And so we lashed our skiff of state ever more tightly to America's wobbly and dangerous ship of state, akin to an Andean mountain tribesman accepting that his fate was not in his own hands.
In the decade plus since I began this blog I've been railing at this bizarre integration, arguing that Canada loosen the lashings a bit, carve a more independent path. We did pursue other opportunities but never really liberated ourselves from the branch plant peril. Now, writes John Lorinc, it's time to pay the piper.
Trump’s bellicose rhetoric after the G7 summit offers a stark reminder that Canada, despite its culture of prudence, has pursued a risky path when it comes to trade. We’ve tethered our quality of life to the whims of one large and apparently mercurial customer. And now we may have to face the consequences.
For generations, a combination of geography and convenience has helped foster Canada’s deep reliance on trade with the US. In the 1950s, economic nationalists began bemoaning Canada’s resource-dependent branch-plant economy. In response, Lester B. Pearson’s Liberal government negotiated a trade arrangement designed to boost Canada’s struggling automotive industry; the deal turned out to be a huge boon for Ontario in particular. But an unfortunate side effect of the Canada-US Auto Pact was that it gave Canada all the more incentive to focus its trade south of the border. In the decades that have followed, our dependence on the US has become noticeably more pronounced, particularly since the Canada-US Free Trade Agreement in 1989 and its successor, the North American Free Trade Agreement, in 1994.
For ordinary Canadians, the events of the past two weeks should feel like an ice-water wake-up call. After all, those huge US export numbers are linked to nearly 2 million Canadian jobs, and such exports also ensure the profitability of countless businesses. “This is a potential fork in the road for the country,” says retired BlackBerry co-ceo Jim Balsillie, a critic of Canada’s economic-prosperity strategies. “We have to ask ourselves, Are we as autonomous as we need to be? It could be an awakening moment.
..While the Liberals signed ceta in 2016 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership this year, our dependency on the US is as intense as it’s ever been. According to Statistics Canada, Canada’s 2016 merchandise exports to the EU and China combined—regions with a population of 1.9 billion people—add up to just 16.4 percent of what we sell in the US.
There’s considerable irony about this somewhat self-inflicted crisis. If you own even a modest investment portfolio—some mutual funds socked away for retirement—you’ve likely heard that a diversified strategy is the safest way to go. Don’t bet the farm on one sure-fire stock!
And yet, as a country, we’ve done exactly that with our economic future. What’s more, Canada’s reliance on exports to a single market makes us quite unique among G7 nations—though not at all in a positive way.
Economists and policy makers use a metric called the Herfindahl-Hirschman index (hhi) to gauge the degree of concentration of a country’s exports. ...The hhi measures international trade concentration using a complex economic formula: the higher the resulting percentage, the greater a country’s dependency on a single market (or product). The majority of developed economies—including the US and most European Union countries—scored below 10 percent in 2015, which is considered to be a healthy level.
Canada and Mexico, however, hover in the 50 to 60 percent range. According to World Bank data for 2015, the only other country with a higher hhi than that is Mongolia. Last year, StatsCan dutifully published a fact sheet detailing the concentration of our exports, which does cite our hhi score, albeit somewhat shorn of context. While it does mention that Canada is the least diversified among G7 nations, the document conveniently neglects to show how we rank globally—hardly surprising, given that these comparisons verge on the absurd for a country that claims to be one of the world’s wealthiest nations.
Balsillie, for his part, adds that while twenty-first-century wealth is being built on the ownership of valuable intellectual property and data, Canada lacks a robust and intentional strategy for ensuring that all the world-beating innovation and discovery generated in Canadian university research labs doesn’t just get scooped up by foreign firms. Citing yet another depressing international ranking, Balsillie says that, from 2015 to 2016, Canada saw the largest percentage drop among G7 nations in patents registered with the World Intellectual Property Organization, a measure which is used to show how different countries do when it comes to exploiting their own inventions.Trump is a predator. He can smell vulnerability, he despises "weakness" and knows how to fully exploit an opportunity. He approaches it with all the empathy of a sociopath (that's probably no coincidence).
Right now we're easy meat. Decades of visionless leadership, Liberal and Conservative, have seen to that.