Amid all the outraged sputtering over the backroom deal through which Peter MacKay secured the Tory leadership, one wee fact has escaped mention: the North American free-trade agreement should be re-examined.
The 10-year-old pact has clearly been a huge net benefit for Canadians in terms of economic growth. But it's far from perfect. Any dolt with eyes and a brain can see, or should be able to see, that trade could be freer than it is. Moreover, many Canadians are concerned about our future relationship with the United States. They wonder whether closer economic ties will necessarily mean diminished freedom of action in foreign and social policy. These are legitimate concerns.
If Mr. MacKay's 11th-hour accommodation with anti-free-trade crusader David Orchard catalyzes a healthy public debate -- or forces the reigning Liberals to face the issue, rather than ignore it, as they have been -- more power to him. It's shocking that the federal government, 10 years in, hasn't undertaken a fulsome review of free trade of its own accord.
Some Liberals will argue that Partners in North America, the December, 2002, report of the Commons committee on foreign affairs and international trade, constitutes such a review. Unfortunately, the committee's 39 recommendations amounted to little more than a reaffirmation of the status quo. If the status quo were exemplary, Mr. Orchard wouldn't now be a political force.
First, let's be clear: Mr. Orchard and his movement occupy the Luddite fringe of Canadian economic nationalism. They would see NAFTA scrapped, the border slammed shut. That's never going to happen. Nor should it.
In principle, free trade is a centrepiece of economic liberty. It means that a consumer in one country is free to buy a good or service from a producer in another country, with no tariffs or restraints, thus ensuring them the best possible deal.
Perhaps more importantly for Canada, free trade gives sellers access to a broader market. It allows, or should allow, Canadian landowners to sell timber to the highest U.S. bidder, with no limits. It allows, or should allow, Canadian farmers to sell wheat to U.S. bakers at whatever price they're willing to offer.
There is no larger, hungrier market in the world than the one just south of the 49th parallel, and Canadians need it in order to thrive. Anyone who's unconvinced of that simply hasn't read the statistics. Between 1997 and 2001, Canada's total exports grew about 37 per cent. U.S.-bound exports grew 45 per cent.
Last year, Canada's trade surplus with the United States was $93.7-billion. Trade irritants notwithstanding, they're still buying far more of our stuff than we're buying of theirs. So it would be suicidal for us to kill NAFTA.
Furthermore, the free-trade debate is larger than Canadian exporters' balance sheets. The past decade has seen a global effort to lower trade barriers, in many cases successfully. If the trend continues, the benefits will begin flowing to the world's poorest countries. That's why the Doha global trade talks are dominated by a drive to reduce agricultural subsidies in the West. The Third World is leading the campaign.
So in this sense, Mr. Orchard's crusade is anything but progressive. It is parochial and reactionary, as are similar impulses on the rise in the United States. They should not be pandered to. They should be resisted.
Having said all that, how does a country such as Canada resist the increasingly protectionist U.S. Congress? How should Canada react when faced with threats of 40-per-cent-plus punitive tariffs on softwood lumber, or 12-per-cent interim duties on Canadian wheat?
How should Canadian public companies address the ever-growing importance of Wall Street investment banks in their affairs, or the need to comply with American rules such as the Sarbanes-Oxley Act on corporate governance or Regulation FD on disclosure?
How should Canadian investors deal with the fact that the U.S. Federal Reserve Board's deliberations are more relevant to their portfolios than the Bank of Canada's? That the U.S. Treasury Secretary is more important to them, in practical terms, than Canada's Finance Minister?
Perhaps most important, how can Canada gain better and more secure access to the U.S. market, without compromising Canadian sovereignty? What are the practical tradeoffs involved in a customs union? How to grapple with a unified North American defence strategy when so many Canadians are deeply uncomfortable with the Bush administration's policy of pre-emptive warfare?
Prime Minister Jean Chrétien's answer to these questions has been to cheerfully ignore them. He's got better things to do, like founding new national parks.
Mr. Orchard's remedy to Canada-U.S. relations, to scrap free trade, is idiotic. Mr. MacKay's suggestion -- that a Mulroney-style friendship between the Prime Minister and the President can salve all wounds -- is simplistic and naive. But at least they're acknowledging the problem. And from the clash of ideas, fuelled by contributions from the other candidates in the leadership race, something new might emerge.
It's more than we'll ever get from what passes for a leadership contest in the Liberal Party.