Social Policy in Ontario

The trade war that the U.S. has declared threatens to do more damage to Canadians than any crisis since the Great Depression. Then again, given the unpredictable character of the new U.S. president who launched the attack, the threat could disappear in a puff of smoke.

But wise countries prepare for worst-case scenarios.

Donald Trump, going against his word and without warning, has already threatened the livelihoods of tens of thousands of Canadian dairy farmers and softwood lumber workers. And it came as a stunning revelation last week that Trump had been poised to scrap the North American Free Trade Agreement (NAFTA), a vital underpinning of Canada’s prosperity, on April 29.

It would be delusional to believe that Trump changed his mind due to last-minute phone conversations in which the Canadian and Mexican heads of government warned him of the massive short- and medium-term wreckage that killing NAFTA would cause. Whatever counsel Trump actually heeded in sparing the pact (for now) surely came from Trump confidantes.

Trump has signaled that it’s open season on all Canadian industries. Emboldened by the president’s cavalier regard for America’s purported best friend, powerful U.S. lobby groups have already set their sights on the Canadian aerospace, aluminum, mining and intellectual property sectors, among others.

Never mind that Canada and Mexico are the biggest buyers of U.S. exports of goods (not including services). The numbers for 2016 are a staggering $246 billion and $212 billion (U.S.), respectively. To watch Trump’s handling of this huge portion of the U.S. economy is to imagine a chimp juggling a Sèvres vase.

Like Trump, Mexicans are thinking of quitting NAFTA rather than going along with a Trump “America First” doctrine at Mexico’s expense.

Juan Pablo Castanón heads the Business Coordinating Council, a leading alliance of Mexican business groups. “If they aren’t the right conditions,” Castanón recently told The New York Times of a renegotiated NAFTA, “then we have to contemplate the possibility of not staying within the treaty, and working with international rules instead.”

No U.S. president has been subjected to a charm offensive the likes of which Justin Trudeau has lavished on Donald Trump. It has failed. It’s time to disenthrall Trump from thinking his reckless behavior has no consequences.

Before getting to how that could be done, a few salient points:

• This isn’t the place to argue the merits of NAFTA. Suffice to say, as this space noted last week, that U.S. trade with its NAFTA partners has tripled since the treaty came into effect, in 1994, to last year’s $1.1 trillion.

• There is dissent within Trump’s own party about his trade actions. “We should improve NAFTA,” says veteran U.S. Senator Jeff Flake, a Republican. “Not abandon it.”

• Both Canada and Mexico are keen to renegotiate NAFTA, whose indisputable benefits have not been equally shared by the North American population.

A creaky NAFTA traces its origins to the 1965 Auto Pact. It does not include the state-of-the-art environmental and social-justice provisions of the proposed Trans-Pacific Partnership (TPP). Trump withdrew the U.S. from the TPP early in his administration.

Starting now, Canada needs an escalating response to Trump’s trade belligerence. How is that done?

Phase One: Ottawa would promptly abide by the request of B.C. Premier Christy Clark, who has the livelihoods of about 60,000 softwood-lumber workers to protect, in imposing a moratorium on U.S. coal headed for export markets via the federal Port of Vancouver. Trump is obsessed with reviving the U.S. coal industry.

Ottawa would also announce that Canada is embracing Japan’s enthusiasm in spearheading a revival of the TPP. That would strengthen Canadian trade ties and goodwill with the TPP’s 11 Pacific Rim and South American members. An isolated U.S. would have no role in shaping, via the TPP, a Pacific Rim economy that is America’s top foreign-policy concern.

TPP membership would complement Canada’s agreed-upon free trade deal with the European Union. That would accelerate progress in reducing Canada’s over-reliance on the U.S. market.

Phase Two: Trump has demanded that NATO members pay more for their membership. Ottawa would announce that, actually, Canada is re-considering its NATO membership altogether.

It’s not proper to say this out loud, but NATO is chiefly an instrument of U.S. foreign policy. It’s time to rethink helping America fight its wars.

Canada made its first substantive claim to sovereignty during World War I in demanding and obtaining Canadian command of Canadian troops. Yet in Afghanistan, in Syria and in joining NATO’s deployment of troops on Russia’s western frontier, our forces have continued to be directly or indirectly under U.S. command.

Freed of NATO obligations, Canada would retain its ability to use its armed forces unilaterally or in coalitions, as our interests alone dictate. And we could more fully deploy our military resources on peacekeeping, which we pioneered but have sadly neglected in recent decades.

Phase Three: In constructing a long-overdue national energy strategy by the end of this year, Canada would reconsider its energy export practices.

America’s largest source of imported oil is the Athabasca tar sands. And much of the power that lights up the U.S. northeast is generated by Hydro-Quebéc.

The rates we charge for those energy exports bear examination, since much of them are underpriced. Also, Athabasca, in particular, wreaks enormous environmental damage in Canada and is a significant contributor to global warming. That undermines Canadian goodwill, and makes tougher the challenge of meeting our CO2-reduction commitments under the Paris Accords.

The R&D into continual technological improvement needed to reduce that damage should be borne at least partly by U.S. energy consumers.

A carbon surtax on fossil-fuel exports would achieve that goal. Trump is adamantly opposed to putting a price on carbon emissions — the only certain way of reducing them. But then, Trump regards global warming as a “hoax” perpetrated by China to disadvantage U.S. industry.

The above measures are not intended as retaliatory strikes. They are long overdue, common-sense policy improvements. None require major new expenditures. And some would save Canada money more wisely spent on other priorities.

We could wait out Donald Trump. But we can’t afford a minimum of four years of economic uncertainly and potential turmoil. Besides, we will not have seen the last of erratic, thuggish leaders here and abroad after Trump retires to Mar-a-Lago. We have our own example in the quixotic John Diefenbaker.

Our surest protection against epic maladministration at home, and that which is directed at us from abroad, is to deeply entrench best practices now, to enact sound policies with which even the most determined future buffoons in high places cannot tamper.

The time to get moving on that is right now.

https://www.thestar.com/business/economy/2017/05/05/how-to-fight-a-trade-war-olive.html