JUNE 2018 WHAT’S NEXT for Trans Mountain?

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PublishedBrian LeeBrian by Crowley, theLee Crowley,Macdonald-Laurier Managing Managing Director, Director [email protected] Institute David Watson,James Anderson,Managing ManagingEditor and Editor, Communications Inside Policy Director Brian Lee Crowley, Managing Director, [email protected] David McDonough, Deputy Editor James Anderson,Contributing Managing writers:Editor, Inside Policy Contributing writers: Thomas S. Axworthy PastAndrew contributors Griffith Benjamin Perrin Thomas S. Axworthy Andrew Griffith Benjamin Perrin Mary-Jane BennettDonald Barry Jeremy Depow Stanley H. HarttMarcus Kolga MikeRobert Priaro P. Murphy Massimo BergaminiDonald Barry Peter DeVries Stanley H. HarttAudrey Laporte Mike PriaroDwight Newman Derek BurneyKen Coates Brian Dijkema Paul KennedyPeter Layton Colin RobertsonGeoff Norquay Ken Coates Paul Kennedy Colin Robertson Charles Burton Ujjal Dosanjh Brad Lavigne Benjamin Perrin Brian Lee Crowley Audrey Laporte Roger Robinson Catherine CanoBrian Lee CrowleyDon Drummond Audrey Laporte Ian Lee Roger RobinsonJeffrey Phillips Elaine CarsleyCarlo Dade Patrice Dutil Ian LeeChristian Leuprecht Robin V.Mike Sears Priaro Carlo Dade Ian Lee Robin V. Sears Duanjie Chen James Fergusson Edward Luttwak Richard Remillard Michael ChongLaura Laura Dawson DawsonMartha Hall FindlayJaniceJanice MacKinnonMacKinnonMeredith MacDonald MunirMunir SheikhPhilip Sheikh Carl Salzman Dan Ciuriak Chrystia Freeland Janice MacKinnon Munir Sheikh Scott ClarkGuyGuy Giorno Giorno Stephen Greene LindaLinda NazarethVelma McColl AlexAlex Wilner WilnerSean Speer Ken Coates Stanley Hartt David McDonough John Thompson StephenStephen Greene Greene GeoffGeoff Norquay Celine Cooper Carin Holroyd Shuvaloy Majumdar Gil Troy Philip Cross Dean Karalekas Paul Martin Michael Watts Past contributors: Mary-Jane Bennett, Carolyn Bennett, Massimo Bergamini, Ken Boessenkool, Brian Bohunicky, Scott Brison, Past contributors:Laura Dawson Mary-Jane Bennett, PaulCarolyn Kennedy Bennett, Massimo Bergamini,Ted Menzies Ken Boessenkool, BrianAlex Bohunicky, Wilner Scott Brison, Derek Burney, Catherine Cano, Dan Ciuriak, Scott Clark, Philip Cross, Celine Cooper, Peter DeVries, Don Drummond, John Duffy, Derek Burney, Catherine Cano, Dan Ciuriak, Scott Clark, Philip Cross, Celine Cooper, Peter DeVries, Don Drummond, John Duffy, Patrice Dutil, Joseph Fantino, Daniel Gagnier, Brad Lavigne, Tasha Kheiriddin, Jeremy Kinsman, Steven Langdon, Velma McColl, Patrice Dutil, Joseph Fantino, Daniel Gagnier, BradCover Lavigne, photo: Tasha transmountain.com Kheiriddin, Jeremy Kinsman, Steven Langdon, Velma McColl, Ted Menzies, Robert P. Murphy, Peggy Nash, Gil Troy, Michael Watts. Ted Menzies, RobertProduction P. Murphy, designer: Peggy RenéeNash, DepocasGil Troy, Michael Watts. The contributors to this publication have worked independently and are solely responsible for the views presented here. The contributorsThe toopinions this publication are not necessarily have workedthose of independently the Macdonald-Laurier and are Institute,solely responsible its Directors for or the Supporters. views presented here. The contributors to this publication have worked independently and are solely responsible for the views presented here. The opinionsThe opinions are not are necessarily not necessarily those those of the of theMacdonald-Laurier Macdonald-Laurier Institute, Institute, itsits DirectorsDirectors or or supporters. Supporters. Inside Policy is published six times a year by the Macdonald-Laurier Institute. The contents of the magazine are copyrighted, but may be re-produced with permission in print, and downloaded free of charge from the MLI website: macdonaldlaurier.ca Inside PolicyInside is Policy published is published six times four a times year aby year the by Macdonald-Laurier the Macdonald-Laurier Institute. Institute. The The contents contents ofof the magazinemagazine are are copyrighted, copyrighted, but may bebut re-produced may be re-produced with permission with permission in print, in print, and anddownloaded downloaded free free of ofcharge charge from from the the MLIMLI website: macdonaldlaurier.ca macdonaldlaurier.ca For advertising information, please email: [email protected]

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insidepolicy [march].indd 2 14-04-01 10:00 AM From the editors Contents

LI has been at the forefront of the debate on how to best approach 4 Ontario, First Nations take giant step toward Mthe Trans Mountain pipeline, and we are pleased to showcase a reconciliation Ken Coates and Stephen Crozier selection of our work on this topic in this issue of Inside Policy. 5 Why Trudeau spent $3.5 billion to nationalize Managing Director Brian Lee Crowley looks at why the Trans Mountain Brian Lee Crowley government nationalized Trans Mountain, which according to Munk 7 The pipeline purchase is a sign of economic Senior Fellow Sean Speer is another example of economic enfeeble- enfeeblement Sean Speer ment. Carin Holroyd and Munk Senior Fellow Ken Coates explore 8 What the Kinder Morgan decision says about what this decision can teach us about the challenges facing investment investing in Canada Carin Holroyd and Ken Coates in Canada. Yet, as Coates and Stephen Buffalo write, Canada’s natural 9 How Indigenous peoples can save the resource economy in Canada resource economy could also benefit from a full Indigenous partnership Stephen Buffalo and Ken Coates – a realization that countries like Taiwan are beginning to understand, according to Coates and Holroyd. An important step was recently 11 Carbon taxes do not curb emissions or help battle climate change Philip Cross established with the Ontario government’s revenue-sharing plan with First Nations, as noted by Coates and Stephen Crozier. 12 Following Comeau, lawmakers need to defend Canada’s economy could use such an injection of entrepreneurship. Canadians’ economic rights Brian Lee Crowley and Sean Speer Munk Senior Fellow Philip Cross outlines the high economic costs associated with the government’s carbon tax plan, while Senior Fellow 14 Budget doesn’t make grade in truly helping women Linda Nazareth takes issue with the government’s plans for gender- to narrow wage gap Linda Nazareth equal pay. Speer also joins Robert Asselin to offer a guide for fixing 15 Canada must play the long game to fix its economic Canada’s economic competitiveness. competitiveness Robert Asselin and Sean Speer Crowley and Speer also argue that we could benefit from a 16 Fill in the gaps to strengthen Pharmacare charter on economic rights to rectify the shortcomings arising from Sean Speer our interprovincial trade barriers. And Speer recommends ways to fix 19 Is Canada’s defence of supply management giving Canada’s pharmacare system. away the farm? Larry Martin Most importantly, the federal government must also deal with NAFTA negotiations and a Canada-US trade war on the horizon. 20 No one will win Trump’s fight between the US and Canada Laura Dawson Munk Senior Fellow Laura Dawson makes clear that no one will win in a trade war – a point reiterated by former Republican Congress- 22 Canada’s losing jobs when we should be booming man Charles Boustany. Cross looks at the buoyant business climate economically. Guess why Philip Cross in the US compared to the weak investment in Canada. Meanwhile, 23 Trump’s tariff justification is patently absurd Larry Martin provides some recommendations on how to best increase Charles Boustany market access in trade negotiations like NAFTA. 24 What lessons can be learned from the Toronto Even as Canada tries to deal with an unpredictable US president van attack case? Scott Newark and fraught trade negotiations, it also must confront other challeng- 26 Not to Aecon, nor to Huawei: the security of Canada es. Scott Newark offers lessons from the van attack in Toronto, while can never be for sale Brian Lee Crowley Crowley warns of being too close to China-owned Huawei. Canada must also be ready to confront cyber and disinformation threats from 27 The international recognition of Indigenous Putin’s Russia, as noted by Senior Fellow Marcus Kolga. resource rights Ken Coates and Carin Holroyd The G7 offers an important forum to deal with key global challenges. 28 The G7 can find common cause in the South As argued by Crowley, the G7 could find common cause in confronting China Sea Brian Lee Crowley Chinese assertiveness in the South China Sea. A provocative idea is also 29 The G7 should become the G8 again – with India in offered by Munk Senior Fellow Shuvaloy Majumdar – to transform the fold Shuvaloy Majumdar the G7 into the G8, with India as a member. Both suggestions would 31 We need to stop Russia’s cyber and disinformation better prepare G7 members to deal with the Indo-Pacific century. campaign Marcus Kolga

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 3 INDIGENOUS AFFAIRS Ontario, First Nations take giant step toward reconciliation

Revenue sharing deal between Ontario and First Nations helps reinforce Indigenous self-determination.

Ken Coates partly because Progressive Conservative with companies, typically involving Stephen Crozier leader Doug Ford’s earlier support for training, jobs, business opportunities and revenue sharing with Indigenous peoples community benefits, will remain an integral very once in a while, the ground lifted the issue out of the realm of partisan part of modern mining development in Eshifts in the Canadian public-policy politics. This is a good thing. Finding Canada. Revenue sharing, therefore, is a landscape. So it was in May 2018, when appropriate mechanisms for involving crucial piece of a larger puzzle of contempo- the Ontario government announced Indigenous communities in resource rary resource activity in Canada. an agreement to share mining and forestry development is crucial to the general Indeed, perhaps the most important revenue with First Nations. The specific deal vitality of Ontario’s resource sector as well and difficult work lies ahead. The was worked out with the Grand Council of as the economic and social well-being of agreements have to be implemented Treaty #3, the Wabun Tribal Council and Indigenous peoples. successfully. Additional agreements will be the Mushkegowuk Council. This transfor- mative development, many years in the making, changes the very foundations of The benefits for Indigenous communities resource development in Ontario and holds the potential to set Indigenous, government could be substantial. and industry relations on a new path. The situation in Ontario is well known. Many promising resource develop- The details of the agreements are needed, as currently only 32 First Nations ments, highlighted by the Ring of Fire in straightforward. The province will allocate have signed on. Notably, the current Northern Ontario, have been stalled or 45 percent of forestry stumpage fees (the agreements do not extend to the Ring of slowed by Indigenous opposition. The price a company must pay to the landown- Fire. Revenue sharing also does not remove often-stated position is that there was little er to harvest timber from an area) and 40 the obligation of resource firms to work reason to pursue developments when the percent of mining tax and royalty payments carefully, constructively and openly with returns to Indigenous communities were associated with active mines to the affected Indigenous communities. small and uncertain. Resource companies First Nations. Government revenue from Collectively, the benefits for Indigenous have supported resource revenue sharing, future mines will be subject to a 45-percent communities could be substantial and are provided it represented a sharing of current allocation to the First Nations. The funds certainly well-deserved. For their part, taxes. The provincial government, for will come to the First Nations with no communities need to remain vigilant to their part, worried about how they would strings attached; they can use the money to hold government to its commitment not to fund other development costs, like major address local needs, which remain substan- claw back the additional revenue from other infrastructure, if their resource revenues tial in most communities. Crown payments and contributions to First eroded. An impasse had settled over the Government resource revenue sharing Nations. Companies will be keen to ensure resource sector, leading to many delays, is no panacea. The sums involved will not be that Ontario does not seek to offset the cost conflicts and legal struggles, all of which high enough to immediately address urgent of the shared revenue through increased fees slowed investment and limited opportuni- requirements, let alone produce windfall and taxes, which could easily make further ties for Indigenous participation. profits for First Nations governments. It development non-economic. In the run-up to the provincial election, is also not the only way that First Nations Resource revenue sharing supports then Premier Kathleen Wynne’s announce- could share in the opportunities associated ment did not get the attention it deserved, with resource development. Agreements Continued on page 32

4 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute COVER FEATURE ransmountain.com Why Trudeau spent $3.5 billion to nationalize Trans Mountain

The government has pursued a policy of appeasement to pipeline opponents and environmental activists.

Brian Lee Crowley aims to triple the capacity of former owner ravenously eyeing Prime Minister Justin Kinder Morgan’s existing pipeline bringing Trudeau as the prime minister nervously ccording to the Canadian Encyclopedia, oil from Alberta to the Port of Vancouver. tries to shoo the beast away with billions Athe network of oil and gas pipelines in Even then, the outcome is uncertain. of dollars of taxpayer cash. Canada is 840,000 kilometres long. And How did it come to this? The answer The roots of this story reach back to virtually every kilometre of pipe was laid by is that this was the entirely foreseeable the years just prior to the 2015 federal private capital over many decades. outcome of a policy of appeasement election. The previous Conservative Yet today, it appears the only way a toward pipeline opponents and environ- government had tried to position Canada major pipeline project in Canada can get mental activists pursued by the governing as a “world energy superpower,” as Alberta built is if the federal government buys the Liberals. Winston Churchill once famously oil sands production rose precipitously and project, as it did this week when it spent described an appeaser as one who feeds existing pipeline capacity neared its limits. $4.5 billion Canadian (US $3.5 billion) a crocodile, hoping it will eat him last. Four major pipeline proposals were to buy the Trans Mountain project, which Having devoured all, the crocodile is now all forging ahead. Two went to the west

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 5 oil tankers on the northern west coast and, in concert with the government of Alberta, introducing tough measures to limit the growth of the oil sands, including Prime Minister Justin a greenhouse gas emissions cap. Trudeau, MP Randy This moving of the goalposts Boissonnault and Minister Amarjeet mid-game caused the collapse of two of Sohi visit the Kinder the four pipeline proposals (Energy East Morgan Edmonton and Northern Gateway), despite billions Terminal, June 5, 2018 of dollars spent in good faith by the Adam Scotti (PMO)/ pm.gc.ca proponents to meet the rules as they existed at the time. Only one project remains that coast (Trans Mountain and Northern can break Canada’s dependence on the US Gateway), one to the Atlantic (Energy market and add billions to Canada’s GDP: East), and the fourth (Keystone XL) to the It was weakness Trans Mountain. Trudeau says he’s all-in US Gulf Coast. Every one of them sought despite the opposition of the government the Canadian energy holy grail: access to that drove him to of British Columbia. tidewater. Without such access, the existing purchase the But whereas Trudeau was proposing pipeline network only reaches US domestic a rational trade-off (tougher standards for markets. Due to fracking, US markets are pipeline at pipeline approval), his erstwhile allies were already awash in oil, such that the Western taxpayer expense. simply opposed to pipelines, full stop. In Canadian Select oil blend fetches a discount- an effort to win them over, he whittled ed price. But if it can sail, then Canadian oil his options down to one. It was weakness fetches the world price in Europe and Asia, claiming to favor responsible pipelines, that drove him to purchase the pipeline at currently roughly $20 a barrel higher than they made it clear that they would not ride taxpayer expense. what American refiners will pay. roughshod over pipeline opponents, but Having helped legitimize opposition In the Conservatives’ love affair with would toughen standards even further and to all pipelines, Trudeau now finds he is Canadian energy exports, the Liberals win over opponents by demonstrating their the one being demonized by his former saw a potential political advantage. If commitment to environmentally-sound friends for agreeing to one. Tzeporah the Tories could be portrayed as callous economic growth. To do that, they had Berman, one of leaders of the pipeline money-grubbers, indifferent to theto make clear that the existing standards opposition, recently wrote, “After a decade environmental cost of energy develop- were not just inadequate, but dangerously of the [Conservative] Harper government I ment, the Liberals stood to benefit, so, bad enough to justify political and civil thought [Trudeau] was a dream come true. since Canadians believe strongly in high disobedience. Now it’s a nightmare.” environmental standards. As Trudeau said when his party Expect a campaign of civil disobedi- Standing in their way was the regulato- was still in the parliamentary minority, ence involving politicians, international ry and legal framework developed over governments may issue permits, but only celebrities, Aboriginal groups, and environ- many years by successive governments. local communities can give permission for mental activists, with the tacit backing of Canada in fact already had some of the projects that affect them. The stage was the far-left British Columbia government, toughest environmental and constructions set for legitimizing direct challenges to to reach a crescendo over the next year, standards in the world. The workings of the democracy and the rule of law in the name as they test what they believe is the weak National Energy Board (NEB) were widely of a higher environmental ethic. resolve of Ottawa to haul hundreds of admired, and people came from all over the The Liberals duly won the election people off in paddy wagons. world to study how Canada managed oil and, thinking they had a deal with the Expect to see a few hungry crocodiles and gas so successfully. environmentalists, set out making good on on the picket line. The Liberals’ political strategy therefore their end of the bargain. They are toughen- required them to throw in their lot with the ing regulatory requirements, replacing the Brian Lee Crowley is the Managing Director of MLI. hardline environmental movement. While NEB, introducing a carbon tax, banning This article first appeared in theWashington Examiner.

6 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute trans mountain pipeline The pipeline purchase is a sign of economic enfeeblement

The Trans Mountain episode should cause us to restore common sense to government decision-making and project reviews.

Sean Speer private company that abided by the process bigger than one government, one pipeline, and sought to invest billions of dollars in or one sector. It now permeates every level he Trudeau government’s decision our country was precluded from doing so? of government and crosses the economy. Tto spend $4.5 billion to acquire the How did we get to a point where public One example: Condo and real estate Kinder Morgan pipeline must be a wake-up capital needed to replace private capital to developers in Toronto typically face nearly a call for Canadians. finance a profitable project? year-and-a-half for approvals and spend an It’s a sign that we’ve gone too far. This isn’t a nascent industry. It isn’t average of $46,570 per unit on compliance Consultations and regulatory processes a case of market failure. We already have costs. The result is less housing supply have become disconnected from their 840,000 kilometres of pipeline operating and in turn higher prices at a time when initial purposes of informed decision- in Canada. Most has been financed and people are rightly concerned about housing making. Project approvals and permitting constructed by private capital. affordability. are regularly subjected to lengthy delays and costly uncertainty that have nothing to do with the environment, science, or our How did we get to a point where public economic interests. We’ve enfeebled our economy as a capital needed to replace private capital result. The case of the Trans Mountain to finance a profitable project? pipeline should bring this into stark clarity. A private company wanted to invest $7.5 billion – more than half the federal government’s annual infrastructure budget This is a case of government failure. Another example: federal, provincial, – in our country’s energy infrastructure. In fact, it’s a failure by all of us. We’ve and local governments pledged funding It represented a substantial investment permitted a build up of government for the Spadina subway extension in 2006 involving 15,000 construction jobs alone. rules and processes that amounts to what and yet the service only commenced The company, by all accounts, followed conservative columnist George Will calls more than 10 years later in December the rules. It submitted a project application at “economic enfeeblement.” 2017 following various delays and cost the end of 2013. The National Energy Board The Trudeau government certainly overruns. No wonder it represented the recommended its approval in May 2016. The contributed to the problem. Opportunis- first new subway stops in decades. government accepted the recommendation tic critiques of the major project review The list could go on and on. The Trans – including 157 conditions – in November process diminished public confidence. Mountain episode is merely the most 2016. Kinder Morgan spent $1 billion going Vague commitments about the United recent and highest profile example. through the painstaking consultation and Nations Declaration on the Rights of It should cause us to restore common regulatory process. Indigenous People raised the spectre of sense to government decision-making And yet, in spite of all this, the company a First Nations “veto.” New regulatory and project reviews. It’s time to end the ultimately decided the project wasn’t viable burdens exacerbated the already slow and enfeeblement. We need to start building due to ongoing policy and legal uncertainty. cumbersome process. Notions of “social things again. No other firm would touch it. Ottawa had licence” were predictably used as a foil by no choice but to buy it. ideological activists to stall progress. Sean Speer is a Munk Senior Fellow at MLI. This How did we get to a point where a This is all true. But the problem is article previously appeared in the Toronto Sun.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 7 trans mountain pipeline What the Kinder Morgan decision says about investing in Canada The federal government’s purchase of Trans Mountain carries potentially serious long-term financial consequences for the country.

Carin Holroyd Without government assurances that Ken Coates the pipeline project could proceed in full accordance with the law and duly secured ould you invest a billion or two in permits and approvals, the company was WCanada right now? going to shut construction down. By buying the Trans Mountain Ignore, if you can, all of the related pipeline, the government of Canada has concerns about the employment of construc- made a stunning admission. They cannot tion workers, financial commitments to assure a major company, one with a long First Nations along the route, increased and successful track record in Canada, or decreased federal and provincial that a legal, comprehensively reviewed and government revenues, and the national and fully authorized major project will proceed international debates about climate change to completion. and oil sands development. Let’s park the conversation about the Focus instead on what this says about relative merits of the pipeline itself and think Canada’s investment environment. about the message that this decision sends By buying the pipeline, the government to the investment community, particularly of Canada has essentially agreed with relating to natural resource development. Kinder Morgan – a private company could Canada has, for generations, been a not build a fully authorized project in a major beneficiary of foreign and domestic timely and commercially effective manner. investment in resource projects and related And so the federal government is transmountain.com infrastructure. That investment flow is going to build it, assume the risks with now at risk. taxpayer money and somehow deal with the The protests against Kinder Morgan continuing protests, including the potential are fully understandable. In a properly and, to date, the overwhelming majority of for violence and for citizen arrests. functioning democracy, people debate with the protests and tactics used by opponents This is a staggering admission and one passion and conviction the major issues of the project have been well within with potentially serious long-term financial of the day, including energy policy and acceptable bounds. consequences for the country. pipeline construction. Canada and British Columbia have been The opponents have many different Canada’s Standing Rock? down this path before. In the mid-1990s, the and honourable motivations, from concerns But with continued push-back from the province’s NDP government slammed the about the pipeline itself and Indigenous government of British Columbia and pro- brakes on the Kemano Completion Project, rights to worries about protecting the coastal vincial municipalities, particularly Burnaby a major hydro-dam expansion in northern waters from a potential tanker disaster. and Vancouver, and with promises from central BC. Alcan, the project’s proponent, Others see the struggle with Kinder other opponents to turn the construction had spent $500 million by the time the Morgan as an existential battle against project into Canada’s Standing Rock (a government cancelled construction. climate change and, specifically, the lengthy confrontation over the construction exploitation of the oil sands. of the Dakota Access pipeline in the US), These are perfectly legitimate concerns Kinder Morgan had had enough. Continued on page 32

8 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute trans mountain pipeline How Indigenous peoples can save the resource economy in Canada With full Indigenous partnership, the country can have a robust, successful natural resource economy.

Stephen Buffalo Ken Coates

n one of the most unexpected develop- Iments in recent years, numerous First Nations have recently come out in favour of both the construction of the Kinder Morgan Trans Mountain Pipeline and, more surprisingly to most Canadians, have indicated a desire to buy all or part of the now-nationalized project. For people in the field, this is not surprising. Instead, it is the logical extension of a steady expansion in the role of Indigenous peoples in the oil and gas industry in Canada. For generations, resource develop- ment occurred on the backs of Indigenous peoples. Outside developers moved into transmountain.com Indigenous territories and produced a great deal of wealth from mines, oil and gas fields, forests and hydro projects. Indigenous Indigenous peoples are not puppets communities, if they gained any benefits at all, got scraps off the table. But they in the control of resource firms. absorbed repeated body-blows, such as despoiled lands, the destruction of harvest- ing activities, and the impoverishment of entire societies. The small financial returns Canadians know very little about invested hundreds of millions of dollars in from paternalistic governments were sparse Indigenous successes in recent years. Few everything from oil sands tanker farms to compensation for profound losses. urban people have much contact with airlines, hotels, resource-bearing properties, This is all changing fast. Only 50 Indigenous communities. But the growth and other business assets. years ago, Canadians refused to recognize has been dramatic. There have been Resource companies understand, much Indigenous rights. But at great cost to their thousands of Indigenous businesses created. more than the Canadian population at large, communities, Indigenous peoples fought Their communities have signed hundreds that Indigenous peoples are now central to back, spending decades using the courts to upon hundreds of agreements with resource the future of the resource economy. The get governments in Canada to recognize the and infrastructure firms. Thousands of legal “duty to consult and accommodate” contemporary authority of Aboriginal and Indigenous workers, many with college is now integral to the sector. All major treaty rights. It has been a hard slog, marked diplomas or university degrees, are working resource companies have sizeable outreach by literally hundreds of legal victories in the sector across the country. Indigenous operations responsible for working with offsetting a small number of losses in court. economic development corporations have Indigenous peoples.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 9 Make no mistake. Indigenous peoples are not puppets in the control of resource firms. They bargain hard to create opportu- nities for their communities. They do not follow standard business conventions and il investment patterns; they look for long-term returns, local economic development and business spin-off opportunities. In the future, many major infrastructure projects will not just be built through Indigenous territories but will be owned, all or in part, by Indigenous communities or consortia.

Mining Industry Human Resources Counc Mining Industry Human Resources Indigenous communities will be actively involved in everything from exploration and economy. Take the Kinder Morgan Trans development to environmental oversight, Mountain Pipeline controversy. The First response and remediation. Nations on the West Coast have for strong Indigenous peoples will not abandon local reasons fought against the pipeline or, their concern about the environment. They more accurately, against coastal shipping are deeply connected to their traditional and the incremental use of fossil fuels. But territories and want to protect their lands consider the work of the 130 oil and gas for future generations. Projects will only producing First Nations that are members proceed after robust and difficult internal of the Indian Resource Council, or the debates. But Indigenous peoples understand dozens of Indigenous communities that the need for a balance, looking for the right have made partnership agreements with economic opportunities that will give them Kinder Morgan and, earlier, Enbridge’s the resources to support autonomy and Northern Gateway pipeline. independence. Consider, too, the commitment of the Indigenous peoples are back economi- But the rest of the Canadian economy Inuit of Nunavut to engage in the natural cally. They know their economic future is has made little effort to reach out to resource economy and infrastructure tied to the success and sustainability of the Indigenous peoples. Save for the double- development. And the work of Indigenous Canadian natural resource sector. Without a edged sword of dependency on government groups in the infrastructure and support full and enthusiastic embrace of Indigenous transfer payments, Indigenous peoples in industries. To many Canadians, finding communities – without ensuring that most of Canada understand that there are communities that have been outspoken Indigenous peoples have a proper share in precious few economic opportunities for critics of the oil and gas sector coming to the returns and an appropriate measure them outside the natural resource sector. the defence of the industry is something of of influence over the sector – the resource Indigenous peoples are not impediments a shock. For close observers of Indigenous sector will continue on its current uncertain to the growth of the resource economy; they participation in the resource sector, course. With full Indigenous partner- are a key part of the future of Canadian however, the recent suggestions by some ship for the first time in Canadian history, extraction, processing and transportation of Indigenous communities that they are open the country can have a robust, successful natural resources. Indigenous communities to purchasing part ownership in the Trans natural resource economy. seek economic opportunity, including a fair Mountain Pipeline is a logical extension share of Canadian prosperity and a release of their engagement. That several of the Stephen Buffalo is CEO of the Indian Resource from the weight of history and the grinding First Nations that have stepped forward Council. Ken Coates is a Munk Senior Fellow at MLI poverty and hopelessness that accounts for have been vocal critics of the oil sands and a Canada Research Chair at the Johnson-Shoyama most of their social and cultural problems. demonstrates that these positions are based Graduate School of Public Policy at the University of Many Canadians refuse to see the on thoughtful and careful analyses of the Saskatchewan. This article was first published in the complexity of the current resource best interests of their communities. Hill Times.

10 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute carbon tax Carbon taxes do not curb emissions or help battle climate change

Carbon taxes have degenerated into a tax grab to increase government spending and expand government.

Philip Cross acceptable, but high oil prices make it feel tax grab, academic advocates implicitly punitive to the average person already said that what was important to conserva- hen first proposed, a carbon tax had struggling with higher fuel costs. tives – that the exercise be part of a more Wthe potential to be an effective way High prices have not always proved the efficient but not expanded tax system – of achieving the long-term goal of reducing best way of promoting energy efficiency. was not important to them. In so doing, greenhouse gas emissions. Significant progress has been made using carbon tax advocates made it easy to label However, its introduction and the other tools. the whole exercise a Trojan horse to expand ongoing campaign conducted by advocates Mandatory mileage standards for government. have become so politicized and corrupted vehicles have resulted in dramatic increases Poisoning the bipartisan well of support by ideology that it is no longer politically in fuel efficiency, allowing North Americans for a carbon tax reduces its effectiveness. tenable, while rising oil prices reduce its to drive larger vehicles without guzzling The public increasingly treats such taxes economic necessity. more gas. Electricity generation has been as transitory, to be reduced or removed To achieve the goal of curtailing fossil largely de-carbonized in Canada through when conservative governments are elected. fuel use enough to meet the Paris Climate government fiat, while in the US a shift So people respond to a carbon tax by Agreement, our current technology requires away from coal was driven by a drop in making transitory adjustments instead of carbon taxes so high that they are a political natural gas prices, not higher taxes. fundamental investments (such as buying non-starter. Proponents of a carbon tax Most fatally for the carbon tax, it more fuel efficient cars) that permanently seem to increasingly agree with this. has become politicized. In its early days, alter behaviour and lower emissions. Instead of a major overhaul to the people on both the left and right of the Left wing governments have stoked the efficiency of the tax system, supporters now political spectrum supported a carbon tax. cynicism of conservatives with an alarming meekly argue that a carbon tax is just one Conservative leaders such as Patrick Brown willingness to ignore facts and simply of a wide range of solutions (the federal and Jim Prentice advocated versions of the indulge vindictive environmental whims. environment minister recently was reduced tax. Now their heirs in Ontario and Alberta When the Obama administration failed to pledging to plant more trees to make its have joined a growing number of conserva- to get a cap-and-trade scheme to control climate change plan palatable to the public). tive parties opposing it, including at the emissions through Congress, it petulant- Small carbon taxes are not a serious federal level. ly played to the environmental lobby’s proposal to curb emissions, but the Why are conservatives increasingly obsessive hatred of Canada’s oil sands by equivalent of buying a papal indulgence united in opposing a carbon tax? Partly blocking the Keystone XL pipeline despite to alleviate our collective conscience because their long-standing suspicions evidence it would lower emissions. with a largely symbolic gesture to climate that the carbon tax would become another A similar process is at work in the change action. government tax grab were confirmed. opposition to the twinning of the Trans Waning interest in a carbon tax Almost all provincial governments used Mountain Pipeline. These moves make is not necessarily a bad thing for the carbon tax revenues to increase government it seem that the triumph of a particular environment. Even without a meaning- spending rather than cutting income taxes. ideology, not the effectiveness that could ful carbon tax, fuel prices across North Carbon tax proponents needed to only come from bipartisan support, is what America are at, or near, record highs this vociferously condemn governments not drives the push for lower emissions. summer. Proponents never clarified how lowering other taxes as an existential threat the tax would interact with changes in oil to the whole carbon tax agenda. By mutely Philip Cross is a Munk Senior Fellow at MLI. This prices: low prices made a carbon tax seem watching the exercise degenerate into a article first appeared in theToronto Star.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 11 INTERPROVINCIAL TRADE LAWS Following Comeau, lawmakers need to defend Canadians’ economic rights

The federal government needs to stand up for Canadians wishing to exercise their rights to work, buy, and sell in any corner of the country.

Brian Lee Crowley Sean Speer

t’s now been just over two months since Ithe Supreme Court of Canada ruled on the high-profile “free-the-beer” case. The court’s unanimous decision against retired steelworker Gérard Comeau’s right to purchase beer in Quebec to bring back to New Brunswick has been the source of great despair for many who hoped for an affirmation of Canadians’ economic and commercial rights free from interprovincial trade barriers. There are plenty of reasons to be disappointed with the judicial outcome. Not only did it involve a tortured interpretation of Section 121 (the open market clause) of iStock the Constitution, it strains credulity that the oft-activist court suddenly was animated larly the federal government – to stand up But, as we’ve written elsewhere, it’s by notions of judicial restraint, particularly for people like Mr. Comeau who wish to not merely about financial consider- given the importance of the economic and exercise their rights to work, buy, and sell in ations. It concerns our basic rights as commercial rights of Canadians that were any corner of the country. workers, entrepreneurs, and consumers very much at stake. and even though those rights may not But notwithstanding these legitimate A matter of cost and principle have been included in the Charter of grievances with the decision and what it Interprovincial trade barriers impose con- Rights and Freedoms, they have nonetheless says about the confused and contentious siderable economic costs. Statistics Canada been recognised by some of our greatest state of legal thinking in this country, it has estimated that the totality of interpro- thinkers – like Adam Smith and David would be a mistake simply to despair. vincial trade barriers (such as New Bruns- Hume – as absolutely central to human The Supreme Court’s decision is most wick’s ban on bringing beer across its pro- freedom. Given how much our identity emphatically not the end of any hope of vincial line) amount to the equivalent of and our life revolves around our economic using the law and the Constitution to a 7-percent tariff inside Canada’s borders. choices and possibilities, what trade or protect economic rights and tear down Think about that for a minute. We essen- profession we can exercise, what education interprovincial trade barriers. It merely tially have tariff-free trade with the United we can acquire, how secure our property means we cannot look to the courts to get States and dozens of other countries but is from arbitrary seizure, whom we are the job done. That puts the ball right back allow governments to impose the equiva- permitted to trade the fruits of our labour in the court of elected officials. The onus is lent of a 7-percent tariff on the purchase of with and under what conditions, the lack now on Canadian governments – particu- goods and services within our country. of internal free trade in Canada isn’t some

12 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute petty dispute between governments, but were vulnerable under the Constitution. exemptions, and the ink was barely dry a serious and pervasive obstacle to the The charter would be faithful to the before BC and Alberta were threatening freedom of Canadians. founders’ vision and rooted in the principle each other with new trade barriers in the Moreover, the absence of free trade that a Canadian has the right to seek dispute over the Trans Mountain pipeline. for all Canadians means we have signally employment, earn a living, and sell his or The premiers are no free traders. failed to realise the hopes and aspirations her goods and services anywhere in Canada the founders of Canada had for this new without exception. Standing up for the “Little Guy” country in 1867. Piecing together a national The Comeau case ultimately failed but it’s economy wasn’t a tangential part of the influence will be enduring. Why? It gave country’s founding. It was the central prize the issue a human face. It helped Cana- sought by many of the leading politicians dians understand the power imbalance of the time, an idea expressed repeatedly in What can be done between strong special interests and or- the Confederation debates. The idea that to realize the dinary Canadians that’s often inherent in Mr. Comeau was sanctioned for buying interprovincial trade barriers. Mr. Comeau beer in Quebec and bringing it back to national vision wasn’t some grubby corporatist looking to New Brunswick would have dismayed Sir of Macdonald erode health and safety or environmental John A. Macdonald – and not just because protections. He was just a retired steel- he loved his tipple. George Brown would and the other worker looking to purchase cheaper and similarly have been appalled at the failure founders? better beer. of Confederation to tear down the barriers There are countless others like him. between Canadians, making “a citizen of They’re not famous and don’t have one [province] a citizen of the whole.” high-priced lobbyists, so we don’t know The question, then, is: what can be It would have real enforceability in the about them. They’re hairdressers who can’t done to eliminate these barriers and realize form of an economic freedom commission find work in Ontario because they got their the national vision of Macdonald and the with the power to investigate breaches training in Saskatchewan. They’re small other founders? of the economic charter of rights on its business owners who can’t bid on provincial The Macdonald-Laurier Institute has own initiative as well as in response to contracts because they live on the wrong long championed a legislative solution complaints. Provinces and territories would side of provincial lines. They’re restaura- to these matters. The Supreme Court’s need to justify regulations or policies that teurs who can’t sell their products from one ruling only reinforces the need for such impede the exercise of these basic rights. province to the other. And none of them an approach. Real reform must come from Otherwise people and businesses would can do anything about it. Ottawa. be entitled to ask the courts for financial An economic charter of rights is an compensation for infringements. idea whose time has come – particularly Economic charter of rights following the Comeau decision. It seeks We have argued that the federal govern- The function would thus be somewhat to unshackle Canada’s economy. It seeks ment has the constitutional power to in- similar to the NAFTA’s investor-state to complete Canada’s nation-building troduce a sweeping statute — an economic dispute mechanism. People would similar- project. And most importantly: It seeks to charter of rights — to ensure that no gov- ly now have real recourse to protect their help the rights and freedoms of the little ernment rules or policies unnecessarily re- economic and commercial rights within guy whose life opportunities and livelihood strict the free movement of goods, services, Canada. And the adjudicator would not, as are damaged by parochial and protectionist labour, and capital, and give individual is the case under the current dispensation, restrictions and barriers that have no place citizens clear legal remedies against such re- be the same governments responsible for in a modern and unified Canada. strictions. Such a law would be entirely in the barriers in question. It’s ultimately the There’s no more time to despair. Our keeping with the Supreme Court’s ruling, only way to keep the provinces’ protection- federal legislators have work to do. It’s time which did not say that barriers could not ist inclinations in check. Remember that to “free-the-beer” once and for all. be torn down. Instead it said that the courts under the new agreement on internal trade wouldn’t do it, and that provincial barri- that the provinces negotiated and put into Brian Lee Crowley is Managing Director and Sean ers whose real purpose was to restrict trade effect last July, there are over 100 pages of Speer is a Munk Senior Fellow at MLI.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 13 2018 FEDERAL BUDGET Budget doesn’t make grade in truly helping women to narrow wage gap

The reasons for the pay gap between men and women are not particularly new.

Linda Nazareth men to take “breaks” from work (a really to change the hours worked by women very poor word to express what happens when significantly, however. lease, at least let’s start by using the you are home with small children), which Despite the hype, the measures directed Pright numbers. Of course there is a pay does not help their long-term earnings at women in this budget are pretty scant, gap between men and women in Canada, power either. And there is straight-out pay and that is actually okay. After all, according but let’s not make it worse than it is. When discrimination, which is some portion of to that same Statistics Canada study, that you play with the statistics on male-female that 13 cents although it is hard to know 13-cent gap between men and women has earnings, you lose your credibility and then just how much. narrowed already from 23 cents in 1977 and who knows what else some of us are going 18 cents in 1994. Maybe it is because over to question. that period women have tired of waiting for Case in point: In the 2018 budget help from the government and have gotten speech, Finance Minister Bill Morneau Measures directed themselves loads more education and earnestly says that women make just 69 at women in degrees, realizing that that is the best path cents for every dollar earned by men on an to earning more. A just-published study annual basis. It is a shocker of a statistic, this budget are from Georgetown University in Washing- the same one that sometimes has people pretty scant. ton comes to the grim conclusion that for asserting that it is as if women start working women to equal men’s pay they need one for free at 2:40 in the afternoon while men full degree more their male counterparts. keep getting paid all day. Trouble is, it And so we have a smorgasbord of Depressing as that is, in both the US and simply is not true. offerings to women in this budget. Female Canada, women seem to be getting on with Comparing the earnings of men and entrepreneurs will have $1.4-billion it and making that happen. women on an annual basis is a red herring earmarked for them through the Business Looking at the budget through given that women tend to work fewer hours Development Bank, along with another economist-eyes shows that the thing that than men. According to a 2017 study by $250-million through Export Development most threatens the economic health of Statistics Canada, when you look at hourly Canada. Given that these sums are relatively women is the same thing that threatens earnings of men and women, you see that small and will be doled out over a series of men: There is red ink as far as the eye can women earn 87 cents for every dollar that years, they are not much more than a token, see. With deficits merrily forecast for years men earn. That is still a gap and that’s not but a welcome one anyway. The same is true to come, the government figures that okay, but it is a lot less than the one Mr. for a promise to support women entering Canadian public debt payments will grow by Morneau is talking about. the trades, and the $85-million allocated to 37 percent between the last fiscal year and Next, let’s look at why that gap exists investigate sexual harassment claims in the 2022/23. That is a burden that is going to and whether any of the policies put forth work force. fall on millennial men and women, and on in the federal budget are likely to make a The one child-care measure in the Generation Z and Generation Alpha as well. dent in it. budget is a “use it or lose it” parental Celebrating women is nice, but really The reasons for the pay gap between leave program that can be used by men or the best way to say some things is with men and women are not particularly new. women. That presumably will allow women money and on that, this budget does not Women tend to be clustered in fields that to return to work earlier if they want while make the grade. traditionally pay less than the ones that men knowing that their partners are home on choose, and in occupations that pay less as their own “break,” taking care of their Linda Nazareth is a Senior Fellow at MLI. This article well. They are also a lot more likely than children. It is really not meaningful enough first appeared in theGlobe and Mail.

14 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute CANADIAN ECONOMY Canada must play the long game to fix its economic competitiveness A number of high impact yet low-cost steps can be taken to help improve our business investment climate.

Robert Asselin Liberal and Conservative governments. Our pension funds are some of the Sean Speer Canadian policy makers must of course most sophisticated institutional investors remain mindful of maintaining competi- and are heavily invested in infrastructure rowing concerns about weak business tive corporate taxation. There may be around the world. Yet we still haven’t put Ginvestment in general and foreign scope, for instance, for revisiting deprecia- in place right policy conditions to leverage investment in particular have recently risen tion rates or enabling full expensing on a private capital to build big infrastructure to the top of the policy agenda. Statistics temporary or even permanent basis. in our country. The Canada Infrastructure Canada data show that business investment has lagged since prior to the last federal election and shows no real signs of improv- It would be a mistake to think about ing. Fortunately, the renewed policy debate has come to rightly focus on Canada’s competitiveness solely through a taxation lens. economic competitiveness. Competitiveness, by definition, is dynamic as different jurisdictions strive to But it would be a mistake to think Bank is a welcome initiative, but it remains give themselves a policy edge in order to about competitiveness solely through a to be seen how effective the new organiza- attract investment and enhance productiv- taxation lens. Competitive taxation is a tion will be in achieving this goal. ity. Research in fact shows that competi- necessary yet insufficient condition for Skills acquisition and lifelong learning tiveness and in turn business investment enabling more business investment. Signifi- are crucial in the new knowledge economy. are key indicators of a jurisdiction’s cant tax-rate reductions without offsetting There should be a bolder sense of purpose long-term economic prospects. These issues tax reform or spending reductions would between the federal and provincial must therefore transcend partisanship. exacerbate the budget deficit. And in a governments and the private sector to There’s no silver bullet to fix such zero-sum fiscal scenario, there’s a strong case collaborate and act on this issue. Streamlin- a dynamic and multifaceted issue. It to focus instead on non-fiscal policy levers. ing occupational licensing would be a key requires a continuing process of reform and The good news is that there are a step in this regard. refinement involving various policy levers – number of high-impact yet low-cost steps On talent acquisition, Canada is doing including regulatory reform, competition that Canadian policy makers can take that well in attracting top researchers and policy, trade, infrastructure, education and will have bipartisan support and improve entrepreneurs in the burgeoning sectors of skills, taxation and so on. the country’s economic competitiveness. clean technology and artificial intelligence. Thus far, much of the policy discussion Near the top of the list must be address- But a low Canadian dollar still makes has been focused on corporate taxation as ing the panoply of regulatory and policy it difficult for domestic firms to compete result of tax reform in the United States. impediments to build major infrastructure against the United States with regard There’s compelling evidence that a jurisdic- in Canada. Trans Mountain is only the most to relative compensation levels. Better tion’s corporate-tax rate and structure are recent and high-profile example. We now foreign-credential recognition would go a key determinants of its overall economic rank 34 of 35 OECD countries for the time long way in bringing the best and brightest competitiveness. This is why Canada has to obtain a permit for general construction to Canada. long had a bipartisan consensus in favour of projects. Changing this will require a shared Improving competitiveness also competitive corporate taxation – including intergovernmental commitment to reduce the lowering of the federal rate – under both overlap, duplication and red tape. Continued on page 33

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 15 CANADIAN PHARMACARE SYSTEM Fill in the gaps to strengthen Pharmacare

Adopting single-payer coverage is not the solution to the challenges facing Canada’s pharmacare system.

Sean Speer financing for and access to pharmaceuti- annual growth of expenditures for drugs has cals. There are gaps in the current model exceeded hospital and physician spending he idea of creating and implementing of health insurance in general and drug in recent years. Ta national pharmacare program has coverage in particular, and room for Remember that Canada’s public become an increasingly important part of improvement in the current funding model insurance model is, by and large, limited to the policy agenda. The announcement of to reflect changes in medical technology, hospital and physician services. Drugs and an advisory panel to study the subject in demographic pressures, and public needs. many other health related costs are general- February’s budget has since been followed But it doesn’t follow that the solution is ly only covered when they are incurred in by a parliamentary committee report that to establish a federally run, single-payer hospital. This is an anachronism that fails to favours a single-payer pharmacare scheme system. reflect the growing and increasingly critical and an expression of support by Liberal This is the crux of the debate over role of pharmacology in modern medicine. Party members at their recent policy the coming months. The two poles are The “biotechnological revolution,” as it is convention. Meagan Campbell predicts in represented by the MPs on the health sometimes called, post-dates the advent of Maclean’s that this issue will loom large in committee who endorsed first-dollar, single- Medicare. the 2019 federal election. payer coverage on one side and Finance The current mix between public and There’s good reason Minister Bill Morneau who has said any private spending on health care (see table for policymakers to new initiative should seek to fill “gaps” in 1) has been largely frozen for nearly half a focus on improving the the current financing century. It makes Canada an outlier relative and insurance model on to our peers. Public insurance essentially the other. This article covers 100 percent of all hospital and sides with Mr. Morneau physician services, but is highly limited in in this important policy other areas of health care spending including debate. drugs, dental, and outpatient care. MLI has previously described Canada’s single-payer Canada’s health care model as a “mile deep and an inch wide.” anachronism Think about this statement for a Most of the basic architecture of the health minute. Hospital and physician spending care system – including delivery and financ- represents less than half of Canada’s health ing – remains unchanged since the early care expenditures. So essentially we have days of Medicare. Yet almost everything full public coverage for half of our health else, from care protocols to technology, has care system and little to no public support changed. for the rest. And the non-insured share One example: while pharmacological of the system is growing faster than the innovation has markedly improved health insured share. outcomes, it has also changed how health Other jurisdictions, by contrast, care is delivered, and the mix and composi- provide less generous public insurance but tion of health care spending. Drugs became are able to extend coverage to a wider range the second largest health care expenditure of health-related services. Australia is a good roughly two decades ago (see chart 1). The example (see table 1).

16 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute (Chart 1) Different types of expenditures as a share of total spending in Canada. This amounts to an health care spending – 1975 to 2017 average of $476 per household. These costs are disproportionately borne by the lowest- 50.0% income households. 45.0% • Efforts to control drug costs have 40.0% been ramped up – including a new 35.0% pan-Canadian Pharmaceutical Alliance 30.0% 25.0% involving the provinces and territories to 20.0% enable bulk negotiations and purchasing by 15.0% the provinces. The focus of the efforts has 10.0% generally been on better controlling costs 5.0% for provincial governments. 0.0% • Political pressure is mounting for 1 5 3 7 governments to find new and different 1975 201 1981 201 1985 201 1983 1977 1991 201 1995 1987 1993 1997 1979 1989 2001 2005 1999 2003 2007 2009 solutions to help individuals cover the Hospitals Physicians Drugs costs of drugs. One of these solutions is the adoption of the national pharmacare model Source: cihi.ca/sites/default/files/document/nhex2017-trends-report-en.pdf. mentioned earlier. • Public spending on health care has (Table 1) The mix of public and private health insurance become increasingly unsustainable. It now in Canada and Australia (%) averages about 40 percent of total provincial spending and MLI research shows that Health-related country service Public Private in several provinces it will soon exceed 50 percent. Canada hospital 92% 8% • The Parliamentary Budget Office doctor 99% 1% has judged that every province except for drugs and other Quebec and Nova Scotia are presently facing outpatient costs 35% 65% long-term fiscal sustainability challenges – the gap ranges from 0.4 percent of GDP in country Health-related Public Private service Ontario to 7.2 percent for the Territories. Australia hospital 68% 32% The case for reform, then, is strong: doctor 79% 21% some of the systemic perversities caused by the current model and the growing drugs and other outpatient costs 45% 55% unsustainability of its overall funding model must be addressed. But the need for reform does not necessar- Source: macdonaldlaurier.ca/files/pdf/MLICanadasHealthcareCrisisSeries6_f_web.pdf. ily lead to the conclusion that we ought to move to single-payer coverage for drugs. Not The case for rethinking health care patients to receive treatment at home rather only would it be massively expensive – the financing than in the hospital, but the insurance Parliamentary Budget Office estimates its As mentioned, there’s a case for rethinking model (which covers drugs administered cost at more than $20 billion per year – but drug financing and insurance coverage in in hospital but not at home) can create it threatens to disrupt the parts of the system light of the rising role of pharmacology in perverse incentives whereby treatment that people are used to and that they like our health care system, the interaction of choices are driven by financing instead of and want to protect. The lesson from the new medical innovation with the single-pay- medical considerations. Obamacare experience in the United States er system, and the growing unsustainability • Out-of-pocket spending on prescrip- is that health care reform must be deliberate of the overall model. Examples include: tion drugs is climbing. It currently represents and incremental if it is to survive the political • New oral-administered drugs enable more than 20 percent of prescription drug process and secure public buy-in.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 17 (Chart 2) Current mix of drug financing in Canada, 2017 an equity standpoint. Why would a wealthy 24-year-old be eligible but a poor 25-year- old not? Instead, there’s room for more holistic reform whereby public insurance is 35% 22% extended to drug coverage based on one’s means in exchange for the introduction of means-tested patient cost-sharing (such as 6% co-insurance, co-payments, or deductibles) across the public insurance model. This 37% would expand Medicare coverage on a pay-as-you-go basis, which would have the benefit of improving equity without further eroding fiscal sustainability. Provincial/territorial public coverage Private insurer coverage The idea is far from revolutionary. Out-of-pocket spending Other Many other jurisdictions with universal coverage are able to extend public health dollars across a wider range of Source: cihi.ca/sites/default/files/document/nhex2017-trends-report-en.pdf. services – such as prescription drugs – by implementing patient cost sharing. Caps Put it this way: private insurance should look to “fill gaps,” as Finance Minis- or exemptions for those with chronic currently makes up $12 billion of the $34 ter Morneau has put it, in order to strength- conditions would address concerns about billion spent on prescription drugs each en the current model. undue costs. The plan would ensure that year (see chart 2). Canadians who are scarce public resources are targeted for currently covered by these plans would those who most need the help. This just likely see a decline in their coverage under makes sense, especially as the provinces a mandatory, single-payer plan because the grapple with their long-term fiscal sustain- federal formulary would invariably be more Health care ability. limited than what is offered under current Such a balanced reform would likely private plans. How is that the basis for a reform must be require the federal government to enact successful and durable reform? deliberate and amendments to the Canada Health Act to It’s a losing political and policy strategy enable greater legal clarity and scope for to tell 35 percent of the population that incremental. patient cost-sharing. In doing so, Ottawa they cannot keep their prescription drug would be usefully contributing and would plans even if they like them, especially also be enabling provincial experimen- since many of these benefits have been The Ontario government’s recent tation and encouraging incremental won through collective bargaining. One move to OHIP+ is a flawed yet general improvements. can envision various court challenges if the step in this direction. The province has This reform would be a major step government(s) sought to impose a one-size- moved to provide first-dollar coverage for toward broader and more universal fits-all public insurance scheme. We cannot prescription drugs for Ontarians ages 24 coverage as well as sustainability and and should not merely graft single-payer and under. fairness. Experimenting with patient coverage onto the pre-existing regime. It’s the type of incremental, targeted cost-sharing in prescription drugs would solution that policymakers ought to enable the provincial governments to test Filling gaps in Canadian drug consider. But, as I have written elsewhere, different models and build public awareness coverage the focus on age – particularly on an age that might allow for a future incremental Rejecting the idea of a mandatory, single- group that’s generally healthier and tends to expansion to the rest of Medicare. payer plan doesn’t mean that there’s no use fewer prescription drugs – seems like an room for reform. Canadian governments odd solution. It’s especially perverse from Sean Speer is a Munk Senior Fellow at MLI.

18 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute CANADA and trade Is Canada’s defence of supply management giving away the farm?

Ottawa should rethink how it approaches increasing market access in trade negotiations.

Larry Martin To date, Canada has been willing to increase TRQs for dairy and poultry in ublic commentary regarding the trade negotiations. In the Canada-European PNAFTA negotiations is mainly on Union Comprehensive Economic and the auto industry, as is appropriate. But Trade Agreement (CETA), Europe got another of Trump’s whipping boys is US 16,000 tonnes of TRQ for high quality market access to Canada’s supply-managed cheeses and 1,700 for industrial cheese. dairy and poultry industries. In the fourth In the Comprehensive and Progressive round of the NAFTA discussions, the US Agreement for Trans-Pacific Partnership negotiators tabled a proposal to eliminate (CPTPP), Canada gave 3.25 percent more Canada’s supply management system for TRQ for dairy and 2.0 percent each for dairy, poultry, and eggs, which Canada’s chicken, turkey and eggs. With other access Agriculture Minister Lawrence MacAulay already given up, this means Canada has responded by calling it a “non-starter.” given just under 10 percent of Canadian Yet Trudeau has since indicated a consumption to other countries. willingness to show “flexibility” on this The NAFTA negotiations appear to be issue. More uncertain is what this “flexibil- on hold because of the US-imposed (and ity” would actually entail. Canada’s recent WTO-illegal) tariffs on steel and aluminum. track record in trade negotiations has But anything that Trump is involved in can been to offer increased access to dairy turn on a dime, so they could be back on and poultry through a mechanism called TRQs are essentially from 5-8 percent of tomorrow. So, what is the best strategy? Tariff Rate Quotas (TRQs), which denotes domestic consumption. Current data suggest major reductions a minimum market access for imports Tariffs work in conjunction with in Canadian tariffs would not give up before tariffs become applied. Changes in TRQs: once the TRQ for a product is full, much protection. Butter will illustrate. TRQs can affect imports without having i.e., when the amount allowed in duty free Canada’s milk prices are based on support an impact on tariff levels. However, is imported, the tariff applies against any prices for butter and skim milk powder. questions can be raised about the wisdom further imports. For example, Canada’s Canada’s current support price for butter is of this approach. tariff on butter is just under 300 percent; so $8.00/kg. The intent of the tariff is to keep Under supply management, dairy and assuming the TRQ is 8 percent of domestic imports out by making their landed cost poultry boards manage prices to levels consumption, as soon as that quantity (their price plus transportation and tariff) informed by cost-of-production formulas is imported, any remaining imports are higher than $8.00. and by allocating production quotas to subject to the 300 percent tariff. Imports The US Department of Agriculture’s domestic farmers. Managed prices are are tariff free within the quota, but highly average wholesale price of butter in late frequently above US and world levels. To protected thereafter. March 2018 was US $4.85 per kg. Given prevent imports from undermining them, the weaker Canadian loonie (US $0.78), Canada imposes tariffs of between 150-300 The strategic policy issue this gives a US price in Canadian funds of percent, which are allowed by the World In trade negotiations, the importing coun- $6.22. So, ignoring transportation costs, Trade Organization (WTO). WTO also try can offer market access by reducing tar- US butter within its TRQ can be sold in mandates a minimum market access using iffs, increasing TRQ, or a combination of the TRQ mechanism. In Canada’s case, the two. Continued on page 33

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 19 CANADA AND TRADE g7.gc.ca/en/news-media/multimedia No one will win Trump’s fight between the US and Canada China, Russia and others who do not share our values are not standing still as Canada and the United States feud.

Laura Dawson But lashing out at Canada is a bit Arizona, where livelihoods depend on trade, like slapping your grandmother. She to openly oppose the White House. Rather hy did President Trump go after probably won’t hit you back, but it’s not than thanking the president for delivering WCanada in such a dramatic way very satisfying and nobody respects you new levels of prosperity, manufacturers and after leaving the Group of Seven meeting in much afterward. Politically, a trade war exporters from states such as Wisconsin Quebec? Perhaps he wasn’t aware until he with Canada provides little red meat for are staggering under increased costs for boarded his jet to leave that Canada had, two Trump’s base, because 99 percent of trade imported inputs and lost markets for weeks prior, announced retaliatory tariffs to with Canada is already tariff-free. Also, it exported food and finished goods. counter his preposterous claim that Canadian invites Republicans and Democrats from Meanwhile, in Canada, rather than steel and aluminum threatened US national states such as California, Ohio, Maine and making Prime Minister Justin Trudeau security. Perhaps, as White House economic adviser Larry Kudlow suggested, attacking ABOVE: Leaders of the G7 meet in Charlevoix, Québec, June 2018. (L to R) Donald Tusk, US allies was a good way to show that the President of the European Council ; Theresa May, Prime Minister of the United Kingdom; United States is a force to be reckoned with Angela Merkel, Chancellor of Germany; Donald Trump, President of the United States; Justin Trudeau, Prime Minister of Canada; Emmanuel Macron, President of France; Shinzo Abe, Prime as Trump headed to Singapore to meet with Minister of Japan; Giuseppe Conte, Prime Minister of Italy; Jean-Claude Juncker, President of the North Korean leader Kim Jong Un. European Commission

20 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute look weak, Trump’s tweetstorm provided tive curmudgeon John Diefenbaker, who US government no longer trusts – or even his foil with a domestic “Trump bump,” refused to break ties with Havana during likes – its neighbours. While France, Britain uniting politicians from all parties to the Cuban missile crisis. There was no and Germany have also been targeted by US condemn the attacks against their nation love lost between Ronald Reagan, the trade actions, the effects are more directly felt and its leader. That’s not to say the Charlev- Hollywood actor, and Pierre Trudeau, by Canada and Mexico because we share a oix drama and the months of political the smug intellectual (and Justin’s father). territory and an economy. Every day, nearly theatre surrounding the NAFTA renegoti- Perhaps the greatest blowup in recent half a million people cross the Canada-US ations have been costless for Canadians. memory was when Lyndon B. Johnson border, and more than a million dollars Nor will they be costless for Americans. accused Lester B. Pearson of “pissing on my a minute in trade passes between the two The Bank of Canada has already rug” after Pearson publicly criticized US countries. As many as 9 million US jobs lowered its estimate for Canadian business airstrikes in Vietnam. depend on trade with Canada. investment and exports through 2020 by Ultimately, the US-Canada relation- Canadians will hunker down and 3 percent and 1.5 percent respectively due ship is resilient and deep. It is recognizable hope their economy survives the latest to NAFTA-generated uncertainty. Investors in hundreds of thousands of connections bump in the relationship. They take quiet, will keep their hands in their pockets until embedded in the shared fabric of family, Canadian-like pride in the fact that there North America figures itself out. That means culture, education, sports, scientific are eight Canadians among the Washing- the dispute will hurt US workers, too. discovery, public health and defence of our ton Capitals players who hoisted the

Rather than making Prime Minister Justin Trudeau look weak, Trump’s tweetstorm provided his foil with a domestic “Trump bump.”

Canada is the largest buyer of US exports territory. The best of this relationship is Stanley Cup down Constitution Avenue – more than Britain, China and Japan seen in the instinctive response whenever on Tuesday (and zero North Koreans). But combined. A weaker Canadian economy the other is threatened: Think of Canadian where shots across the fence are the most translates into reduced Canadian demand Ken Taylor and the Iran hostages, damaging are in their impact on North for US products. In the world of marketing, Newfoundland’s care of stranded 9/11 American competitiveness. The rest of the abusing and insulting your largest customer passengers and the thousands of Canadian world is not standing still while we feud. is seldom a recommended practice. travellers who have sought shelter at US China, Russia and others who do not share US national-security tariffs on steel, embassies in hostile environs where no our values are moving in to fill the void. aluminum and the auto sector will have an Canadian mission is available. North America’s strengths of abundant immediate and punitive effect on Canada Still, the most recent attacks by Trump energy, resources and human ingenuity and a spinoff effect on US manufactur- and his advisers will not be easy to shrug off. were amplified by US leadership in the ers and supply chain partners. Canada Canadians are hurt by the implication that global trading system. In the absence of is counting on its US business partners they are a security risk after having fought that leadership, North America loses its to make the case to US decision-makers, shoulder to shoulder with Americans on the competitive position in the world. but as a small economy of 34 million beaches of Normandy and the mountains of The lesson that has failed to reach the people, Canada might not be able to go on Afghanistan and maintained, for 60 years, White House is that the United States bleeding until Trump sees reason. a joint North American aerospace defense does not grow stronger when it attacks The economic implications of the trade alliance (NORAD) that is the unparalleled the neighbours. Instead, everybody in the war are bad, and fighting it out under a in the world. neighbourhood is made worse off. political spotlight makes resolution in the Salutary gestures like the #ThanksCan- near term very difficult. But Canadian and ada Twitter campaign that affirm the Laura Dawson is the Director of the Wilson Center’s American leaders have feuded before, and importance of maple syrup and Joni Mitchell Canada Institute in Washington, and a Munk Senior they will do so again. John F. Kennedy made to the American way of life are nice, but Fellow at MLI. This article first appeared in the no secret of his dislike for the Conserva- they don’t change the fact that the current Washington Post.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 21 CANADIAN ECONOMY Canada’s losing jobs when we should be booming economically. Guess why It all comes down to buoyant business investment in the US and weak investment in Canada.

Philip Cross

ay brought another disappointing Mreport about Canada’s economy, with the loss of 7,000 jobs, the third decline in five months to bring the total decline since December to 50,000. Slumping employment is consistent with a slowdown in the underlying growth rate of Canada’s GDP to less than 1.5 percent. And this slowdown is happening in spite of rapid growth in the US, which has accelerated to nearly three percent. Canada’s economy is falling behind the US on several fronts. Perhaps most striking is the difference in investment intentions

for 2018. Statistics Canada found in its iStock annual survey that firms plan to trim investment outlays this year by another Canada; if talks fail, they have an American one percent, their fourth-straight annual beachhead from which to produce for decline. In contrast, a semi-annual survey the US market. If talks succeed, they can of investment intentions in the US found export freely to Canada across the border. that firms revised up their plans to increase Canada’s economy In such an environment, it is not surprising investment spending from a 2.7-percent to see the Trump administration resisting increase just six months ago, all the way up is falling behind and even escalating tensions with Canada, to a 10-percent increase in the latest survey. the US on since continued uncertainty may actually The forecast of an upturn in business favour the US while harming us. investment in the US already is reflected several fronts. The contrast between buoyant business in actual spending, as business investment investment in the US and weak investment in the first quarter was up 6.8 percent in in Canada is mirrored in the superior volume from a year earlier, nearly double communications everywhere else). performance of the broader American the increase in the previous year. Meanwhile in Canada, several jurisdic- economy. Compared to that three-percent It is not difficult to identify the reasons tions are doing the opposite, whether by underlying annual rate of growth of real why business investment in the US is sharply raising the minimum wage in a GDP in the US, in Canada GDP growth improving faster than in Canada. The short period or blocking the construction has fallen to half that since mid-2017. It Trump administration has been unrelent- of pipelines that have already met all the is now lower than before the oil slump ing in signalling its desire to improve the necessary regulatory approvals. began in 2014 despite the addition of business climate, from reducing regulations Overhanging all this is uncertain- large dollops of both fiscal and monetary to sharply lowering the corporate income ty about the outcome of the NAFTA stimulus. tax (its consistency in staying on-message renegotiations, an uncertainty that gives in this area contrasts with its erratic firms an incentive to invest in the US over Continued on page 33

22 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute CANADA AND TRADE Trump’s tariff justification is patently absurd It’s an abuse of power for the President Trump to impose unwarranted protectionist measures against steel and aluminum imports from allies such as Canada.

Charles Boustany unprecedented authority to reduce tariffs and to negotiate trade agreements. Kennedy he Trump administration has imposed went on to say “it marks a decisive point Ttariffs on steel and aluminum imports for the future of our economy, for our from Canada, declaring these imports to relations with our friends and allies, and for be a threat to the national security of the the prospects of free institutions and free United States. This notion is patently societies everywhere. This act recognizes, absurd. Canadian and American troops have fully and completely, that we cannot protect fought side by side in major wars, Canada is our economy by stagnating behind tariff a NATO ally, and Canadian aluminum has walls, but that the best protection possible been strategically important to the United is a mutual lowering of tariff barriers among States for many years. The United States friendly nations so that all may benefit from and Canada have shared in the defence a free flow of goods.” Prime Minister Trudeau and Minister of Foreign of North America in close coordination Affairs Chystia Freeland speak regarding the through NORAD and collaboration on American steel and aluminum tariffs in Ottawa, May 31, 2018 intelligence matters. (Adam Scotti (PMO)/pm.gc.ca) The Trump administration cited Section 232 of the Trade Expansion Act of Canadian In Chapter 4 of this legislative act, 1962 as the basis of authority for the investi- aluminum has Sections 231 and 232 addressed imports gation and imposition of these tariffs. In from Communist countries and the risk to accordance with that law, the Department been strategically national security. This same Section 232, a of Defense must be consulted regarding the important to the relic of the Cold War, is now being used by use of national security justification for the the Trump administration to impose tariffs imposition of these tariffs. In a memoran- United States for on friends and allies under the pretence dum, the Secretary of Defense called into many years. of protecting the national security of the question this national security justification United States. for applying these tariffs to Canada and This is an overly expansive interpreta- other key allies, in stating “DoD continues This bipartisan legislation was enacted tion of US trade law, and frankly an abuse to be concerned about the negative impact during the height of the Cold War for the of power to impose unwarranted protection- on key allies regarding recommended stated purposes of using trade agreements to: ist measures against steel and aluminum options within the reports.” 1. Stimulate the economic growth of imports from allies. The Trump administra- The Trade Expansion Act of 1962 was the United States and maintain and enlarge tion is taking this abuse further by initiat- signed by President John F. Kennedy on foreign markets for products of the United ing an investigation to rationalize tariffs on October 11, 1962. It was hailed as President States; automobiles and auto parts. It is ironic that Kennedy’s most significant legislative victory 2. Strengthen economic relations with the Trade Expansion Act of 1962 is being used in his first two years in office. In remarks foreign countries through the development to impose tariffs on allies, which is contrary upon signing the legislation, Kennedy cited of open and non-discriminatory trading in to the Congressional intent of that law. it as the most important piece of interna- the free world; and Unilateral declaration of the national tional legislation since the Marshall Plan. 3. Prevent Communist economic This bipartisan legislation gave Kennedy penetration. Continued on page 34

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 23 CANADIAN SECURITY iStock What lessons can be learned from the Toronto van attack case?

Identifying measures to help prevent such attacks in the future should be a priority.

Scott Newark it was morally wrong. It has essentially gers and assign blame. Second, given the become that the horrific nature of the complexity of the threat, it is unlikely that lek Minassian, the man accused in crime is the defence. But, given the clear a single solution exists, which means dif- Athe April 23 Toronto van attack, and specific evidence against Minassian, it ferent security contributing measures are appeared in court to face new charges is hard to imagine that it will be success- desirable. The bureaucratic mindset that “I following identification of additional ful. That doesn’t mean that it won’t be can’t do anything until I can do everything” victims. Minassian now faces ten counts advanced, however, so the public will need must be avoided and rejected. of first degree murder and sixteen counts to stay tuned. of attempted murder. Canadians remain Lone wolf and no copycats understandably shocked at the savagery of Are there lessons to be learned from After these attacks, one of the first priori- the attack and are now interested in how this case? ties of law enforcement and national secu- the prosecution will unfold. Any time an incident such as the Toronto rity and intelligence officials is to assess The criminal case against Miniassian is van attack occurs, it is also advisable to ob- whether the attack is part of a larger plan obviously very strong. The case will either jectively analyse what happened and, most and whether it will inspire unconnected be resolved by guilty pleas, a criminal trial, importantly, determine whether there are copycat attacks. This was part of the re- or the defence pursuing a verdict of “Not lessons that can be learned from the inci- sponse to the Toronto attack. Fortunately, Criminally Responsible” (NCR) pursuant dent to help prevent such attacks in the no other attacks took place, although one to s. 16 of the Criminal Code. For the future. Two key principles need to be pri- other Incel online member was noted to NCR defence, they will need to establish oritized in this effort. First, the object of have praised Minassian for his actions. This that, because of a mental disorder, he was the exercise is to identify possible better post-incident analysis and potential proac- unaware of what he was doing or that preventive actions and not to point fin- tive strategy must be continued.

24 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute Develop better political communications are angry that they cannot get laid. Involun- may suffice (including Section 83.27 In the immediate aftermath of the attack, tary celibates? Really?” which creates a potential life imprisonment Public Safety Minister Ralph Goodale If a motivation as vacuous as Incel sentence for an indictable offence that is also commented that the events “do not appear can contribute to this kind of horrific “terrorist activity”). But it may be advisable to be connected in any way to national se- attack, what about environmental groups to specify that engaging in “terrorist activity” curity.” Minister Goodale was almost cer- (pro and anti), anarchists, anti-Semitic is itself a crime, whether or not it’s done tainly referring to the fact that the attack and anti-Muslim groups, right wing or in support of a terrorist entity or not. This was not Islamist-inspired or directed. Most white extremists, the antifa crowd, Black issue was identified in the recent acquittal people had initially assumed it was, since Lives Matter and their opponents, or (and NCR finding) in the Ayanle Hassan the method of the attack was identical to anti-immigrant groups? Ali case involving an Islamist inspired attack what has been directed and carried out by Islamist terrorists. Given that the attack was, in fact, seemingly inspired by an anti- This is a new threat and it requires a careful social ideological group targeting women balancing of interests as well as fact-based and gender equality societal principles, and that it resulted in multiple civilian and justifiably targeted applications. deaths in a public space, there are legiti- mate public safety and security concerns that should not be minimized. Political Determining if these groups or their at a military recruiting centre in Toronto. leaders will be called on for public com- members pose a potential threat will be a The current definition of “terrorist activity” ment should such incidents re-occur and challenge for public authorities given the in Section 83.01(1)(b) appears sufficient. those remarks should focus on the efforts legitimate rights to free speech and privacy. Attention should also be given to the to identify those responsible and to guar- The fact that these communications capabilities of authorities to get judicial antee the commitment to ensuring public include public postings on social media orders on appropriately defined grounds to safety and security. sites will likely facilitate such analysis and take down unlawful content on websites or ensure that a judicially authorized follow on social media. This will require examina- Recognize the scope of the potential up authority will also be necessary. This tion of current Section 320 (hate propagan- new threat is a new threat and it requires a careful da) and 83.221 (advocating or promoting Perhaps the most significant aspect of the balancing of interests as well as fact-based commission of terrorism offences), the latter Toronto attack was that a previously un- and justifiably targeted applications. Given of which is up for revision in Bill C-59 recognized threat adopted the Islamist ter- the issues involved, this may be an area where it unwisely raises the evidentiary rorist methodology to achieve its goals. In best led by Criminal Intelligence Services standard for prosecution. this case it appears to be a narcissistic, self- Canada (CISC) and its local offices. The Minassian case has revealed an entitled group of men that find validation evolved potential ideological and violent through social media. This new online social Review existing tools threat against public safety and security in reality must be considered going forward. It will be advisable to review the existing le- Canada. Therefore, the legal framework for There are definitely ideologically driven gal toolbox to see if the existing provisions detection and proactive prevention must groups who possess the same kind of self- are suitable to deal with this potential new also be reviewed to ensure an appropri- entitlement and arrogance. threat. This could include: ate balancing of interests to achieve the Now we know about Incel. What • Are existing inciting hatred/propagan- necessary targeted measures to address the other groups are there that share this kind da provisions sufficient? The definition of unfortunately increased potential threat. of ideologically-driven agenda fueled by “identifiable group” in Section 318(4) has social media that has the potential for some been amended over the years and is likely Social media issues or even one of its members to take violent sufficiently inclusive to deal with these new In addition to legal tools (preventive and action to advance the cause? As Frontline circumstances. prosecution), the fact Minassian was part Security’s Chris MacLean put it in her recent • Are terrorism related definitions/ of a social media group should also be op-ed on the attack, “I was shocked to hear offences sufficient? As noted above, the there is a thriving social group for men who penalty provisions in the Criminal Code Continued on page 34

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 25 CANADIAN NATIONAL SECURITY Not to Aecon, nor to Huawei: the security of Canada can never be for sale If the Aecon decision signals an increased skepticism by Ottawa vis-à-vis China and its intentions toward the West, that’s a welcome development.

Brain Lee Crowley

ecent accolades for Ottawa’s decision Rto disallow a Chinese state-owned enterprise’s (SOE) bid for Canadian construction giant Aecon are justified, but the real takeaway is that Ottawa’s policy on national security and foreign investment is an opaque, confusing mess. Consider not just the Aecon deal, but three other Chinese companies and their Canadian activities. Chinese telecom giant Huawei was founded by a former engineer in the Aecon Group vehicle with a spool of fiber optic cable (wikimedia commons) Chinese People’s Liberation Army and has been singled out as a noteworthy cybersecu- rity risk in Congressional testimony by the eventually become potential or actual development of this sensitive communi- heads of the CIA, FBI, National Security military adversaries? cations infrastructure. Agency and the Defense Intelligence Agency If an Aecon, under Chinese SOE Then there was last year’s purchase in the United States. Of particular concern control, building Canadian infrastructure by China’s Hytera of Vancouver-based has been the prospect of Huawei equipment caused Ottawa national security heartburn, Norsat International Inc. The Trudeau being integrated in the next generation of you’d think that having Huawei at the government didn’t consider this deal even Internet 5G wireless networks that will be heart of building the backbone of our most worthy of a proper national security review ubiquitous within a few years. sensitive communications infrastructure either, against the advice of Mr. Elcock Even with extensive testing, would cause gastroenteritis. and Mr. Fadden, both of whom argued understanding the function of every line Instead, Public Safety Minister Ralph that a deal like this merited a full national of software or every piece of hardware in Goodale seems rather sanguine, telling security analysis. According to one report, these systems is difficult. Yet the criticism journalists last March that an eye is being “Canada and many of its allies use the of Chinese companies – whether owned kept on Huawei and it does not pose a company’s patented satellite communica- explicitly by the state or not – increas- national security threat to Canadians. tions technology for security, public safety ingly heard throughout Western capitals I’m glad he thinks so. His optimism is and defence.” is that they are not legitimate commercial not shared by Ward Elcock, John Adams Those allies include the United States, enterprises, but unapologetic agents of the and Richard Fadden, all former heads who were not amused to learn that one Chinese state and, even more worryingly, of of the main agencies charged with this of their suppliers was now controlled by a the Communist Party of China. country’s national security, including nation whose companies are notorious for Who knows what surveillance or even CSIS, CSE, the Department of National filching intellectual property. Such property sabotage functions might be built into Defence and others. Every one of them ends up in the hands of the state, unsurpris- such networks by a Chinese state that must has gone on record warning against consider that Western governments might allowing Huawei to play any role in the Continued on page 34

26 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute INDIGENOUS ISSUES The international recognition of Indigenous resource rights It has taken a great deal of time to secure the constitutional, political and legal power needed to protect Aboriginal interests.

Ken Coates participation and sharing benefits. This is inclusion and Indigenous recognition and Carin Holroyd an impressive commitment, coming close the practicalities of serving both Indigenous to the “free, prior and informed consent” as and broader economic interests. Canada anadians are slowly getting used to outlined in UNDRIP (UN Declaration on often finds itself in the same situation. Cthe re-empowerment of Indigenous the Rights of Indigenous Peoples). Strengthening Indigenous rights has people and their governments. It has taken But even promising commitments run produced better and more appropri- a great deal of time to secure the constitu- into roadblocks, as the Trudeau government ate resource development agreements tional, political and legal power needed to has since discovered. So it has been in and not intractable Aboriginal resistance. protect Aboriginal interests. Less noticed is Taiwan. In 2017, thousands of Indigenous Partnership on major developments and the degree to which Indigenous rights have peoples, environmentalists and their infrastructure is not a distant possibility; it become a global issue. Taiwan is a case in point. The Republic Strengthening Indigenous rights has of China (Taiwan) officially recognized 16 Indigenous groups. Over half a produced better and more appropriate million Indigenous people live primarily resource development agreements. in the mountainous lands on the eastern backbone of the island. The first groups were recognized by the pre-World War II supporters took to the streets to demand is a current reality. Indigenous peoples have Japanese-run colonial government, with greater Indigenous control over existing been negotiating effectively with resource additional groups being officially added in and new mining projects. Pushed by these companies and governments, securing the early 21st century. protests, the Taiwan government moved to more jobs and business opportunities, and Acknowledgement brought social and amend the Mining Act to give the authori- steadily increasing their role in environ- cultural assistance, but it did not immediate- ties the right to reject mining renewals and mental oversight and project planning. ly ensure Indigenous peoples a significant otherwise control development activities. This re-empowerment of Indigenous place in the Taiwanese economy. But that Opponents objected to the amendment, peoples has vital international dimensions. has recently changed. The Indigenous Peoples however, believing that mining companies Ottawa recently announced the formation Basic Law (2005, amended in 2015) has with existing licences could use the legisla- of the Canadian Ombudsperson for UNDRIP-like assurances of Indigenous tion to avoid further scrutiny. Responsible Enterprise (CORE) to monitor language and cultural authority, protection The Taiwanese cabinet has proposed the work of Canadian resource companies for tribal governance and requirements for connecting the Mining Act to the Indigenous overseas. This comes at a time when substantial government control. Peoples Basic Act, to re-enforce Indigenous Indigenous groups globally are far more The Basic Law also includes clear authority. But as one activist, Hsieh assertive about their rights and needs, and commitments on resource use. Article Meng-yu, said, “The government only non-governmental organizations draw 20 provided recognition of “Indigenous respects Aborigines when it needs them to world attention to examples of abuse or peoples’ rights to land and natural resourc- perform in big events, but as for their rights conflict over development. es.” Article 21 required governments or to land and natural resources, it can find all The CORE initiative will, if properly private parties engaged in land development kinds of excuses to exploit their property.” In done, re-enforce Canada’s international or other activities to “consult and obtain this regard, Taiwan has discovered the need consent” by Indigenous peoples, including to build bridges between the principles of Continued on page 35

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 27 THE G7 AND CHINA The G7 can find common cause in the South China Sea Canada should join with the US and France in conducting naval exercises to push back on false claims of sovereignty by China.

Brian Lee Crowley

he G7 can sometimes appear as an Torganisation in search of a mission. This drift can only be exacerbated by the trade frictions that have come to a boil recently, pitting the US against the other six G7 members. Yet the G7 can and should play a pivotal role in the world order. Given the deadlock at the UN Security Council occasioned by vetoes exercised by Russia and China, the G7 is the premier venue assembling those developed nations that carry the burden MCpl Jennifer Kusche, Canadian Forces Combat Camera|combatcamera.forces.gc.ca Combat Canadian Forces Kusche, MCpl Jennifer of leadership in protecting the liberal rules-based international order. A dysfunc- tional G7 riven by internal disputes is of no The G7 offers a forum to catch up and value to anyone except those who benefit from the undefended world order. even assert leadership over an issue Repairing the G7 requires common that actually matters. projects all members can get behind. Responding to China’s repeated challenges to the international order, challenges that Chinese President Xi promised, in the paid major dividends for China. threaten the rule of law, freedom of the seas White House’s Rose Garden no less, that The Philippines courageously took and a rules-based international order is an China would not militarise these newly China to the International Court of Arbitra- area where there is growing consensus for constructed islands. Yet in keeping with tion to challenge its occupying of islets action. Canada is behind on this, but the G7 China’s strategy in so many areas, their and reefs over which the Philippines also offers a forum to catch up and even assert approach has been to deny, deny and deny claimed sovereignty. The ICA unambigu- leadership over an issue that actually matters. again their intentions while moving ahead ously found in the Philippines’ favour Consider that China has unilaterally in incremental steps until the “facts on the and found China’s behaviour an egregious commandeered, expanded and militarised ground” are overwhelmingly established. violation of international law. The fact that a number of islets, atolls and reefs in the Each step along the way is carefully China subsequently bullied and bribed the South China Sea (SCS) as part of their calibrated to be just below the threshold Philippines not to carry the case further can campaign to claim Chinese sovereignty over that might trigger international action. Each be no excuse for accepting the status quo. these waters. This they have done in the face subsequent step is then too easily allowed to The Americans, the great defenders of of condemnation from many of the littoral slide on the ground that no one acted on freedom of navigation, have been regularly nations in the region who have unresolved the earlier provocation, and this time the sending ships through the SCS, and particular- claims to the area, as well the opposition of provocation is no worse than the last one. the United States and Japan. This so-called “salami-slicing” strategy has Continued on page 35

28 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute THE G7 AND INDIA iStock Adam Scotti (PMO)/pm.gc.ca Adam Scotti The G7 should become the G8 again – with India in the fold If the G7 nations want to keep their mandate as the global economy’s hub shifts to the Pacific, they should woo India.

Shuvaloy Majumdar that has occurred in Russia in recent years The 2002 decision was another step and in particular under the leadership toward building confidence in the aftermath n June 26, 2002, at a summit in of President Putin,” read the members’ of the Cold War. Formed through informal OKananaskis, Alberta, then-Canadi- statement. conversations in the corridors of the an prime minister Jean Chrétien made it If the notion of major Western powers wider transatlantic alliance in response to official. The alliance of advanced industri- extending such a warm hand to Putin’s economic crisis, the G7 initially conceived alized democracies previously known as Russia seems hard to imagine today, it is its mandate as the economic steward of the the “Group of Seven” – Canada, France, only because geopolitical realities have world’s major free market democracies, just Germany, Italy, Japan, the United Kingdom, shifted so rapidly over the last 16 years. as NATO sought to safeguard their security. and the United States – would be admitting its eighth member: the Russian Federation. TOP: The Sansad Bhawan, the Parliament of India, New Delhi; LEFT: Prime Minister Justin “This decision reflects the remarkable Tudeau meets with Narendra Modi, Prime Minister of India, in Hamburg at the G20 meeting, economic and democratic transformation 2017; RIGHT: Leaders of the G7 meeting in Charlevoix, Québec, June 2018

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 29 But when communism fell, calculations this decade and beyond. A third of all $5 trillion economy by 2025. His adminis- changed – and inviting a post-Soviet Russia economic growth now occurs in the Pacific tration has been defined by its bold agenda into the very institution once designed to region, where half of humanity dwells. It’s of macroeconomic reforms, tax moderniza- contain it was seen as an essential means inspired the International Monetary Fund tion, and a badly needed regulatory through which to consolidate the peace to declare it “the most important engine cleanup. Emerging from its own Cold and stability of the new global order. of global growth,” a clear signal that the War legacy as a “non-aligned” state, and President Putin, of course, did not region’s continued trends will continue confronted by China’s ambitions, this new live up to the compliments he was given to rebalance power in an increasingly India is forging ambitious new economic in Kananaskis. Over the next dozen years, multipolar era. and strategic alignments. It is, in short, an Russia’s once-promising economy descend- But behind the curtain of every essential democratic ally of the rules-based ed to a crude petro-state kleptocracy and optimistic conversation about the international order long championed client state of China’s, while its democratic economic energy in this region is the by the Group of Seven – and while the

Let’s welcome India to the table, and reward this rising power for succeeding as spectacularly as Putin’s Russia has failed.

government collapsed into one-man rule. profoundly important strategic challenge advanced economies of Australia and South Old Soviet habits of domestic surveil- posed by the rise of China, against the Korea could make them prime candidates lance and control, supplemented by the norms of democratic free-market prosper- for inclusion in the G7 too, the sheer scale subversion of sovereign neighbours, were ity that the G7 was founded to defend. of India’s rise holds vast consequences for revived with a vengeance. In 2014, as For all of China’s much-vaunted economic wider regional and global growth. Moscow’s interference in Ukraine climaxed progress following the Deng Xiaoping Four years ago, Prime Minister with the annexation of Crimea, Russia was reforms of the 1980s, much of its economy Stephen Harper demonstrated his status formally expelled. The G8 became the G7 still remains closed, state-driven, and as a statesman in leading the charge to again. statistically opaque – a trend explicitly expel Russia from the G8. The country The Group’s summitry has grown intended to continue under the regressive had brazenly squandered an opportunity considerably to address a range of themes autocracy of President Xi Jinping. to escape its past isolation from global across a litany of sub-summits on the The transatlantic architecture of the progress, and it suffered appropriate fringes of the leaders’ meeting, tailored past half-century could serve as a roadmap consequences in response. Prime Minister to the pet projects of the governments of for what a transpacific one would look like Justin Trudeau has his own opportunity to the day. It is a fate in which multilater- today. If the vast majority of the statecraft demonstrate seriousness as a world leader, alism for multilateralism’s sake threatens of leaders is informed by the prosperity of by anchoring the world’s most important to overtake consideration of the essential their nations, the G7 only stands to benefit economic summit to a faithful partner economic issues of the age. But Russia’s by expanding its Pacific presence. And that’s doing so much to help shape an fall should not sour the G7 to the that’s what makes India such an appealing economic order driven by international possibility of new members to reconnect addition to the group. rules. with its essential mandate, particularly as Emerging as the Pacific’s true star, It’s time to restore the G8. Let’s fresh global realities present an obvious India possesses the fastest GDP growth on welcome India to the table, and reward this candidate: India. earth and a nearly $3 trillion economy that rising power for succeeding as spectacularly Just as the Cold War’s end was the last year rose to the world’s sixth largest, as Putin’s Russia has failed. defining geopolitical reality of the 1990s ahead of the United Kingdom and just and early 2000s, so too will the shift of below France. For this, the government of Shuvaloy Majumdar is the Munk Senior Fellow for the planet’s economic centre of gravity Prime Minister Narendra Modi deserves Foreign Policy at MLI, and a former policy director to from the Atlantic to the Pacific define considerable credit as it aims to achieve a Canadian foreign ministers.

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 30 CANADIAN SECURITY iStock We need to stop Russia’s cyber and disinformation campaign Kremlin disinformation is aimed at subverting Canadian democracy and our alliances.

Marcus Kolga The global leadership Canada assumed and eventually the bonds that hold our when it adopted Magnitsky human rights nation together. he so-called “Five Eyes” security group sanctions legislation last fall has helped It is not too late for Canada to avoid T– Britain, Australia, New Zealand, the boost Canada’s reputation among our allies, the most apocalyptic outcomes if we take United States and Canada – met recently to while drawing the ire of repressive regimes, serious steps to counter it now. talk about cyber attacks, mostly from Russia. including Russia. We must first recognize that the theatres The US and UK also issued a warning that Canada’s Communications Security of information warfare expand well beyond Russia has been heavily involved in cyber Establishment (CSE) recently confirmed the realm of cyber, and that such campaigns and disinformation attacks. that the 2015 federal election campaign threaten not just our elections, but our entire It can no longer be ignored that Canada is was targeted by foreign adversaries and that democratic system. As such, efforts to defend one target of Kremlin disinformation aimed it is very likely attempts will be made “to it require an approach that begins with an at subverting our democracy and alliances. influence the democratic process during the understanding of the nature and complexity The expulsion of four Russian agents 2019 federal election.” of the Kremlin’s disinformation operations. was a good first step in defending Canadian The damage caused by disinforma- The core of Canada’s strategy to democracy against Vladimir Putin’s tion may not be physical or immediately counter disinformation must include four attempts to eviscerate it. But a comprehen- visible. It is much worse, designed to turn key principles: identification and monitor- sive strategy is required if we hope to avoid Canadians against each other and surrepti- ing, countermeasures, public literacy and the experience of the US, UK, Estonia, tiously infuse our democratic society with a accountability. Ukraine, France, Spain and Germany over decay that slowly breaks down our foreign 1. A permanent unit that communi- the past years. alliances, confidence in our government cates and coordinates between the ministries

31 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute of Public Safety, Global Affairs, National ties consume their news and information accountable for their actions. Canada can Defence and Democratic Institutions must from state-owned media made available use targeted Magnitsky sanctions against be created to identify false narratives and by Canadian cable TV operators and the foreign propagandists to prohibit their actively monitor their dissemination in Internet. Russian and Chinese state-owned travel to Canada. We can also ensure concert with our allies. This includes stories media are known to manufacture facts that foreign propaganda broadcast on manufactured to discredit our soldiers that support their narratives and political Canadian cable systems is identified as operating in foreign theatres designed to objectives. By increasing support for such – like warnings for films that contain undermine their cohesion and support for Canadian domestic diversity programming foul language and violence – and that their missions. Fabrications that underpin and independent media, we can provide licence owners whose media broadcast destructive conjecture and inference have credible, third-language Canadian news foreign disinformation and hate speech, been attempted in order to damage the alternatives to state-owned media, through are fined. reputations of Canadian leaders on both broadcasters such as OMNI. Expelling foreign agents who engage sides of the House of Commons. A national media literacy strategy in disinformation to undermine Canadian By monitoring the sources of disinfor- must also be developed to help Canadians democracy is a good start. But a comprehen- mation and catching false narratives before identify propaganda and disinforma- sive national counter-disinformation they spread to mainstream media, we can tion. Understanding news sources and strategy must be developed immediately inoculate Canadian democracy against the importance of verified facts is critical. to defend our institutions, elections and these destructive agents before they cause Awareness within government and media society against foreign powers that seek to damage similar to that inflicted on other of when state-sponsored organizations subvert it. western nations. This does not mean and actors attempt to influence issues engaging in censorship or the development and narratives is a critical component of Marcus Kolga is a documentary filmmaker, human of counter-propaganda, but using facts and information warfare defence. rights activist, disinformation and sanctions expert. truth to defend against manipulation. 3. Finally, foreign governments and He is a Senior Fellow at MLI’s Centre for Advancing 2. Many Canadian ethnic communi- disinformation pedlars need to be held Canada’s Interests Abroad.

Ontario (Coates, Crozier) resource revenue sharing, progress has To return to the question posed at the Continued from page 4 been made. outset, and given the controversy surrounding Indigenous communities and backs Kinder Morgan: Would you invest in a major their moves toward greater Indigenous Ken Coates is a Munk Senior Fellow at MLI. energy project in Canada right now? self-determination. It also supports Stephen Crozier is Vice-President of Corporate There is an important twist at the end of appropriate and well-planned resource Affairs at IAMGOLD Corporation. This article first this story. development – something the province appeared in the Globe and Mail. The current debate has brought Indigenous urgently needs. These agreements ultimate- influence in the energy sector to the forefront ly represent sound public policy and should of the national conversation. attract continued support from all political Kinder Morgan (Holroyd, Coates) There are several Indigenous-led parties moving forward. Continued from page 8 infrastructure initiatives – to say nothing of That the agreement came as a Important twist Indigenous interest in taking equity positions pre-election surprise speaks volumes to More than 20 years later, and Canada in Kinder Morgan – that could break the the value of quiet and careful negotia- has found itself in another profoundly current logjam and change the national tions. It now falls to all parties – First difficult situation. conversation. Nations, the new Government of Ontario Ottawa’s decision to purchase Kinder Given the long and unhappy history of and the resource companies – to ensure Morgan’s pipeline was seemingly intended Canada/Indigenous relations, wouldn’t that that these agreements are honoured to show that the country is a safe and be ironic? and that discussions continue where reliable place to invest, but it may in fact agreements have not yet been reached. It is convince major companies to put their Carin Holroyd is Associate Professor at the University possible to make progress on Indigenous money in other countries that are easier to of Saskatchewan and Distinguished Senior Fellow at affairs. With this latest announcement on deal with. the Asia Pacific Foundation of Canada.Ken Coates is

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 32 a Canada Research Chair in Regional Innovation at Canada’s tariff is far higher than needed Guess why (Cross) Continued from page 22 Johnson-Shoyama Graduate School of Public Policy to protect the Canadian market. This is and a Munk Senior Fellow at MLI. This article first rather like using an artillery barrage to While jobs in Canada have declined appeared in The Conversation. kill a fly when a flyswatter would suffice: by 50,000 overall since December, the in this example, the fly swatter would be a US has added nearly a million new jobs. minimum $1.78 tariff. As a result, measured on the same basis, Economic competitiveness unemployment in the US has fallen to (Asselin, Speer) Implications 3.8 percent compared with 4.8 percent in Continued from page 15 Because the tariffs for supply managed Canada. means expanding competition. The products are so high, giving up a lot of tar- Canada’s May job slowdown was 2008 Competition Policy Review Panel’s iff gives up only a little protection, whereas particularly pronounced for BC and recommendations to liberalize foreign- giving up a little TRG gives up a lot of pro- Ontario – provinces, not surprisingly, ownership restrictions in telecommuni- tection. Canadian tariffs are far higher than whose governments have adopted the most cations and other protected sectors have needed to protect the domestic market. anti-business tone. BC recently led the not, for the most part, been enacted. The We should expect two arguments nation with projections for four-percent federal government should revisit them against negotiating tariffs rather than job growth by mid-2019, but employment in the name of attracting more foreign TRQs. The first is that exporting in the past year has essentially stalled (up investment and bringing greater dynamism countries can do the same arithmetic and just a tenth of a percent) despite continued to the domestic market. conclude that TRQs are much better for gains in house construction. The upshot is enhancing Canada’s them because the drop in Canadian tariffs The stall, of course, accompanied economic competitiveness will require a required to have real impact on market the arrival of a new NDP government, concerted, ongoing commitment to refine access is so large. But there’s nothing in whose unrelenting opposition to the Trans and reform a wide range of policies. This the history of trade negotiation that says Mountain pipeline expansion helped raise can’t be a static process or a single-election- the exporting countries get to choose the uncertainty surrounding business cycle or a partisan agenda. Our long-term how importers provide more market investment in Canada to the point that the competitiveness and prosperity depends access. Canada has no obligation to give federal government resorted to buying the on it. up TRQs. project to keep it viable. The second argument is one that In Ontario, employment dropped 0.2 Robert Asselin is a Senior Fellow at the University of members of the supply management percent since the start of the new year – Toronto’s School of Public Policy & Governance and a industry have made for 30 years. It’s the with the bulk occurring in January when former adviser to Finance Minister Bill Morneau. Sean “slippery slope” argument: i.e., if we give the outgoing Liberals’ drastic minimum- Speer is a Senior fellow at the University of Toronto’s up any tariff at all, there will be no end wage hike took effect. Doug Ford’s new School of Public Policy & Governance, Munk Senior to demands to give up even more in trade Progressive Conservative government Fellow at MLI, and a onetime adviser to former prime negotiations. While that’s clearly true, in Ontario faces a massive challenge of minister Stephen Harper. This article first appeared in giving up more and more TRQ is not a improving Ontario’s economy after over the Globe and Mail. slope. It’s falling off a cliff: we simply give a decade of higher taxes, ever-greater increasing parts of the domestic market regulation, soaring hydro costs and to foreign suppliers and take it away from ballooning deficits. Supply management (Martin) domestic farmers. At least with lower But Ford alone cannot change the Continued from page 19 tariffs the domestic industry would still direction this country is on. Canada’s Canada for a very healthy profit of $1.78 have substantial protection, would be able governments have badly lost focus. They all ($8.00 - $6.22). to adjust to meet foreign imports, thereby must return once again to clearly sending But the 300 percent tariff (again having a chance to compete in its own the message that Canada is committed to ignoring transportation costs) at $6.22 country’s market. market-based economic growth driven by is $18.66. Adding the tariff to the cost There is clearly a choice. business investment – and not just the of $6.22 gives a landed price of $24.88. pacification of environmentalists and the In other words, in the current situation Larry Martin is Principal at Agri-Food Management redistribution of income away from wealth of relatively low dairy prices in the US, Excellence. creators. If they don’t, investors and our

33 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute most ambitious workers already see an Toronto van attack (Newark) • Deploying drone detection, tracking Continued from page 25 alternative south of the border that looks and takedown capabilities for outdoor increasingly attractive specifically considered from the context accessible MPVs (stadiums, events, etc.); of possible preventive measures that could • Implementing a vehicle rental Philip Cross is a Munk Senior Fellow at MLI. This be taken in the future. These potentially screening system so persons seeking to rent article was first published in theFinancial Post. include: vehicles are checked against a security threat • Analysing the case circumstances to database (similar to what is currently being assess the impact on Minassian acting as implemented in the European Union). Absurd tariff justification (Boustany) he did; Continued from page 23 • Assessing the entitled behavioural Conclusion security exception is allowed under Article attitudes of Incel members and whether it The fact that an individual from a non-Is- XXI of the General Agreement on Tariffs and was fostered by social media; lamist and non-identified but ideologically Trade, but it is not to be used frivolously. • Determined what triggered the attack motivated online group would choose to In the absence of a true national security and if it was discernible; adopt an Islamist terrorist attack method justification, the use of the national • Assessing if these ideological, social to carry out a murderous mass casualty at- security exception will invite retaliation and media-based groups can be identified, tack against civilians in Canada has been, could lead to proliferation of protection- monitored and deradicalized or talked and remains, shocking to all Canadians. ist measures that would undermine the down through human interaction and It is also the new reality that must be ad- global trading system. The national security counselling; dressed as best we can to try and prevent it exception should not be used as an ordinary • Identifying other groups that have happening again. trade remedy or as a means to gain leverage members (living or deceased) who advocated in the course of trade negotiations – as or engaged in violence as was the case with Scott Newark is a former Alberta Crown Prosecutor Trump appears to be doing in the NAFTA Incel and its idolized “Supreme Gentleman” who has also served as Executive Officer of the negotiations. (and mass killer) Elliot Rodger; Canadian Police Association, Vice Chair of the Ontario The Trump administration has now Office for Victims of Crime, Director of Operations for embarked on this high-risk course. This will Other measures the Investigative Project on Terrorism and as a Security inevitably lead to a trade war if widespread These attacks on civilian populations in Policy Advisor to the governments of Ontario and retaliation against the United States occurs, Mass Population Venues (MPV) are a de- Canada. He is currently an Adjunct Professor in the which appears to be the case. The Trump liberate tool undertaken by ideologically TRSS Program in the School of Criminology at Simon administration is retreating from America’s motivated groups with the specific intent of Fraser University. leadership of the world’s trading system and maximizing casualties, avoiding pre-attack alienating key allies in the process of doing detection, reducing expertise required for so. This approach was on full display at the the attacker, and heightening public fear be- Aecon sale (Crowley) recent meeting of the G7 in Charlevoix. cause of the continuing at-risk circumstanc- Continued from page 26 In warfare, supply lines matter; in a es inherent in Western societies. As such, trade war, supply chains matter. Supply preventive measures must be targeted at ing when Chinese corporate structure must chains for American companies will be recognized actions (see above) and as mini- give the paramount leadership role to cells increasingly vulnerable as a result of Trump’s mally intrusive on the free movement of of the Communist Party of China. retreat into protectionism. By invoking persons and activities in our society. Once Finally, Ottawa last year also approved national security to provoke a trade war again, the necessary measures may not, by the sale of Montreal-based ITF Technolo- with allies, the Trump administration may themselves, guarantee no further attacks but gies Inc., reversing a veto of that transac- very well achieve the opposite of its goal they may assist in preventing one which is tion by the previous government on the and do harm to American economic and the appropriate metric of success in this new grounds that it would reveal to the Chinese national security. challenge that we face. Among the measures authorities military technologies that give worth examining are: an advantage to the West. Charles Boustany is a former member of the US • Continuing to deploy vehicle access If the Aecon decision signals an increased House of Representatives and a retired physician. He is restrictions in specific identified MPV (and justified) skepticism by Ottawa vis-à-vis a partner at Capitol Counsel LLC. locations; China and its intentions toward the West

INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 34 in general and Canada in particular, that’s trend. Native Americans have developed mission. That warship, carrying a British a welcome development. But when this strong partnerships with resource firms, helicopter detachment and European government’s national security decisions on notably in Alaskan mines and western oil observers, including from Germany, sailed Chinese activities since coming to office are and gas fields. Australian firms have long close to the Chinese-seized Spratly Islands. taken together, the pattern is alarming rather collaborated with Canadian companies In one memorable confrontation, the than reassuring. and have comparable approaches to French ship was radioed by the Chinese If the government is serious now about working with Indigenous communities. who baldly asserted that the islands were protecting the security of Canadians in the Sami peoples in Scandinavia are facing under Chinese sovereignty and asking the face of explicit Chinese plans to use their considerable pressure to accept resource French to declare their intentions. The country’s companies to advance Beijing’s projects in their territories and are interest- French, with all the aplomb of a Paris interests, they need to make clear, explicit ed in the relative effectiveness of Canadian waiter looking down his nose at a hapless and consistent this change of heart. practices. customer, responded that they were in One way of doing this would be Prime Minister Justin Trudeau has international waters and the Chinese were to make a full national security review made collaboration with Indigenous not in a position to ask anything. compulsory under certain circumstances – peoples a centre-piece of his government’s When questioned about the mission, for example, when firms from countries that agenda. But he has discovered, as have the French defence minister asserted that pose a national security risk (such as China) the Taiwanese authorities, that it takes “The [Chinese] fait accompli is not a fait attempt to enter sectors critical to the safety good will and commitment to transform accepted.” France has been carrying out and security of Canadians, such as energy, pronouncements about Indigenous such missions in support of freedom of telecoms or infrastructure. Moreover, recognition into consistent action and real the seas for several years. The Japanese, Canada needs a comprehensive long-term Indigenous authority. Indeed, countries long concerned about the dangers to strategy, perhaps using a Canadian around the world are discovering that their shipping from Chinese assertions version of America’s US-China Economic it’s not so easy to truly share power with of sovereignty over the SCS, have been and Security Review Commission and Indigenous authorities on major economic anxiously looking for support on this issue co-ordinating with such bodies in other and development files. from their allies. Western governments to share information The first step is a major advance over Canada sailed two frigates through and protect shared interests. the colonial and paternalistic policies of the SCS last year, and avoided going close To better educate the public on these recent years. The next step, one reflect- enough to the disputed islands to trigger dangers, the government also needs to ing true partnership with Indigenous a Chinese response. This year Canada has be as forthcoming as possible about the peoples, requires a continued high level of made it official that they are not doing conclusions of these reviews. commitment and collaboration. official freedom of navigation missions, The security of Canadians can never be defined as going within 12 nautical miles for sale. Ken Coates is a Canada Research Chair in Regional of the disputed islands. Innovation at Johnson-Shoyama Graduate School of That’s not enough. America and Japan Brian Lee Crowley is Managing Director of MLI. This Public Policy and a Munk Senior Fellow at MLI. Carin are looking for allies in their contesting article first appeared in theGlobe and Mail. Holroyd is Associate Professor at the University of of Chinese aggression. The French and Saskatchewan and Distinguished Senior Fellow at the the British are on board and the Germans Asia Pacific Foundation of Canada. observing. This is an issue ripe for some Indigenous resource rights leadership and who better to offer it than (C0ates, Holroyd) the chair of this year’s G7 summit? Continued from page 27 South China Seas (Crowley) A G7 united in defence of the rule of Continued from page 28 reputation for social justice and support law, freedom of the seas and a rules-based for Indigenous peoples, and promote ly into those waters near China’s unilateral- international order and against Chinese even more effective business relationships ly commandeered and militarised islets, to assaults on all three would give the between Canadian firms and Indigenous China’s great displeasure. Now, according organisation a new lease of life and benefit communities. to the Wall Street Journal, a French warship the world. The Taiwanese and Canadian develop- was dispatched by President Emmanuel ments are part of a growing international Macron on a similar freedom of the seas Brian Lee Crowley is Managing Director of MLI.

35 INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute In a world and an industry that can be incredibly complicated and full of change, we boil it down to what matters.

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With pride, with precision, with care. Made for safety, made for strength. Made on time, with perfection. Made for today’s delivery, made for tomorrow’s innovation. Made by the best people in our industry.

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INSIDE POLICY • The Magazine of The Macdonald-Laurier Institute 36 Learn more about Martinrea International Inc. at www.martinrea.com.