Lessons from Canada's History as a Trading Nation

Abstract

Michael Hart, a former Canadian trade official, holds the Simon Reisman Chair in Trade Policy in the Norman Paterson School of International Affairs at Carleton University and is a distinguished fellow of the Centre for Trade Policy and Law at Carleton and the University of Ottawa. His most recent book is A Trading Nation: Canadian Trade Policy from Colonialism to Globalization (Vancouver: UBC Press 2002).CANADA HAS ALWAYS BEEN A TRADING NATION. From their earliest days, Canadians have pursued their livelihood on the basis of exports to bigger and wealthier markets and have benefited from a wide array of imported goods, services, capital, and technologies. Not surprisingly, trade policy, that is, federal and provincial measures to govern and influence the flow of exports and imports, has figured prominently in Canada's development as a nation.Over the past half century, as a result of successful multilateral, regional, and bilateral negotiations, a rules-based international trade order has become a universally accepted part of both intellectual and intergovernmental discourse. The success of that order in integrating national economies into a global economy poses a new series of challenges that require new policies and an expanded regime capable of extending the concepts of national governance to an increasingly integrated global economy.The full impact and ramification of the global economic changes that are driving the demand for new thinking are, of course, only now emerging. For Canada, deepening bilateral integration with the United States provides a second dominating theme confronting Canadian trade policy practitioners. Addressing these challenges will require some appreciation of the road Canadians have traveled over the past century and a half and the lessons they have learned along the way. It is more than a cliche that those ignorant of the past are bound to repeat its mistakes. The past informs the present and makes it both more intelligible and easier to accept. With a firm understanding of the past and a realistic appreciation of the present, the challenges of the future are less daunting.Good trade policy does not come naturallyFor a relatively small economy dependent on trade with larger economies, it is not difficult to identify the hallmarks of 'good' trade policy. Canada's history, however, suggests that good trade policy may be easier to describe than to implement. As in so many areas, the conjunction between good policy and good politics has often proved narrow and difficult to find and to implement. The result is a history rich in lessons for the future.As most practitioners would describe it, good trade policy involves the careful integration of economic, business, legal, and political ideas and values into a coherent set of laws, agreements, regulations, policies, and practices, attuned to the circumstances of the moment but broad enough to endure. From an economic perspective, good trade policy finds ways to move towards more open markets. Government policies that distort the efficient allocation of resources are likely to lower national and global welfare while the removal of such barriers is likely to raise them. Competitive markets and consumer choice are critical contributors to national and individual prosperity and are among the most widely shared values in economics. They are also critical to the goals of the global trade regime. Unfortunately, the benefits of an open economy are all too often apparent only in the long term. To endure, therefore, good economic policies need to be reinforced by political, business, and legal goals.Governments, of course, pursue more than economic objectives. Policies that distort market efficiencies may serve other important societal goals. Efforts to ensure consumer safety, national security, cultural identity, sustainable environments, or distributive justice may affect the operation of the market and the flow of goods and services across national borders. …