I wrote this memo in November-December 2016 and circulated it to a few people in and around government. Sadly, I think it’s held up quite well. Posting it here for posterity. For me, one of the key takeaways is that it’s been clear since the beginning that Trump poses an existential threat to the liberal-international order and to Canadian security and prosperity. Or at least it’s been clear to those of us who study North American politics and the international political economy.

Almost two years’ on, it seems people are slowly starting to realize exactly how dangerous the situation is for Canada, and I’m still not sure of the extent to which the Canadian government and politicians of all stripes are facing some of the hard questions I raise below.

December 5, 2016

SUMMARY

The election of Donald Trump potentially presents an existential crisis for Canada of a type previously unimaginable in the post-World War II period. There is a non-zero (and growing) possibility that Trump’s election will accelerate the decline of the US-underwritten liberal international order, ushering us into to a world of power politics that is unfamiliar to the current generation of Canadian policymakers. In this scenario, it is questionable whether the current public Canadian policy of reminding Trump of Canada’s economic value to the United States would be an effective way to preserve Canadian prosperity, let alone autonomy.

By taking a more self-interested, transactional approach to international relations, the United States could fundamentally alter the decades-old international system that has provided the context for all of Canada’s domestic and international economic, political and military activities. Should this come to pass, the fundamental assumptions underlying the Canadian economy – open, free-trade-based – and Canadian foreign policy – multilateral, Canada as the United States’ helpful fixer – would have to be rethought in the context of its relationship with a more-antagonistic United States. Given the extreme downsides to this possible outcome, the Canadian Government should begin preparing contingency plans that will allow the country to deal proactively with this worst-case scenario.

RECOMMENDATIONS

1. The Government should work pre-emptively to depoliticize Canada-US relations by creating a Cabinet committee on Canada-US relations with representation from the main opposition parties.
2. The Government should allocate resources across all departments to begin planning for the “post-US” world order. Key topics should include: the optimal structure of the Canadian economy in a world of “hard” regions; negotiating with a belligerent United States; reassessing the extent of Canadian-US military and security cooperation; the status of the North; maintaining the United Nations’ relevance in a world of region-based realpolitik.

THE PROBLEM

The Canada-US relationship affects every single aspect of Canadian society. Currently, the Government’s publicly expressed approach to the incoming Trump administration seems to be based on the assumption that, while perhaps distasteful, Trump represents relative continuity with previous Republican administrations. This is a very dangerous assumption to make and is belied by almost every one of Trump’s actions in his presidential campaign and since becoming president-elect (e.g., igniting an international incident with China via a phone call with the president of Taiwan). It is also belied by the extent to which the Republican establishment has embraced him, of which the courting of former Trump critic Mitt Romney is only the most recent example. While it is possible that Republican free-trade ideology and the traditional US support (however reluctant) of international institutions will carry the day, there is a strong possibility that the US consensus on the importance of a liberal economic and political order internationally is about to be shattered.

Assuming these public pronouncements by Canadian officials represent the opinions of the Canadian Government, Canada faces the very serious possibility of being completely unprepared by the increasingly likely rewrite of the fundamental rules of the global political and economic system by the Trump administration, as well as the eventual, long-term decline of US global dominance. A lack of planning for the worst-case scenarios (which, while perhaps unlikely, seem not as impossible as they did in October 2016) could lock the Government into a reactive stance that produces long-term damage to the Canadian economy and state.

BACKGROUND

The post-World War II period in Canada-US relations has been characterized by ever-deepening political, military and particularly economic integration, the latter of which reached its apex in the formal recognition of an integrated North American economy in the 1989 Canada-US Free Trade Agreement and the 1994 North American Free Trade Agreement. In the 1970s, US political scientists Robert Keohane and Joseph Nye termed this relationship one of “complex interdependence,” reflective of societies that had become so intertwined that the obvious power asymmetries between the two countries were not reflected in policy outcomes. Rather, the relationship is characterized by respect for the norm of non-issue-linkage and restraint in the exercise of dominance.

Canada-US relations are embedded in a larger Western international society that emphasizes multilateralism, economic and political liberalism, and sovereignty. As noted by prominent political economist Susan Strange, among others, argue, this international society is underwritten by US hard and soft power, or “hegemony.” Hegemony is not just coercive, dependent on military and economic strength; it also depends on an element of consent – other states and peoples have to “buy in” to the dominant power’s ideas (e.g., free trade, democracy, human rights). US leadership has created what American political scientist Peter Katzenstein calls the “American imperium.” This system is characterized by “open regionalism”: increasingly integrated world regions (Asia, Europe, Africa, the Americas) that remain deeply interpenetrated by each other and, particularly, by the United States.

While all this has led to a globalized world in which transnational corporations span the globe and international organizations like the World Trade Organization and the United Nations structure economic and political activity, the United States remains the ultimate guarantor of this liberal international order.

Already, before the election of Trump, US hegemony was under challenge from within and without. The 2008 Global Financial Crisis has led many to question the wisdom of US-style economic liberalism; the 2003 invasion of Iraq raised serious questions about the United States’ commitment to the principles of sovereignty and human rights. In Asia, China’s antipathy toward the current system can be seen most directly in its promotion of the Asian Infrastructure Investment Bank (AIIB), which the Obama administration correctly views as an attempt to gain influence for itself against the US-dominated institutions of the World Bank and the International Monetary Fund. In this view, Canada’s and others’ decision to join the AIIB represents a weakening of US hegemony.

In other areas, analysts have observed attempts by the United States, pre-Trump, to move away from its hegemonic role, for instance, in its lack of interest in intervening directly in Syria due to a lack of a direct perceived “national interest.”

The US exercise of global hegemony has always been complicated by its fractious domestic politics. In her 1987 article, “The Persistent Myth of Lost Hegemony,” Susan Strange remarked that international-institutional instability could be traced to parochial domestic US politics. This observation is even more accurate today, as we can see in the unravelling of the Trans-Pacific Partnership (TPP). The TPP was, primarily, a geostrategic attempt by the United States to balance against China in the Asia-Pacific, cementing US economic, political and military primacy in the area against a rising power. While a smart strategic move, it was undone by US domestic politics. Attempts by US firms to cement their dominance in Asia through policies like strong intellectual property protection and investor-state dispute settlement that provide overwhelmingly one-sided benefits to US corporations were opposed worldwide, and ironically contributed to Trump’s unexpected electoral victory.

The election of Donald Trump is likely to vastly accelerate this already-ongoing process of the loss of US hegemony. Trump’s contribution to this long-run change is likely to come via his disregard (shared by many in the Republican party) for the rules and institutions that undergird the international system. To use Susan Strange’s terminology, while Trump has a keen appreciation for relational power – that is, the ability to dominate others – he does not seem to understand the importance of structural power – that is, the ability to set the rules and context within which other countries operate. He does not appreciate the extent to which the United States benefits from its ability to set the global rules (including promotion of “universal” norms). Instead, his entire campaign and his time as president-elect have been characterized by attacks on this system. Nor does he (or the Republican party at large) have a plan to replace the current system with something else; instead, the instinct will be to rely on relational power – including the world’s most powerful military and its (for now) most vibrant economy – to get what they want from other countries.

These long-term trends will likely lead to an eventual fracturing of US hegemony, and with it – in the absence of the unlikely rise of another liberal hegemonic power – the current liberal-international system. Global free trade (and also transnational production networks) as the foundation of the world economy cannot be assumed to continue forever. As the United States removes its sponsorship of a global liberal economy, it is very possible that a global world will transform into a world of “hard” regions, in which dominant countries shape the policies of the region’s smaller countries, with less emphasis on liberal economic policies and more on a mercantilist approach to trade and economic policy.

As a small, open state whose only border is with the United States, Canada will keenly feel the effects of these changes. Canada’s current economic policies are based on the existence of deep economic integration with the United States, (relatively) free trade and US restraint in the exercise of power. If the United States abandons its commitment to a liberal trading regime and adopts a more transactional relationship toward its partners, Canada will almost certainly be affected dramatically. While economic inertia is a powerful force, the current economic regime cannot be assumed to continue indefinitely if one partner takes an increasingly short-run, transactional approach to economic and political matters. Deep integration did not prevent the United States from imposing economically self-harming border measures post-9/11 to protect what it perceived as its national interest.

Politically and economically, there is no “us” in North America. The “complex interdependence” that has characterized the peaceful Canada-US relations of the postwar period is underwritten by economic factors and normative values. However, while US businesses may experience discomfort as transnational supply chains are interrupted, at the end of the day they respond to the political and economic structures created by the state. For this reason, it would be unwise to place disproportionate faith in the idea that Republican administrations are good for Canada-US trade, or that deep economic integration will necessarily protect Canadian economic interests. Although economists generally agree (with caveats) that free trade is a better economic policy than mercantilism, such a consensus is unlikely to prevent politicians from deciding to go all-in on mercantilism should they choose to do so. Sound economic policy does not always carry the political day.

This brief does not argue that the United States is becoming a less consequential actor, particularly in its relations with Canada. A world of transactional, relational power is not one in which US power is necessarily diminished, at least in relational terms. It is one in which rules are seen as less important by larger states, and one in which smaller states (like Canada) are much more vulnerable to great-power aggression and dominance than they are today. Dealing with a transactional United States would also raise important questions about the extent and wisdom of Canada-US military and intelligence interpenetration, or interoperability, and the desirability of a fully independent Canadian military and intelligence services.

Economically, while successive Canadian governments have assumed that Canada has economic alternatives to the United States (even if these have never worked out), realistically, Canada is trapped in North America. Historically, our geographic location has been an enormous benefit to Canada. However, in a world of “hard regions,” it may become a burden. Pursuing independent extra-North American relations may become increasingly difficult if the United States begins to see Canadian exports, say, of oil to China as a form of aid by one of “their” countries (i.e., Canada) to one of their rivals.

CONCLUSION

In normal times, advice that Canadians not panic over the election of an unsavoury US president, which seems to be the Government’s primary public message, would be sound; the deep economic, political, military and social connections between the two countries would constrain the incoming president and mitigate the damage he could cause to the Canada-US relationship.

These are not normal times. The Trump transition is showing no signs of maturing into a normal Republican administration.

The centrality of the Canada-US relationship to Canadians’ well-being means that managing the fallout from the Trump administration – to say nothing of ensuring that Trump-style populist sentiment does not gain a foothold in Canada – will be the Government’s most challenging file for the foreseeable future. Given the extreme potential downsides to fundamental changes in the relationship and the world order, the Government should a) work to create a united front in dealing with the United States by inviting the leaders of the main opposition parties to participate in crafting a grand strategy to confront these issues; and b) begin serious whole-of-government contingency planning for how Canada will navigate a world of “hard regions.” Even if Trump had lost the election, such planning would be prudent; his election makes it imperative.

Prepared by:
Blayne Haggart
Associate Professor, Department of Political Science
Brock University