I have a new oped out in the Globe and Mail, on why Canada should not renegotiate our trade agreement with the United States and Mexico, the United States Canada Mexico Agreement (USMCA in the US, CUSMA in Canada, T-MEC in Mexico). The US itself has been pushing for a quicker renegotiation, while some pundits and premiers, such as Québec Premier François Legault, have been calling for renegotiation in order to end the current uncertainty in the relationship.
Their arguments are, to be blunt, nonsense.
The problem in the North American economic relationship isn’t with the USMCA, however it’s named. The problem is that the United States is not honouring the current agreement. To imagine that Trump’s and Musk’s United States would honour a new agreement when they don’t stand by their existing ones is pure magical thinking.
Legault and other renegotiation supporters are practicing cargo-cult policymaking. They want to continue doing the thing they did in the past without understanding why the thing they’re doing (negotiating agreements) delivered prosperity.
Trade agreements aren’t some magical economic-growth device that anyone can use at any time. They only work under specific circumstances. When you try to use them inappropriately, they can lead to disastrous outcomes.
The circumstances that allowed trade agreements to do their thing — a global respect for sovereignty and the rule of law — no longer hold.
It only makes sense to negotiate trade agreements when all parties can be trusted to abide by its terms, more or less. There is no global police to enforce international law, so you have to trust your partners. The United States has made it very clear that it does not feel bound by any of its agreements. That’s kind of what it means to dismantle the liberal international order.
Under these conditions, any agreement Canada and Mexico signed with the United States would serve to bind the smaller countries while leaving the US free to do what it wants, when it wants. It would not be an agreement between sovereign equals, but between master and servants.
If we renegotiate, I guarantee you there will be even more onerous terms that have nothing to do with North American trade and everything to do with cementing US dominance over our economies and our future. Already, the USMCA includes clauses limiting countries’ ability to set independent monetary policy, and that effectively give the United States a veto over any future Canadian and Mexican trade agreements with China.
What does any of that have to do with North American trade, you ask? Absolutely nothing. But it shows how the US uses the carrot and stick of access to its market force concessions on countries.
Trade agreements are supposed to protect the policy autonomy of the smaller party. The USMCA’s renegotiation clause is already being used to attack Canadian tax and cultural policies. If we renegotiate, expect more of that in pretty much every area of our economy.
This time around, I would bet any amount of money that Musk’s US government will go hard after anything that restricts his companies’ interests: bans on any online harms regulations or restrictions on self-driving cars or AI safety regulations. Policies in Canada’s interest that have nothing to do with trade.
Remember all of Trump’s talk about economic coercion? This is exactly what he has in mind. And there’s a process in place to deliver it: the USMCA renegotiations.
Negotiating, or renegotiating a trade agreement with an expansionist, authoritarian country like the US makes absolutely no sense. It would only serve to tie our hands at the very moment we need to reorient the Canadian economy. The whole point of the USMCA, from the US perspective, is to prevent this much-needed reorientation from happening at all. They want to tie us to the US mast.
To be clear, not having a trade agreement is not the same as not having any trade. Agreement or no, trade will continue among the three countries because each has and can do things that the others want or need. The only difference is that trade would take place without the false sense of security provided by a dead-letter agreement.
Any new or renegotiated trade agreement wouldn’t deliver the mutually shared benefits that people tend to associate with free trade agreements, because the world in which that was possible no longer exists. Instead, the new USMCA would bind only the weaker parties: Canada and Mexico. It wouldn’t be formal annexation, but it is, for the US, the next best thing.
Talking is good and planning is better, but I have to say that I don’t have high expectations for this summit to produce a workable blueprint capable of addressing the Trump threat. In particular, I’m worried that the federal government and the business sector continue to underestimate the enormity of what’s happened.
For example, while Canadian Chamber of Commerce president’s “all hands on deck” language sounds impressive, her calls for lower taxes as a response to Trump’s aggression suggest a business-as-usual mindset.
Calls for lower taxes is business boilerplate, trotted out whenever there’s a perceived threat to Canadian competitiveness. It’s in the business playbook. But it makes no sense in the face of a threat that will almost certainly require a massive expansion in government capacity, not least to help businesses diversify their markets.
Public policy experts, and here I’m drawing on John Kingdon’s foundational work on how policies get adopted, have long recognized that actors use crises to advocate for their pre-existing policy preferences. Rather than working from the problem to find a solution, more often than not policy entrepreneurs use the emergence of problems to promote the preferred solutions they already have in their back pocket.
That’s why I’m not holding out much hope for today’s summit. It takes time to come up with bold new plans, especially if you’re a business or organization that has operated under the same rules for three-plus decades. With the exception of Jim Balsillie, most business and labour leaders were not advocating for the complete reorientation of Canada’s economy away from an overdependence on the United States five months, or even five weeks, ago. Which means that they likely haven’t done the work needed to come up with what a month ago would still have been seen as radical proposals.
From this perspective, calling for tax cuts is as expected as they will be ineffectual.
There are a couple of exceptions where we can expect movement, precisely because of the presence of a pre-existing constituency. Economists and many policymakers have been calling for internal free trade for decades now, which means they could probably move fast (or start to move fast), should the political will be there (this, BTW, is textbook Kingdon).
An east-west energy corridor, maybe, for similar reasons, though that would be one for the history books: “Let the eastern bastards freeze in the dark,” anyone? It would be one of the greatest ironies in Canadian history if Justin Trudeau, hated in Alberta, were to deliver the west-east energy corridor that his father couldn’t, and which kinda poisoned Alberta against the federal Liberals for generations.
The problem is that there is so much more that would need doing to actually reorient the Canadian economy. Such as: massive CBC funding. Serious rebuilding of physical infrastructure. Reinvestment in education and training. Investment in government planning capacity, not consultants. Actually diversifying trade, not just signing trade agreements. These things cost money. The money has to come from somewhere. Which means higher taxes.
Then there are the things that nobody is talking about yet but that are equally, if not more, important. The United States is dismantling its regulatory state and sabotaging its statistical databases. Our two governments are interdependent. We need to stress test and reinforce Canada’s and the provinces/territories’ regulatory and statistical capacity. Otherwise US chaos will become ours.
Also underdiscussed: the vulnerability of our electronic infrastructure. US tech has bent the knee to Trump. They control the “cloud,” the servers on which a lot of Canadian businesses and organizations store their data. Elon Musk has penetrated the US Treasury Department and now has access to untold data on Americans, US businesses and, almost certainly, business that operate in the US. If I were at this summit, I’d raise the spectre of widespread corporate espionage. And if I were a university or researcher working on economic, socially or politically sensitive issues, I’d begin assessing my vulnerability yesterday.
I wrote the Third Option piece in part because I recognized that people were calling for it in all but name, but without appreciating the history, including why it has proved unworkable in the past.
To be clear, I believe that Third Option-style policies are absolutely essential, but it will take effort to go down that path. I also wanted to highlight that what’s needed involves a massive transformation of Canadian society, one we haven’t seriously considered in decades. In other words, this isn’t something we can tax cut our way out of. Calls for tax cuts have me concerned that Canada’s business leaders haven’t fully grasped how all-encompassing a switch from free trade to economic nationalism needs to be to work.
My grading rubric
Here’s how I’ll be scoring today’s meeting. Internal trade barriers are the bare minimum and not enough for a pass. Calls for reduced taxes and merely trying to make Canada a more competitive investment environment through deregulation won’t cut it, for reasons mentioned above. I will know that they’re serious if they commit (or call for) real money to things like infrastructure, transportation (including high-speed rail), green technology (to reduce energy dependence), and education (including to poach US-based researchers being driven out of the country).
I will also be looking to see if they call for government to establish a Royal Commission on the future of the Canadian economy. A business- or university- or think-tank-led study won’t be enough. What we need is a whole-of-government, whole-of-society analysis of the threats and our options. Anything less risks partiality and incompleteness, and will lack the legitimacy needed to undertake huge structural change. And though the clock is ticking, sadly this is not something that we can bash out over a weekend.
I’ll also be looking to see if they commit to enforcing Canadian media ownership rules and regulating US-based social media.
Also important: I would like to hear an explanation of how they intend to deal with Trump’s ongoing threat, including an explanation of what they want to accomplish, and what they want Canada to look like in five-to-ten years. Canada has already made a mistake in paying a $1.5 billion policy bribe to keep Trump from imposing his illegal tariffs. What was that supposed to accomplish? How do we avoid being extorted the next time? And the next time?
And if they highlight the threat posed by US attacks on statistics and regulation, I’ll know that they truly understand what’s going on.
You all know the old joke about experts, which very much includes academics: We know more and more about less and less until we know everything about nothing. There’s definitely some truth to it: As a very smart economist colleague once remarked, just because you understand economics doesn’t mean you’ll be good at investing.
But it’s not quite accurate to say that academics know everything about nothing. Rather, all academics know everything about one thing. That one thing being their dissertation subject, the thing they had to write and be examined on to be awarded their doctorate, their PhD.
That’s not to say we’re completely ignorant about everything else. In the social sciences at least, you learn how to critically evaluate and assess information and arguments. That’s much more difficult than you’d think. We’re trained to tackle problems systematically, to go through an argument, to poke holes in it, to recognize its weaknesses but also its strengths.
And in the Canadian system at least, Political Science PhDs students have to pass comprehensive exams in two subfields, in my case Comparative Politics and International Relations. This involves intense study of key texts, in the case of my program (Carleton University, represent!) over the course of an entire year, to such a degree that you end up internalizing the discipline’s ways of thinking, key concepts and issues.
Did I mention that it’s intense? It’s intense: My partner will tell you she lost count of the times I wandered into the living room, blurted out something arcane about Marx before heading back to my desk for another eight hours of study. Imagine living with someone who does that for 12 full months. Over that year I listened to so many 10 pm-1 am Vancouver Canucks radio broadcasts. And I’m not even a Canucks fan.
(Though this study routine did allow me the pleasure of once hearing the Canucks’ broadcast crew descend into what can only be described as giggles when they realized they’d won that night’s 50/50 draw.)
This training not only serves as the foundation for the research we undertake after we’ve completed the PhD. It also gives us the general expertise (which is still pretty specific) needed to teach courses in these fields, though of course you have to keep up with developments in the field. As one of my PhD advisors told me when I’d successfully completed my comprehensive exams, “Congratulations! You will never be this well-versed in your field again!”
The One Thing
A doctoral program teaches how to think in a particular way, in specific areas. But it’s the dissertation that makes you a Doctor of Philosophy. That’s because, done right, it involves intense study, not just of one issue area, but one issue, One Thing. By the end of it, because it has to be original research that nobody has done before, you will understand this one thing better than pretty much anyone else on the planet. Chosen correctly, your dissertation committee will be experts in parts of your topic — in my case, each of my committee had individual expertise in Mexican politics (and also Canadian policymaking), US politics and copyright law. But in the room, when I was defending my dissertation, I was the only one who could bring it all together. That’s not bragging or a slight on my fantastic committee: it’s by design. That’s how a PhD works.
To outsiders, your One Thing can seem esoteric and pedantic, even silly. This is the root of the slight “everything about nothing.” And it’s true that most of the time, most dissertation topics are probably not directly relevant to people’s everyday lives.
Until they are.
Because social science research (most of the time) is based in the real world, there’s always a chance that today’s intellectual backwater will become tomorrow’s object of intense interest. I first discovered that in 2005 when I began my dissertation. I thought that copyright policy would be a relatively staid field, stable enough to let me trace processes of North American governance. Within three months, copyright had been politicized, including via the first successful political use of Facebook to affect government policy.
Whoops.
I now find myself in a similar position. Because my One Thing — the thing I was using copyright to examine — happens to be: the conditions under which Canada and Mexico can exercise meaningful autonomy (i.e., sovereignty) in the shadow of the world’s most powerful country.
Thanks to the United States’ foolish and immoral re-election of Donald Trump, this is now the most important question facing both countries.
This is the Catch-22 of a political science doctorate. You always want your research to be relevant, but if people come calling to talk about it, it usually means that something’s gone horribly wrong.
I’m telling you all this to explain (as much to myself as to anyone else) why I’ve been so direct in my writing about what I think Trump’s re-election means for Canadian independence, and why I’ve been writing so many opeds. My research in recent years has taken me away from North American regionalism and toward digital regulation (which just also happens to have become super-relevant, since Elon Musk is now apparently the co-president of the United States. I sure know how to pick the quiet topics). In a sense, this focus on Canada-US relations is a bit of a throwback for me.
Alarmist overreaction? Or expert understanding?
When you spend years studying a topic as intensely as you tend to do when completing a doctorate, you come to know it intimately. You develop a level of understanding about it that’s unmatched by all but a handful of people, in the country, in the world. Again, this is not bragging. This is what all doctorates involve.
This intense focus, I’ve found, can lead you down some interesting paths. Intimate understanding often involves recognizing that the conventional wisdom on a topic is flawed, or more usually not quite right. Because you’ve spent so much time with your topic, you end up developing your own conclusions about it, based on your own research.
For me, this has never been more true than now. Everything I know about my One Thing tells me that the North American relationship has been shattered utterly and completely, and that Canadian independence was in extreme danger. I recognized this immediately after Trump’s re-election, not because I’m super-bright and intuitive, but because this happens to be the exact thing I spent six years studying, and thinking about for years previously.
The downside of getting so deep into a subject is that it’s easy to forget that not everybody will have the same understanding of your topic as you do. This can cause problems in getting your message across, because often your expert understanding, gained from deep study, will run counter to the conventional wisdom. A conventional wisdom that is often shaped by self-interested actors who are perhaps not really interested in the truth. This happens all the time in copyright discussions.
Think about how many times you’ve heard an expert talk and thought that they sounded kinda nuts. These experts are often imparting their own deep knowledge about their One Thing. The irony is that it’s the expert is often the one who’s actually in touch with reality, but the non-expert doesn’t realize it.
This dynamic can create pressure on academics not to go against the conventional wisdom, to pull our punches. Nobody wants to come across as a loon, or be thought of as overreacting when things don’t go as bad as we thought they might. That’s another pressure: predictions run the chance of being wrong, and nobody wants to look wrong, or foolish. Or sometimes it might take decades for a prediction to be borne out. Only now, decades later, are free-trade critics’ warnings about free trade’s potential to hinder Canadian sovereignty coming true.
This has definitely been an issue when talking about Trump. I’ve certainly felt this tension between the One Thing that you know and the desire not to sound unduly alarmist or lose credibility. I’m certain that back in November, highlighting the US authoritarian turn and arguing (as I did, along with several of my colleagues) that Canada was in danger of losing its sovereignty to an authoritarian United States sounded a bit, well, overly alarmist.
I will say that I’ve had a couple of people tell me that they thought I might’ve been overreacting to this or that, but that they changed their minds once they saw Trump in action.
That’s the challenge inherent in speaking based on your understanding of an issue, in advance of a crisis. Warn people about an incipient problem and you risk losing credibility, not just if you’re wrong, but if you’re seen as hysterical. But if you wait for the crisis to happen, it’ll be too late.
The obligation to write, the obligation to serve
The other thing about knowing your One Thing is that, often, you’re one of only a very few people who have a deep expertise in that issue. To be clear, “a very few” can range from one person to several thousand. The point is, on any specific topic, the pool of people with deep expertise is limited. And within that pool, there’s a good chance that even fewer people share your exact same skillset and expertise (in my case as it relates to our current crisis, my One Thing, a background in political science, economics (trade), professionally working in Parliament, and an appreciation of the policy process).
Consequently, if you, the expert, don’t weigh in on something, via a journal article, a conference presentation, a government report, an oped, a media interview or whatever, there’s a non-zero chance that the thing that needs saying won’t be said, or the thing that needs doing won’t get done. It’s a pressure I’ve felt in particular when it comes to Canadian digital policy. There are many experts out there, but I also bring a particular viewpoint to the conversation. Again, this is not bragging; it’s the same for pretty much every expert in pretty much every field. Very few of us are interchangeable.
So it is with the One Thing I know. I write not just because I love writing: There are other writing projects I’m neglecting because of all this. I’m spending so much time on this because I feel an obligation, both as an Ontario university professor and as a Canadian citizen, to share what I’ve learned with my community in Niagara, in Ontario and in Canada.
As for my insistent assertions about the nature of this crisis, and the hard choices ahead, which might at times come across as an overreaction: They come not from any political ideology, or anti-Americanism, or love of controversy. Rather, they are based in my research and my training.
That doesn’t make my assertions infallible. I could be wrong! My assumptions could be flawed, my assessment incomplete or inaccurate. I would so love to be wrong about how dire the threat is, about the quality of Canada’s response to date, about all of it.
It would be much easier, and less stressful to be honest, if I could claim to see an easy way out of this. But that’s not what my training tells me. And that’s all I have to draw upon.
If you made it this far, congratulations! Enjoy this delightful song about academic romance from Camera Obscura.
I see Globe and Mail columnist Lawrence Martin is joining the chorus of Canadians thanking Donald Trump for re-igniting a sense of Canadian nationalism. As gratifying as it was to see such a visceral, countrywide reaction to such an obviously unwarranted (and illegal) act of aggression, and as necessary as the reaction was, I’m a bit wary about basking in this surge of Canadian nationalism.
For one, I don’t know how substantive it will turn out to be. It has the feeling of a sugar high, like the unity Canadians felt at the onset of the pandemic. Within 2 years, that unity had collapsed into anger, paranoia, and an occupation of Canada’s capital. Its aftermath is now wrecking our politics.
Certainly, Canada has been threatened, and Canadians reacted appropriately. But we also haven’t been asked to really sacrifice anything yet. Reorienting the Canadian economy and society away from the US is absolutely essential. But (and here’s the old economist in me talking), it’s going to cost. A lot. And that’s a conversation we as a country have yet to have.
Personally, I think it’s a price with paying because the alternative is subjugating ourselves to (let’s be honest here) a fascist government. But, as with Covid, not everybody will see things that way.
As Linda McQuaig points out, deeper integration is very appealing to some right-wing groups and businesses. It’s the easy way to make money. But let’s be clear: deeper integration with an authoritarian country would necessarily eviscerate Canadian democracy. The consequences of deeper integration today are fundamentally different from what many could have imagined in 2001 and 2002, the last time deep integration was really on the Canadian policy radar. Back then, pro-integration advocates could at least argue plausibly that we were dealing with a rational state that respects the rule of law, sovereignty and human rights. No longer.
(An aside: McQuaig and other free trade critics are being proven 100% correct in the fears they raised 20-30 years ago. Trump’s threat to Canadian independence is, in many ways, the free trade chickens coming home to roost. The risk of US integration-driven prosperity (which did happen) was always the potential loss of Canadian sovereignty.
Brian Mulroney sure did like to roll the dice with the future of the country, didn’t he?)
My worry: Unless politicians are explicit about the existential and moral risks posed by Trump (subjugation by a fascist power) and make clear that his regime is a moral abomination on the level of the worst in history, many Canadians will balk when they’re asked to actually sacrifice. Because at a certain point, it’s so much easier (if morally compromising and soul-destroying) to go along to get along.
Only a shared sense of purpose, not reactive nationalism, will keep us from repeating the slow collapse of Canadian unity in the face of Covid. We need — and our politicians need to provide — both a full accounting of Trump’s threat and a nation-building project, presented in a way that will allow Canadians to understand and accept the costs it will entail. If you’re looking for a way to evaluate a political party or leadership, these are some pretty solid criteria.
Since Trump’s election I’ve written and talked a lot about what Trump means for Canada. But about a week ago it occurred to me that I hadn’t really said anything about Canada’s plan to retaliate should Trump follow through on his tariff threat. Strange, considering that’s pretty much been the exclusive focus of our politicians and almost all of the public debate.
On reflection, I haven’t weighed in because I don’t think the tariffs are the real problem. They’re something to be addressed, but as part of a bigger issue. They’re not the whole ball game. It’s the age-old difference between tactics and strategies, between fighting a battle and winning the war.
Plus, the more I think about it, the more I’m convinced that retaliation won’t address the deeper, existential problem facing Canada: that Trump, the Republicans and the United States feel completely free to violate a treaty to demand concessions at all.
Across-the-board tariffs would be a shock to the Canadian economy, no doubt. But the truth is, we could adjust to any tariff level. It might be difficult, and the resulting economy might not be as prosperous as before, but we could adjust.
What we can’t adjust to is the toxic uncertainty that Trump has injected into the relationship. If the threat of tariffs is always hanging over our heads, every action we take, every problem, domestic or international, that we try to tackle will make us wonder if we’re about to summon the Wrath of Trump.
(Full credit: This point was nicely made in a virtual panel I attended yesterday at the Balsillie School of International Affairs at the University of Waterloo. I’m not sure what. the attribution rules were for the event, so I don’t think I can identify the speaker.)
That’s the real purpose of Trump’s tariff threat. They’re not designed to secure US manufacturing or border security. Remember: Trump is fundamentally an ignorant narcissistic sociopath. He cares only for himself. He doesn’t understand (or care about) policy. He doesn’t care about any of this.
What he cares about is power and domination. And that’s what these tariff threats are designed to secure: compliance from Canada and Mexico on anything and everything. The purpose of these all-purpose tariff threats is to destroy sovereignty.
That’s the game. That’s the problem.
And this isn’t just a Trump thing. He’s supercharged it, but increased uncertainty is what you get when one undermines the international legal system, as the US has been doing for a few years now.
It’s also not something that retaliation can fix.
Hard truths in uncertain times
The hard truth: only minimizing exposure to the US can address the US threat to Canada. As I’ve written elsewhere, Canada-US integration, once our greatest asset, is now our greatest vulnerability.
So, what to do? The first step is to recognize that the game has changed fundamentally. This requires breaking habits learned over the past 40 years. In the 1980s, our response to uncertainty over US protectionism was to negotiate a trade agreement, the 1988 Canada-US Free Trade Agreement. It was succeeded by the North American Free Trade Agreement (including Mexico) and then the United States Mexico Canada Agreement (USMCA). Now, we’re gearing up to renegotiate the USMCA, as required by the treaty.
Today’s uncertainty, though, is completely different from what we faced in the 1980s. Back then, the uncertainty we were dealing with centred on whether the US would go more protectionist. Now, we’re uncertain if the United States will honour any agreement it makes. Remember, these tariff threats are illegal.
When you can’t trust your partner, a new or better treaty won’t help at all. Instead, you can expect that the larger partner will use their coercive power to force the smaller partners to accept conditions that limit their room to maneuver. The USMCA already has clauses restricting monetary policy (what does that have to do with trade? Nothing.) and the ability to negotiate a trade agreement with China, the world’s other economic powerhouse.
If step one is to recognize the situation you’re in, step two is to abrogate the USMCA in order to preserve our room to do what we need to do to protect ourselves from the real problem: an untrustworthy United States.
Minimizing our exposure to US threats will require diversifying our trade relationships and building up the Canadian economy along east-west-north lines to make it more inward-focused and resilient to external shocks. And there’s certainly much to be done in both areas (a subject for another post).
This does not mean we should ignore the United States and US interests (no matter how crazy), even if such a thing were possible. We still have shared interests, such as in security. Although fewer than before: It will be harder to justify joint international operations with a partner that has no respect for multilateralism and human rights. The suspicion would always be that the US is fighting out of rank self-interest, not to preserve a community of states or human rights.
But we need to pursue these interests in this new environment, focused always on protecting Canadian sovereignty and our ability to promote Canadian-defined interests.
So: Abrogate, diversify, reinforce. Work with the US on issues of common interest while abandoning the dream-turned-fantasy that deeper integration can be had without sacrificing Canadian independence.
To repeat: Whether or not Trump imposes a tariff tomorrow, no matter its size, the threat of tariffs will remain.
Neither appeasement nor a better trade agreement can fix this hard problem. The United States has destroyed the trust and shared values needed to sustain an integrated economy. We can mourn this needless catastrophe, but we have to recognize it for what it is and act accordingly. Otherwise, Trump will drag Canada down the same nihilistic path as he has the United States.
Blayne Haggart's Orangespace 
You must be logged in to post a comment.