The nationalist dream

In an essay in Foreign Affairs, Andrew Cohen, a Canadian journalist and author, says, after reviewing the often acrimonious personal relations between John Diefenbaker and John F Kennedy, Lester Pearson and Lyndon B Johnson, Pierre Trudeau and both Richard Nixon and Ronald Reagan and Jean Chrétien and George W Bush, that “every time things soured between president and prime minister, the personal did not materially affect the commercial. The relationship was always bigger than the leaders, and it continued to grow into what it is today: two countries with the largest trading partnership in the world, sharing the longest nonmilitarized border in the world. “We are your best friend,” Canadians tell Americans, “whether you know it or not.”” That may have changed.

In Canadian eyes, “What makes Trump different from past presidents,” Mr Cohen suggests, “is that his distaste for the prime minister is not just personal. Tantrums don’t alarm Canada; tariffs do. The president’s crude protectionism has drawn uniform condemnation in Canada, and if Trump imposes stiff duties on automobiles from Canada, as he has threatened to do, it will sting. If he goes so far as to abandon the North American Free Trade Agreement altogether, as he has also threatened to do, it will be ruinous. The United States’ leaving NAFTA would constitute a frontal attack on the two countries’ shared commitment to free trade—one of their alliance’s foundational principles, along with collective security, multilateralism, democracy, and the free market. It would also send Canada into recession. Without NAFTA, Scotiabank has predicted, Canada’s economy would contract by 1.8 percent in 2020.”” President Trump’s attacks, therefore, appear to be of a different sort than even Lyndon Johnson’s fury at Mike Pearson ovre the latter’s comments on the US bombing of Vietnam.

For the moment,” Andrew Cohen says, “Canadians can do nothing other than pursue negotiations on NAFTA, vowing to stay at the table until the table is taken away—which Trump may yet do. As long as Trump continues to negotiate, Canada will, too. Trudeau could make a concession on dairy subsidies, which have been Trump’s chief complaint. Doing so would be politically difficult for Trudeau, since the dairy farmers who benefit are mostly in Quebec, a province that his party, the Liberals, must win to stay in power, but the move would allow Trump to save face and Trudeau to save NAFTA.

He adds that, “For now, at least, Trump’s talk is still just talk. His anger may soon fade, just as it did with North Korea’s leader, Kim Jong Un. But if Trump were to withdraw from NAFTA, Canada would retaliate. Already, in reaction to Trump’s aluminum and steel tariffs, the Canadian government has announced tariffs on a number of U.S. goods, including maple syrup and whiskey, many of them made in states loyal to Trump, and if Trump left NAFTA, Canada would no doubt levy even more. Canadians, for their part, would likely boycott American goods and embrace “buy Canadian.” Against the world’s greatest economy, however, Canada would lose a trade war. Canada relies on trade for its prosperity; the United States does not. If Canada cannot sell automobiles south of the border, plants will close in southern Ontario, the engine of the Canadian economy, leading to a disastrous domino effect on hundreds of suppliers of parts and materials.” And therein we find the heart of the matter: “Canada would lose a trade war. Canada relies on trade for its prosperity; the United States does not.” The key question is, as Mr Cohen puts it, is President Trump just “a summer squall in the relationship that will pass with the election of another president or [does] “America first” represents a new ice age” in the Canada/US relationship?

If it is the latter Andrew Cohen suggests then “Canada will face an agonizing decision. The default option would be to remain committed to North America, with all the obvious advantages of shared geography, history, democracy, and language. That is what the country has done for most of its history, and could continue to do, although it would be near impossible to breach the protectionist walls of “Fortress America.”” But he say ~ and Mr Cohen is a Canadian nationalist ~ “Canada could take a different direction. It could diversify its economy and pivot to Europe and Asia, gradually reducing its economic dependence on the United States. This would mean revisiting the “Third Option,” a proposal that Pierre Trudeau’s government made in 1972 in reaction to protectionist measures imposed by the Nixon administration. The idea back then was to sell less to the United States and more to Europe. Today, it would mean creating a new trade agreement with a post-Brexit United Kingdom, pursuing free trade with China and other Asian countries, and deepening the existing agreement with the EU. Canada’s trade would become less continental and more global … [but he explains] … This would be a difficult, perhaps impossible, option. It is easier to trade across the street than across the ocean. Canada would have to retool its economy, relying less on exports of natural resources and shifting more heavily to high technology and light manufacturing. That would take decades, but with its diverse, multilingual, well-educated, and globally connected population, the country could do this more easily than most.” It’s another blinding flash of the obvious, but one that is 100% correct, when he says that “it is easier to trade across the street than across the ocean;” the Third Option was always a Canadian nationalist dream, making it reality might approach the impossible.

Andrew Cohen indulges with his own nationalistic dreams when he says that “Such a shift [towards the Third Option] would signal the emergence of a bolder, more confident Canada, one more European than American in outlook. In particular, Canadian foreign policy might become more Nordic, given that Canada shares a climate (cold), geography (northern), and values (egalitarian, liberal, communitarian) with Denmark, Finland, Iceland, Norway, and Sweden. Indeed, in their belief in universal health care, gender parity, minority rights, and a social safety net, as well as their rejection of guns, religion in politics, and capital punishment, Canadians have always been more Nordic than American … [but, he says, by way of Canada having its nationalistic cake and eating it, too] … This does not mean that Canada would ever abandon its security commitments to North America or declare neutrality. Canada would surely enhance, rather than diminish, its commitment to NATO. But untethered to the United States, Canada would gravitate more strongly to the UN and other international institutions that it has always supported but that Trump’s unilateralist United States distrusts. Unfazed by the threat of economic retaliation, Canada would be more skeptical of U.S. positions that offend its progressive worldview, such as full-throated support for Israel. The reality is that a Canada less economically dependent on the United States would be more politically independent of the United States … [and] … All of this would represent a sea change for Canada, and an existential challenge, too. But having never seen a U.S. president like Trump before, Canadians must now think in a way they never have before: contemplating a radical new course in a world without America.” That is the nationalist dream that goes all the way back to the Conservative John Diefenbaker and, even father, to the Liberals like Walter Gordon and Mitchell Sharp: how to be more and more European but still live like Americans?

I have said before that we may have to learn to live without NAFTA, which is, I think, something for which Team Trudeau is ill prepared. Too many Canadians are in the TINA² trap which I described as being the square of There Is No Alternative and we are Trapped In North America. All the nationalists need to wake up and recognize that they cannot cut Canada away from the USA and join it to Denmark. We are here and we have to make a continental economy work for us. We cannot thrive without trade, trade with the USA will always be easier and more profitable than trade with Australia, Britain, China, Denmark and so on through to Zimbabwe.

President Trump believes, with good reason, that American can retreat into isolationism and survive ~ its market is large enough and we will be desperate to sell resources to fuel America’s factories. The Chinese and the Europeans think along similar lines. No one really wants Canada’s manufactured goods or, usually, our services; they want us to hew wood, draw water and dig oil and iron out of the ground. We, many Canadians, anyway, on the other hand, want to live in cities, with good, clean, green jobs in the service sector and forget about the hard men and women who mine resources, harvest our forests and build pipelines.

At some points, probably sooner than we wish, dreams will have to give way to reality. We must ~ I think this is without question ~ pursue more and better trade deals with e.g. Britain, China and India; they will be deals and we will have to give up something to get something in return. We must try to preserve the WTO’s rules based system even though I suspect it, the WTO itself, is on President Trump’s ‘hit list.’ We must strengthen our resource sector through subsidies and infrastructure renewal (e.g. pipelines and LNG ports, etc not matter what Montreal and Vancouver say) as necessary. We must manufacture what we can for our own market and export the best (e.g. our LAV III armoured military vehicles) to the world. We must strengthen our service sector ~ e.g. banking, insurance, information technology and entertainment ~ through e.g. increased spending on good, productive education. We must aim to make Canada more productive and a create larger domestic market by making Canada larger ~ through immigration. We must, above all, engage with America, despite its political leanings, to preserve and enhance our access to its markets.

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