Sovereignty or Standard of Living?

Abstract

THE BIG IDEA--deep or the NAFTA-plus agenda--is gathering force. Actively promoted by the same people who brought us free trade--Tom D'Aquino and the Canadian Council of Chief Executives--its proponents are busy lobbying governments on both sides of the border. The CD Howe Institute and other business-friendly think-tanks are releasing study after study. Even former prime minister Brian Mulroney has been resurrected from the politically dead, promoting a new Canada-US deal in both Washington and Ottawa.The agenda is being taken very seriously by the Federal Government. A recent House of Commons Foreign Affairs Committee report called for active exploration of a NAFTA-plus arrangement. Canada-US relations are at the top of the agenda for the Department of Foreign Affairs and International Trade. Paul Martin has also indicated that rebuilding Canada-US relations would be one of his top priorities as the next prime minister, even though he has provided few details of where he wants to take us.So, what does the deep-integration crowd want? Above all, they want the holy grail of Canada-US trade relations: secure access to the US As with the FTA, the starting point of the new agenda is defensive and there is actually very little interest in the big idea in Washington. The big idea is supposed to capture their interest--a proposal designed to be so enticing that they cannot turn it down.There is a second reason why the big idea is defensive. Already complicated border procedures (because of rules of origin and regulatory differences) have been compounded by much tighter US security since 11 September. In addition, the FTA and the NAFTA have clearly not created a single market. The US still manages trade in its own interests when it wants to, as is evident with softwood lumber, wheat and, now, beef.For enhanced and more secure access to the US market, the crowd has put forward the big idea. What we are supposed to get is exemption from US countervail and anti-dumping laws, as well as far fewer border controls. What they are prepared to offer in return is what they think the US wants from Canada: much higher levels of co-operation in non-economic areas like defence, security and immigration. The US would also gain enhanced access to Canadian energy.Deep integration is not just an economic agenda; it is really about falling in line with the US from a position of weakness. In fact, the main argument is that we really have no choice. We have become too dependent on the US and, of course, our economy is heavily dependent on exports, some 90 per cent of which now go to the US. Some groups in Canada--the Canadian Alliance, the National Post--enthusiastically support deep integration because they agree with policies of US Republicans, in the George W. Bush mould. Others, the more pragmatic and less ideological crowd, which tends to dominate the public service and the Liberal Party, think we have little choice.It is interesting to note that Sylvia Ostry, former head of the economics department at the Organisation for Economic Co-operation and Development (OECD), and certainly no raving leftist, recently argued that we have become too economically dependent on the US for our own good. This dependency could make it difficult to retain sovereignty in foreign and defence policy. She noted that US trade representative Robert Zoellick has said, quite clearly, that the US will expect its trade partners to be co-operative on the broader US agenda for the world. As Ostry noted, this runs totally against the basic principle of the multilateral post-war trading system, which upholds that countries should treat each other equally in terms of trade, regardless of their political differences. To her credit, Ostry said that it was time for even enthusiastic free traders like herself to rethink tight integration with the US and to consider how to reduce our dependency. …