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For Canada, bound to the U.S. by security and trade interests, excluding Huawei from 5G is starting to look like a no-brainer.Nacho Doce/Reuters

If you had to guess how a global pandemic will change Canada’s economic policy, you might expect the government would ensure manufacturers in this country will in future make hand sanitizer, N95 masks and mechanical ventilators to ensure a reliable domestic supply.

But maybe it will also push Ottawa into banning Huawei Technologies Co. Ltd. from next-generation 5G wireless networks. At least, that decision looks more obvious. But not less complicated.

The rules that we thought applied to the global economy have been in tatters, but this pandemic is looking like an inflection point.

Around the world, voices on the left and right are cheering on the end of that global liberal economic order. In Canada, a few thinkers who aren’t cheering are arguing that a transformation is more or less unstoppable – and we better figure out how to handle it.

A paper called New North Star II, published by the Public Policy Forum, argues that we’re moving from a world of trade rules to one of geo-economic rivalry. That means Canada needs an industrial policy – a national strategy to succeed.

It was written by three economic-policy thinkers – Robert Asselin, a former Liberal policy adviser, Sean Speer, who was an adviser to Conservative prime minister Stephen Harper and Royce Mendes, a senior economist at CIBC Capital Markets.

The paper has received attention precisely because it is not what you’d expect from supporters of that liberal economic order. And it has already been criticized by some who see its call for a national industrial policy as an invitation for governments to stick their fingers into markets.

But what is essential is not the authors’ detailed prescription, but the clear diagnosis.

Mr. Asselin and Mr. Speer come from the world of politics, wonks who fit their ideas to changing realities.

The first part of their analysis is more political than economic. The liberal order is gone – well, being radically changed – due to superpower rivalry between the United States and China. They refer to the end of the Washington Consensus, the rules-based economic system built since the Second World War. The old order has changed, the authors warn, and it is not coming back.

It is an analysis that is getting hard to deny. China gives or takes access to its market as a political favour. The United States threatens tariffs for leverage. Canada takes its complaints to a World Trade Organization gummed up by the United States. And the bipartisan U.S. political consensus for confronting China goes beyond President Donald Trump.

Although the paper isn’t about the pandemic, its warning fits the economic nationalism in the current zeitgeist of many countries.

Economic nationalism had already surged on the right, and not just in the United States. The indication that China wasn’t forthright about COVID-19 might accelerate the sentiment, and U.S.-China tensions.

Shortages of N95 face masks have people like Ontario Premier Doug Ford arguing Canada should create supply chains to make this necessary stuff – and more stuff generally – at home. Some New Democrats see a rising demand for state action in the economy. One mused privately about the need for a national drug company.

But as the authors of New North Star II note, technology is spurring geo-economics. The first New North Star paper was about the growing “intangibles economy” – intellectual property, software, data and brands. The second is in many ways about the rifts in that economy. It notes that countries, especially rival superpowers, increasingly see their tech economies as security architecture.

It’s a warning to take seriously in a world developing a “splinternet,” and with overlapping security and protectionist interests. Does the United States want Huawei excluded from 5G networks for security or economic reasons? The answer is yes.

For Canada, bound to the U.S. by security and trade interests, excluding Huawei from 5G is starting to look like a no-brainer. Yet China will still retaliate. The United States will still put its own geo-economic interests first.

So this paper calls for figuring out a Canadian path. The authors argue for a “challenge-driven” industrial policy to spur development in key areas, not subsidize companies. Mr. Asselin compared it with how the U.S. decision to send a man to the moon spurred the development of Silicon Valley.

Maybe. The moonshot prescription seems a lot less sure than the diagnosis. But the warning cannot be ignored: There’s a new world now.

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