Allan Gotlieb is senior adviser at Bennett Jones LLP and former Canadian ambassador to the United States.
Listening to Donald Trump's inaugural speech, and his various remarks, comments and tweets about China, Mexico, Germany, Russia and international trade, among other topics, it is clear he has in mind a very different international order from the one the West designed and created in the past half-century – one based on free trade, openness, liberal-democratic values and freedom of movement of people. Now, at the core of the new Trump international order, we have the United States as victim, the United States that has been treated unfairly by most of the world.
In his inaugural address, the U.S. President put it this way: "We assembled here today, are issuing a new decree to be heard in every city, in every foreign capital, in every hall of power. From this day forward, a new vision will govern our land. From this day forward, it's going to be only America first, America first."
Remarkable words that may go down in history.
If words are what they mean, the President of the United States is putting protection at the heart of his new international order. I doubt any presidential statement has been as fraught with negative implications for America's friends and allies.
As America's largest trading partner, historic ally and the world's largest export country into the United States, no country could be as damaged as Canada by a U.S. embrace of protectionism. Yet, the United States has no legitimate grievance against Canada or cause to say we have been treating them unfairly.
The rise to power of Mr. Trump is not just an aberration. He did not invent the nationalist, isolationist, nativist, populist mood in America. The fires of protectionism in the U.S. Congress have been stoked by the same nativist America First sentiments that brought Mr. Trump to the White House and are now glorified by him.
With an anti-free-trade President in the White House, with strongly committed protectionists occupying key positions in the cabinet with their hands on the levers of power, with powerful protectionist lobbyists at work in Congress, with an ideological assault on the very notion of free trade, the spectre of the Smoot-Hawley Tariff Act of 1930 is beginning to cast a very deep shadow over the world trading order.
Canada's concern about our dependency on a single market has long been a priority theme of our foreign policy. When the government of Pierre Trudeau came to power a half-century ago, approximately half of our total exports went to our southern neighbour. To counter this, the government proposed the diversification of our exports to Europe and Japan (the "third option"). But our dependency on the U.S. market continued to grow dramatically – to 75 per cent of our total exports.
In the face of this failure to diversify, the Mulroney government switched direction and sought secure access through deep integration with the United States. Our exports to the United States then grew to the 80- to 85-per-cent range. In some sectors, (e.g. oil and gas) close to 100 per cent of our exports go south.
After two generations of trying to reduce vulnerability to the U.S. market, it cannot be said we have succeeded. What we have long feared could happen tomorrow. Canada will soon learn from the new representatives of America First what complaints they have against us and what changes they wish us to agree to in the North American free-trade agreement. It is possible they may be marginal but it is more likely they will not.
Our economy could be seriously damaged or devastated by a U.S. border tax or other protectionist measures. What can Canada do to protect ourselves against the apostles of America First?
These should be the priorities:
- We should use our influence in the White House corridors of power, at the highest levels, to deepen the U.S. understanding of the great damage it would do to its own interests by restricting trade with Canada. Personal relationships are of critical importance.
- We should engage in vigorous public diplomacy to carry this message directly to the U.S. Congress, state governors and officials, the media and business leaders; diversification of our trade must be of the highest priority. Canada has made significant progress in building economic relations with China, India, Japan, South Korea, Mexico and others. The free-trade agreement with Europe is a major step forward. Similar agreements should be made with China, India and Japan.
- We cannot deepen our trade with foreign customers if we do not have the products to sell. We must overcome domestic political obstacles to the creation of the infrastructure to carry our products to tidewater and beyond; we should seek to renew the special relationship Canada and the United States have enjoyed for much of our history. We should seek to invigorate our bilateral institutions and create new ones.