Canada faces the excruciating task of trying to balance the United States, China and other world powers in the current more hostile diplomatic and trade environment.
“It’s going to be a delicate balance,” said David MacNaughton, Canada’s former ambassador to the U.S., while speaking to the Canadian Crops Convention March 3.
“This is more of a dog-eat-dog world. I think the COVID thing has reinforced that even more.”
MacNaughton said Canada should focus on working collaboratively with the U.S., without being taken advantage of. As well, Canada should avoid needlessly provoking China, while working with allies to pressure China, and endeavour to revive international institutions like the World Trade Organization while not relying upon them to be as influential as previously.
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MacNaughton said many hopes have been raised by the election in the U.S. of president Joe Biden, but the changes to U.S. trade policy and action might be more modest than many hope.
“I would be cautious about how overly optimistic we are,” said MacNaughton, who was ambassador from 2016-19, bridging from the end of the Barack Obama era to the era of Donald Trump.
The caution comes from his experience seeing much trade-skeptical thought emanating from the left side of the U.S. political spectrum.
“They have in their DNA a certain amount of protectionism,” said MacNaughton.
When it comes to China, Canada must work with U.S. and other allies to convince China to follow rules. He said Canada should not stick out too obviously, because it could become a target for Chinese retribution.
“It’s easier for them to squash us than the Americans.”
At the same time, Canada will have to watch how the U.S. acts in its own self-interest with China and other situations.
During the NAFTA renegotiations, the U.S. insisted upon inserting a clause that gave the three members the right to tear up the pact if any of the others made a deal with a “non-market” country, then promptly made a trade deal one-on-one with China.
Canada will need to find ways to be tough with its own self-interest.
“We’re going to have to have sharp elbows and brass knuckles every once in a while where we have some leverage, and I don’t think we can just rely on the international-based system to protect our interests. I think many of those days are past,” said MacNaughton.
Even with U.S. pledges to revive alliances and the global system of trade and diplomacy, Canadians need to be cautious with their excitement.
“There have been all sorts of nice words about rejoining international institutions and everything else, but I have not yet seen any pronouncement by the Biden administration of other (action on the WTO appellate process) or whether or not they were prepared to appoint people to the appellate body.”
The WTO is mostly crippled today by the lack of appeal court judges to hear challenges of its rulings, a gap created by the Trump administration’s decision to stop approving appeal court judges.
“Without that… you wonder how effective the WTO is going to be,” said MacNaughton.
One of the best things Canadian export trade interests could do is ensure a unity of commitment within Canada.
The so-called “Team Canada” missions of the past, where federal, provincial and industry people worked together to build relationships overseas were successful and could be emulated.
“We’ve got 37 million people,” said MacNaughton.
“Unless we work together… we’re not going to be successful in a world that’s becoming more competitive, much more dog-eat-dog mentality.
“It’s the only way we are going to be strong to come up against the strong people like the U.S., China and the EU.”
