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opinion

Canada is being revisited with an ominous recurrence of neo-protectionist economic nationalism. Few countries in the world have as great an interest as Canada does in the unfettered flow of global trade and investment. The controversy over BHP Billiton's proposed takeover of Potash Corp. of Saskatchewan - which ended in Ottawa's abject surrender to political pressure and economic chauvinism - is a worrisome sign of dark times.

In the 1930s, it was the widespread adoption of economic nationalism that turned a grim world economic situation into a disaster. Beggar-thy-neighbour policies, adopted by most countries, contributed hugely to the devastation of world trade and investment and the length of the Great Depression. The weapons governments used were not only tariffs but all sorts of non-tariff interventions to try to privilege domestic industries. They also experimented with competitive currency devaluation, a device now recurring on an alarming scale.

The strange nationalist mood in Canada has grown despite the relative health of our economy. It began a few years ago with complaints about "foreign" takeovers of Canadian resource companies, continued through Newfoundland Premier Danny Williams's crusades against foreign investors, and appears to have increased with the protectionist provisions in Ontario's Green Energy Act and Quebec's stipulation of Bombardier for an exclusive subway car contract.

In the past few weeks, we have been treated to an intense outburst of interventionism, not to say demagoguery, by the government of Saskatchewan and a surprising number of political and business allies. Premier Brad Wall's heated rhetoric about the "strategic" interests and "betrayals" involved in one company's being bought by another and his remarkable campaign to influence Ottawa on the issue bring back memories ranging from the federal-provincial struggles of the 1930s through the era of Walter Gordon and the protectionists of the 1970s. Who would have thought these dead issues would be revived in the 21st century?

And who would have thought that, in 2010, the government of Canada would override Investment Canada's advice and prohibit a major foreign investment in our country? The Harper government seems to have succumbed not just to political blackmail but also to a new climate in which many Canadian business and opinion leaders who should know better are falling into the old rhetoric of economic nationalism: "Yes, I believe in free trade and investment, but in this case …" Or worse: What does it portend when the respected dean of one of Canada's leading business schools, Roger Martin of the University of Toronto's Rotman School of Management, characterizes the executives of a major Australian corporation, as he did in The Globe and Mail on Tuesday, as "two-faced hypocritical bastards"?

The health of the Canadian economy is vitally dependent on liberal investment and trade policies with its allies and neighbours. Protectionist economics, in all its forms, is a great menace to Canada, especially because of our reliance on liberal trade with the United States. We should be very worried about protectionist tendencies in the wake of the U.S. midterm elections. Our economic leadership should be doing all it can to dampen "me first" economics. Instead, we're helping to reignite ideas that can lead to disastrous discrimination against our own companies and producers.

Followers of global trade negotiations have noted for years the brazen hypocrisy of Canada as it supports a cartelized and protectionist dairy industry while claiming to favour free trade. Whether the potash situation also reflects a cartel-friendly mindset - many think it does - Canada won't be seen now as a liberal, open-for-business country. Instead, we become just another navel-obsessed place whose politicians and businessmen succumb to the forces of economic autarky. Just like the 1930s. Just the course the Americans are being tempted to take.

Intelligent Canadian nationalism ought to involve doing all we can to promote the long-term economic benefit of all Canadians. The more we surrender to the protectionist mindset, the more we imperil our underlying best interest.

Michael Bliss is a historian and professor emeritus at the University of Toronto.

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