I doubt I’m the only Canadian not exactly celebrating the official Big Man Signing of NAFTA2, which happened this morning.
After all, it’s pretty much a case of Canada and Mexico making a bunch of concessions in order to stop U.S. President Donald J Trump tearing up NAFTA entirely and leaving us in a never-ending limbo of uncertainty.
No-NAFTA would have been a dreadful scenario for the future of this country and for the vast majority of farmers who rely upon free markets. So this is a liveable deal, but not much more.
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But I’ll bet I’m sharing a gigantic sigh of relief about this being two-thirds done (it’s still got to be passed by the U.S. Congress, which is no sure thing) with most Canadians. It’s nice to be able to move forward into a future that doesn’t seem so grim.
For other reasons, though, we should be very happy about how this all turned out. Regardless of U.S. bullying and belligerence, and the compromises made, Canada actually came together across the political spectrum to support free trade. While there was lots of quibbling and positioning by politicians, this did not escalate into a hyper-partisan issue. They might have griped and wailed about various parts of the negotiations and final deal, but in the end Canada’s political parties and people seemed to get the point that Canada needs free trade and open markets in order to thrive.
That might seem obvious, with Canada and especially Canadian agriculture being overwhelmingly export dependant, but it wasn’t always so. I’m old enough to remember when lefties were mostly anti-free-trade because they favoured an economy dominated by crown corporations and regulations, while many righties didn’t like the idea of free trade if it challenged vested interests and the ruling economic elites. Being pro-free-trade was far from being the default position of the average Canadian.
Back in the late 1970s and early 1980s the main economic concerns I remember reading about, hearing about and studying dealt with the “branch plant economy” and stagflation. Those were both intimately connected with the tariff and non-tariff barriers that blocked free trade between most countries. Small countries like Canada didn’t generally produce world-leading companies since their domestic markets were too small, and the best that could be hoped for was getting foreign countries to build branch plants in Canada. Stagflation was more complex, but a combination of saner monetary policy and globalization, of which the Canada-U.S. Free Trade Agreement was an early part, helped banish stagflation for decades.
You won’t find many Canadians today calling for generally closed markets. People tend to want whatever industry they’re connected to protected from foreign competition, but to have everything else open. We can all be forgiven for being selfish when it comes to our own specific interests. But ideologically, Canadians have swung far over into the pro-free-trade camp.
That should provide our government now and future governments, whether Liberal, Conservative, or even NDP, a chance to continue pushing out into the world to get more trade deals and trade access. Soon we’ll have the ability to work on a deal with the U.K. and we’re already working on deals with China, Southeast Asia and elsewhere. It’d be good to get those locked-down before the U.S. recovers from its current self-destructive protectionist tantrum.
It’d also be good to lock down some more trade deals before the Canadian mood shifts away from pro-free-trade attitudes. I’d like to believe the shift is permanent. I was the kind of weird teenager in the early 1980s who read The Economist and found economics fascinating, so seeing the country embracing good economic sense over the past three decades allows me to be smug and take an “I told you so” attitude.
But attitudes can shift quickly, so it shouldn’t be assumed that there will always be a general public support for free trade.
Closing the deal on NAFTA2 has been a bitter pill for most Canadians to swallow, but once the grimacing is done, it’ll be time to focus on closing the deals that might treat us more fairly.
