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From Deep Integration to Reclaiming Sovereignty: Managing Canada-U.S

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From Deep Integration to Reclaiming Sovereignty: Managing Canada-U.S From Deep Integration to Reclaiming Sovereignty: Managing Canada-U.S. Economic Relations Under NAFTA By Bruce Campbell ISBN: 0-88627-330-7 May 2003 CAW 567 From Deep Integration to Reclaiming Sovereignty: Managing Canada-U.S. Economic Relations Under NAFTA By Bruce Campbell ISBN: 0-88627-330-7 May 2003 About the Author: Bruce Campbell is Executive Director of the Canadian Centre for Policy Alternatives. Acknowledgements: The author wishes to thank Tony Clarke, John Foster, Ricardo Grinspun, Andrew Jackson, Seth Klein, Scott Sinclair, and Michelle Swenarchuk for comments on an earlier version of this paper. CANADIAN CENTRE FOR POLICY ALTERNATIVES 410-75 Albert Street, Ottawa, ON K1P 5E7 tel: 613-563-1341 fax: 613-233-1458 email: [email protected] http://www.policyalternatives.ca Introduction together where one entity is dominant, the resulting combination resembles the domi- Post-September 11 has changed the way the nant entity. This is assimilation—a process of United States views the world and the way becoming like the dominant entity. The dis- the world views the United States. In the Bush tinction is important. What we are talking Administration’s new world order, about is a process that more often resembles multilateralism is dead. Unilateralism trumps assimilation than integration. international law except when it serves U.S. The use of language is important in this interests. Military and economic agendas are debate. Public opinion responses vary with the indistinguishable. Globalization means en- choice of words. Many Canadians currently forcing free market rules and investor supports the idea of economic integration freedoms for U.S. multinationals, protecting with the U.S., but most Canadians would also domestic markets for national producers prefer to see Canada-U.S. differences main- where required, and securing U.S. access to tained or widened. They don’t want assimila- the world’s resources. tion. As public opinion researcher Andrew The American government wages an un- Parkin told a Parliamentary committee, al- ending war on an undefined “terrorism,” leav- though Canadians favour close cooperation ing the world in a state of anxiety reminis- on economic and security matters, this, they cent of the Cold War. In its self-appointed believe, should not compromise Canadian new role, it enlists coalitions of the willing, uniqueness or sovereignty. rebukes the uncommitted, threatens the un- Integration is proceeding through the ac- willing and crushes the evildoers. tions and decisions of corporations within the It is in this climate—where not being in policy framework created by NAFTA. Two- lockstep with the hyperpower raises the spec- way trade and investment flows, intra-com- tre of retaliation—that the discussion of deep- pany trade, and the continental integration ening Canada-U.S. economic integration is of production have accelerated dramatically playing out. Business leaders and free trade over the last 15 years. Most Canadian manu- warriors are beating the drums for another big facturing output is now exported south of the leap of faith into a new comprehensive ar- border. rangement with the United States. Once again It is also occurring, explicitly and implic- they are warning that the status quo is not itly, at the policy level. It is happening explic- acceptable, that the costs of not taking this itly through an array of NAFTA-established leap could be catastrophic for the economy bodies engaged in everything from harmoniz- and the well-being of Canadians. ing labour mobility provisions to standards “Integration” is defined by the Oxford Dic- for pollutants. It is happening through explicit tionary as a process where two or more enti- harmonization measures taking place in fo- ties come together to form a single entity. rums outside the NAFTA apparatus, but very Implied in the definition is an equality of the much related. These notably include the post- separate entities and the creation of a new September 11 measures to harmonize secu- entity that combines equal elements of the rity, transportation, immigration, and refu- pre-existing entities. In a process of coming gee policies and practices. They include meas- From deep integration to reclaiming sovereignty 1 ures to improve the border infrastructure and The most radical integration proposal is expedite border procedures. the creation of a so-called common currency Integration is also happening implicitly (or (in reality, adoption of the U.S. dollar). It is indirectly) through, for example, the harmo- advocated by some in the business commu- nization of social policy and tax policy. nity, and in the business-funded think tanks, NAFTA does not mandate this kind of har- and by two political parties—the Bloc and the monization; nor is it inevitable; but NAFTA Alliance. There is no consensus on this pro- facilitates the tax-cut agendas of posal within the business and policy estab- neoconservative governments. lishment, and it remains a possibility only in Finally, the Americas free trade negotiations the long term. currently underway are proceeding very much A prominent deep integration proposal is in the NAFTA mold and could result in the the so-called Big Idea or strategic bargain. deepening of the Canada-U.S. economic re- Spurred by September 11, it has been circu- lationship. The way the FTAA is shaping up, lating in the public domain for a year now. as evidenced in the drafts that have been made The luminaries behind it include the C.D. public, it appears to be heading toward a Howe Institute led by Wendy Dobson and “NAFTA-plus” deal. That is to say, it goes former trade negotiators Michael Hart and beyond NAFTA in its market-centred orien- William Dymond; IRPP president and former tation, forging into new areas of domestic Mulroney chief of staff Hugh Segal; free trade market deregulation and new constraints on commissioner Donald MacDonald; former government action. In the same way that Canadian ambassador to the U.S. Alan NAFTA was not only an extension, but also a Gotlieb; Tom d’Aquino, CEO of the newly- deepening of the FTA, so the FTAA will likely named Canadian Council of Chief Executives; be not just an extension, but also a deepening and Perrin Beatty, head of the Canadian of NAFTA. At least that is the agenda of the Manufacturers and Exporters Association. U.S., and also, it would appear, of the Cana- These are the same free trade warriors who dian government at this time. This FTAA brought us free trade Round One in the track is scheduled for completion in 2005, 1980s. Big it may be, but it is neither a new though how big an integration step it will be nor a good idea. And it feels like déjà vu all remains to be seen. over again, coming from the same folks who Free trade proponents from various quar- promised at the time that a big comprehen- ters advocate a range of deep integration sive deal would put an end to American har- tracks, from small steps to quantum leaps. assment of our exports. Some advocate big measures such as a cus- The essence of the strategic bargain is to toms union, common trade policy, common trade economic security (Canada’s goal) for energy policy, a common security perimeter, homeland security (the U.S. goal). For etc. Others favour a more stealth-like or be- Canada, this means putting the remaining low-the-radar approach—regulatory harmo- components of our sovereignty on the table nization, harmonization of tax, competition, in a mother-of-all negotiations—trade policy, and resource policies, etc. culture, energy, other resources including water, agriculture, defense and security, etc.— 2 Canadian Centre for Policy Alternatives in return for further enhanced (and this time the balance between the market and govern- genuine) security of access for Canadian ment, between investor rights and citizen goods, services and “knowledge workers,” and rights. Worse, as Stephen Clarkson has elo- full citizenship for Canadian investors in the quently pointed out, it has frozen this imbal- U.S. ance in a supra-constitutional arrangement Proponents stress that there is a window that make these neoconservative experiments of opportunity to be seized, given America’s difficult, perhaps even impossible, to reverse. heightened preoccupation with secure borders Secondly, most Canadian governments con- and a secure supply of resources. They also tinue to pursue think that this can be accomplished without neoconservative Further integration at much in the way of new institutions; and they policies whose argue that the European Union is not the ap- negative social ef- the policy/regulatory propriate model here. The Big Idea, though fects are rein- level is neither inevitable stalled in the current climate of policy diver- forced by the nor desirable. It should gence on Iraq and reticence on the part of NAFTA frame- Prime Minister Chrétien, will likely gain se- work. be avoided or reshaped rious traction in a Paul Martin-led govern- Thirdly, its where possible, and ment. proposed deepen- reversed where feasible. And finally, there are those like myself who ing and widening do not think the Canadian government in an FTAA is be- should be actively pursuing deeper levels of ing driven by neoconservative governments integration with the United States along the bent on further deregulating markets and fur- tracks outlined above. Further integration at ther constraining the role of government. The the policy/regulatory level is neither inevita- Canadian government’s initial FTAA negoti- ble nor desirable. It should be avoided or re- ating position combines some of the worst shaped where possible, and reversed where features of NAFTA and the GATS. (Sinclair feasible. Where it takes place, it should only 2003) do so under clear and well-defined conditions. Finally, the power imbalance is so great be- The impact of nearly 10 years of NAFTA tween the U.S.
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