefully. Ottawa said last week’s plant closing — with the loss of 450 middle-class jobs — was the Ontario government’s business. Queen’s Park blamed Ottawa. Neither did anything.

But the real villain is unrestrained globalization. As long as goods and capital are free to move unimpeded across national borders, companies — even nice ones — will locate where wages are cheap.

All of this could be changed. But to do so would require the fundamental rethinking of belief in the unalloyed virtue of free trade, a belief that the country’s political and business classes accept on faith.

Should Caterpillar Inc., a notoriously anti-union company, have been better scrutinized in 2010 when it offered to buy all of Illinois-based Electro-Motive Diesel’s operations — including its London assembly plant? Perhaps.

But even if this relatively small purchase had come under the purview of Canada’s foreign investment laws, it’s not clear that any government of any political stripe would have blocked the sale.

When the Liberals were in government, they approved all foreign takeovers. The new New Democrats, meanwhile, are desperate to be seen as business-friendly.

More to the point, it wasn’t Caterpillar’s foreign ownership that was the problem. It was its ability, as a multinational, to locate production anywhere.

Canada’s home-grown Bombardier, for example, no longer makes locomotives in this country. It stopped doing that in the 1980s.

Instead, it buys them from a Caterpillar plant in low-wage Mexico.

Should Canada somehow have prevented Caterpillar from making off with Canadian technology? That critique might be valid if Electro-Motive’s technology were uniquely Canadian. But it almost certainly wasn’t.

The London factory was established by General Motors in 1949 as a branch plant of the U.S. firm’s Illinois operations. Its basic technology was American. Even if Ottawa had wanted to protect the fruit of Canadian research, there was little in this case to protect.

So what is left? Using tax breaks to encourage domestic production is a standard prescription. Yet, ironically, that’s exactly what the Harper government did.

In 2008, it offered tax write-offs worth an estimated $5 million annually — not to Electro-Motive (which, at the time, was owned by two hedge funds) but to Canadian railway firms that used locomotives.

The idea was to encourage companies like CN to replace their engine stock more quickly. And if it hadn’t been for globalization, the scheme might have created a few more jobs in London.

But globalization does exist. Canadian railways can still get those tax breaks on new locomotives. It’s just that now they will buy them from Indiana and Mexico.

None of this means that manufacturing has to be doomed. Ottawa could take a leaf from the U.S. and pass Buy Canadian legislation. The province (which is not tightly bound by international trade agreements) could penalize companies that purchase goods from jurisdictions with unfair labour laws.

Governments could even copy the tactic of Trudeau-era trade minister Ed Lumley, who famously threatened to hold up the import of Japanese autos until companies like Honda built assembly plants here.

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But Canadian governments don’t do such things. To be seen as anything but avidly free-trade spooks both politicians and business.

As a result, Ottawa focuses on selling oil to the Chinese. Queen’s Park at least encourages windmill manufacturers. Neither does much else.

Thomas Walkom's column appears Wednesday, Thursday and Saturday.

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