Preparing for a post-NAFTA economy
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Hey there, time traveller!
This article was published 25/06/2018 (1620 days ago), so information in it may no longer be current.
U.S. President Donald Trump has shown profound respect for North Korean dictator Kim Jong Un and sneering contempt for Prime Minister Justin Trudeau. What conclusion should we draw?
The glib answer — that Canada should build its own nuclear weapons — leads nowhere, because Canadians do not wish to make war on their neighbours. Mr. Trump’s Singapore summit with the North Koreans, may, however, offer some clues about managing the man in the White House.
Six months ago, he was all “fire and fury” and “little Rocket Man.” Then Kim granted him an audience in Singapore with all the world looking at him, and he purred like a pussycat and cancelled “war games” behind the backs of his astonished allies in South Korea and Japan, all in return for roughly the same promises North Korea had made to previous presidents.
Mr. Trump’s trash talk, it seems, is something he thinks he has to do to convince himself that he has intimidated the other side as far as possible.
But what if it’s not just trash talk? What if he really means to throw up barriers against Canada-U.S. trade and inflict an unfavourable trade treaty upon us, effectively cutting us off from our accustomed reliance on the U.S. as a market and a source of supply? At the moment, he can’t do that because U.S. industry is against it and Congress would probably not support him. If, however, he secures election of a protectionist Congress at the November midterms, he just might plunge Canada into a recession.
Canada’s equivalent of nuclear weapons would be a serious, practical plan for trading and thriving without the familiar level of trade with the U.S. This might be painful for many Canadian industries, especially automobile and auto-parts makers in Ontario. We might have to get out of making large, heavy things that need a nearby market and switch into exporting bright ideas that can be shipped more cheaply. We might have to accept unwelcome rules imposed by China. We might have to become partners with some governments to which we have not previously been close.
Canada has talked a good fight for many years about diversifying our trade, but reliance on trade with the U.S. has scarcely changed. Mr. Trump knows that we are a captive customer, hostages of the logic of proximity and economic integration. Given a protectionist Congress to back him up, he would be in a position to dictate terms to Canada.
During the next four months, Canada should scout the alternative path. Mr. Trudeau and his government should develop and publish a realistic plan for converting Canadian industry to the post-NAFTA, post-continental era. Canadians should be warned about the costs and dislocations this will entail.
None of this should be done in secret. Canadians need to know what this rocky road looks like. Mr. Trump needs to know that we know how to take that road and are willing to make the sacrifices it entails. The whole planning process should be as spectacular and as well-publicized as Kim Jong Un’s missile shots and nuclear bomb tests.
Economic analysis makes no impression on Mr. Trump. Publicity stunts and intimidation — that’s the language he speaks. Kim Jong Un understood that and beat Mr. Trump at his own game. Canada should profit from North Korea’s success. Maybe Mr. Trump backs down. Maybe we go ahead and wean our industry from U.S. dependency. Either way, we avoid becoming a vassal state.