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States have interests, not friends

This op-ed by Parkland Institute Director Trevor Harrison appeared in the February 24, 2017 edition of the Winnipeg Free Press

Canada is about to relearn the truth in the old maxim, "States do not have friends; they have interests."

The free trade election of 1988 ignored this advice. Former Canadian prime minister Brian Mulroney’s Irish eyes sparkled as he talked about the great relationship between Canada and the United States. With free trade, Canada was entering into a continental partnership that, he argued, would ensure stable trade relations and secure market access.

Critics at the time warned Canada was selling off its economy — and even locking itself into being a "hewer of wood" and seller of raw petroleum products — for the chimera of assured access; more broadly, Canada was potentially dealing away its sovereignty by making itself more dependent on the United States, a country whose history of economic development was a testament not to open borders but to protectionism.

In defence of this critique, critics pointed to past efforts to secure trade deals with the U.S., in particular the Reciprocity Agreement of 1854. That agreement, far more limited in scope than the FTA or NAFTA, secured access for Canadian wheat and other products exported to the U.S. It made sense at the time for Canada, a struggling young colony of Britain that had only recently been abandoned by the mother country that had, 20 years before, adopted free trade.

In 1866, however, the U.S. pulled out of the agreement. It did so in part because of Britain’s support for the Confederate states in the recently concluded civil war. But the U.S. also abrogated the agreement because Canada — as Donald Trump would say — was "winning" in the deal. America’s protectionist instincts kicked into high gear, as they have for much of that nation’s history. The ending of the deal had a happy conclusion, however: it spurred the discussions that led to Canada’s creation the next year.

In later years, notably 1911 and again after the Second World War, Canada toyed briefly with the idea of entering into free trade with the U.S. But its political leadership — and a large portion of the electorate — rejected the idea, fearing a loss of sovereignty. Still, the theology (and misnomer) of free trade stuck around and, during a crisis of Keynesianism in the 1970s, resurfaced under Britain’s then-prime minister Margaret Thatcher and former U.S. president Ronald Reagan.

The decision of both countries to advocate for the trade agreements that followed was based in large part on an intention to hobble unionized labour and to scale back their country’s respective welfare states.

But so-called free trade also had supporters among large corporate interests and, most particularly, among finance capitalists — bankers, investment houses and insurance companies. Already possessors of a large amount of capital, this particular segment of the capitalist class desperately wanted new markets in which to invest its surplus. Capital wanted to be "liberated" — to go wherever it chose in search of greater profit, without hindrance in the form of regulation or fears of public (national) ownership.

The Canada-U.S. Free Trade Agreement set the stage for a swath of similar deals, each of which has been heavy on protecting investors’ rights — such as allowing financial interests to sue governments for enacting policies that cut into their profits — while doing little to protect workers, social programs or the environment.

The rising gap between the rich and the poor in every country and across the globe is a product of these policies. A recent Oxfam report states that eight individuals now possess the wealth of the bottom 50 per cent of humanity. A small group of individuals, whose sole contribution to the world economy is watching their money earn more money, is turning everyone else into debt slaves.

But at least for the moment, this growing underclass in the United States and elsewhere in the West has a weapon: the vote. It is not a coincidence that the two countries whose mentorship in the early 1980s fostered globalization — Britain and the United States — have witnessed, in the past year, a revolt against neo-liberal trade.

For private capital, this current apparent retreat into protectionism will not prove a serious blow. Some will lose money, but most will do well. Capitalism is nothing if not resilient. The Trump administration views everything as a business opportunity and will ensure that "American" corporations — including the president’s own family businesses — thrive.

But Canadians — like Americans — should take seriously the challenge presented by the new administration. Citizens — not governments, nor "the state" — who leave too great an amount of power in the hands of corporate interests surrender control over the kind of society they want today and into the future.

Trevor Harrison

Dr. Trevor Harrison is Director of Parkland Institute. He is a Professor of Sociology in the Faculty of Arts and Science at the University of Lethbridge, and Associate Director and Research Affiliate of the Prentice Institute for Global Population and Economy.

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