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"Giving up: an analysis of the Canadian government's vision for Canada"

by David Orchard

Speaking notes for a presentation to the House of Commons Standing Committee on Foreign Affairs and International Trade hearing on "North American Integration and Canada's Role in the Light of New Security Challenges," Saskatoon, Saskatchewan, May 10, 2002.

The audio version of David's speech is available - click here to listen.

The House of Commons Standing Committee on Foreign Affairs and International Trade is holding hearings on "Canada and the Future of the North American Relationship: Shaping a Long-term Canadian Agenda." The department has prepared and published "an outline of key issues" with a series of questions upon which it apparently seeks public responses.

Right off the bat the document informs us that the U.S. is and will remain "much more important to Canada than Canada is to it," that in fact Canada is less important to the U.S. than it had been decades earlier, one reason being "a general decrease in Canada's global economic and diplomatic/military power."

Rather than seek ideas from the public on how to reverse this trend and how to increase Canada's global economic/diplomatic/military power the question section asks whether the terrorist attacks of September 11 are "likely to increase or decrease Canada's importance to the United States: and "would it be useful to increase the numbers of diplomatic personnel stationed in the United States?"

The next section, "A Canadian Agenda on Border Cooperation," informs us that "Canada's high economic vulnerability to border disruption is a given which must be taken into account in deciding the best policy response."

Again in the questions posed for discussion not a single one asks how Canada can, or if Canada should, reduce this high economic vulnerability. Instead we are asked if Canada should "pursue discussions on the establishment of an eventual North American security perimeter" and if a "border management agency" should be established to secure this North American "perimeter."

The paper on defence explains that "the key element" of bilateral defence cooperation is North American Aerospace Defence Command (NORAD), and seems proud that "the duty officer in charge at the NORAD Operation Centre on September 11, 2002 was a Canadian." The idea that Canadians might want a more independent foreign and defence policy is not even hinted at. Rather, we are asked whether it would be "useful to increase high-level political involvement on such structures as the Permanent Joint Board of Defence."

Part V, "The Canada-United States Economic Relationship," opens by explaining that "Canada and the United States enjoy the largest and most comprehensive trade relationship in the world. Much of this success can be attributed to the North American Free Trade Agreement (NAFTA) and to its predecessor, the Canada-U.S. Free Trade Agreement (FTA)." 86% of Canada's merchandise trade exports go to the U.S. and U.S. investment in Canada has doubled in the last decade, and "this is an opportune moment to examine the course of North American integration," and "what should be the 'driving force' behind the integration."

It is noted, almost in a tone of discomfort that "some Canadians resent further economic integration with the United States"; often, they fear 'becoming American.'" This thought, however, takes up only one sentence and we are moved quickly to the proposal that "given the size of the United States -- economically, demographically, militarily etc -- it may be preferable that the determination of the nature, speed and extent of further economic integration be done pro-actively." In other words, given that Canada appears to be losing its sovereignty, our government is suggesting we should speed up the process by directly soliciting assimilation into the U.S.

We are asked if Canada should "move directly to focus on a strengthened and deepened North American community" and if so, "what options should be pursued by Canadians: a customs union, a common market or an economic union... such as now exists in the European Union and which typically involves the harmonization of domestic economic and social policies as well as a common currency/monetary policy."

The author of Part VI, "Canada-Mexico Relations," explains among other things that "Mexico's response to the terrorist attacks of September 11, 2001 was seen as inadequate by many in the United States, however, and have reawakened some Mexico-U.S.tension and nationalistic sentiment among some Mexicans." "Given this," we are told, "several American witnesses before the committee argued that, despite the long term rhetoric, when compared with the Canada-U.S. relationship, relations with Mexico were still "a work in progress" and a "two-speed" North America was therefore still the preferred model." In plain English this means that as some Mexicans appear reluctant to be swallowed up by the U.S., Canada should proceed alone towards this end.

Part VII is entitled, "NAFTA and beyond: Next Steps?"

Since NAFTA, "two way merchandise trade with the United States has risen by 12%" while "incoming foreign direct investment (FDI) from the U.S. has almost doubled."

In another of its infrequent nods to unpleasant realities the paper acknowledges that since the FTA "Canada's share of total North American inward FDI has been declining. It has gone from about 10% in 1988 to about 6% in 1998 despite strong absolute growth in two-way FDI." What this means, is that under NAFTA Canada is receiving less foreign investment from the rest of the world while the takeover by U.S. corporations of Canada's economy has doubled.

Furthermore, the authors concede that "While there is little doubt that NAFTA has had beneficial impacts, one can make a very plausible argument that other factors have been equally -- if not more -- influential in causing Canada's improved trade and economic performance..." the buoyant U.S. economy, (and) the depreciation of the Canadian dollar were mainly responsible for the dramatic increase in exports to the U.S.!" However, we are assured that "consumers have also reaped the rewards of greater competitiveness in the market place, benefiting from improved products, services and prices."

Key promoters of NAFTA are cited, advocating more integration. "Cumbersome rules of origin, discriminatory government procurement restrictions, complex anti-dumping procedures, vexatious security considerations, intrusive countervailing duty investigations, burdensome regulatory requirements, onerous immigration procedures and other restrictive measures remain in place, discouraging rational investment decisions and deterring wealth-creating trade flows," Michael Hart and William Dymond tell us.

However, "A great deal of work has also been done on possibilities for furthering Canada-U.S. economic integration," the paper assures us, describing "the progression from free trade arrangement to economic union seen in the coming together of the European Union. (Each arrangement involves a loss of sovereignty). These are:

* Customs Union (CU) ...
* Common market ...
* Economic union ...

In the questions at the end of this section we are asked "is greater integration inevitable?" and "what benefits would the United States enjoy as a result of a customs union or common market?"

Then: "Of the four possible alternatives for the Canada-U.S. relationship -- making improvements to the existing framework, a customs union, a common market or an economic union -- what integration option do you support?" There is no question for the majority of Canadians, i.e. those who prefer not be integrated into the U.S.

Part VIII, "The dollarization debate and North American Integration," addresses the issue of a common currency with the U.S. and adopting the U.S. dollar.

For the first time in the document one sees a minimal attempt to present both sides of the debate, including even a section called Sovereignty and Monetary Union. However, adopting the U.S. dollar means phasing out the Bank of Canada and becoming part of the U.S. Federal Reserve system. This which fact is not mentioned in the paper would mean an end to any kind of fiscal or monetary independence.

Section IX, "Towards a North American Community," utilizes without blushing the title of American Robert Pastor's book which urges Canada to integrate into the U.S., adopt the U.S. dollar and sets out a blueprint and time table for this process. Pastor is cited respectfully in this section and in the next chapter, "Further Areas for North American Cooperation."

Having waded through the articles one has the sense this document could well have come out of the U.S. State department. Its single minded focus is on moving Canada deeper into the U.S.

If we accept that the primary role of a government is to guard the nation's sovereignty and promote the well-being of its citizens, how can our government justify a document that presents, examines, and then promotes the integration of Canada into the U.S.?

Given what the document calls "Canada's high economic vulnerability," why is the government of Canada not putting forward a document about how to reduce this vulnerability, this danger to Canada?

Why is there not a chapter dealing with how to safeguard our sovereignty and reduce our weaknesses? There are numerous examples that could be helpful. How, for example, does Norway, next to the European Union, protect its sovereignty? Norway remains outside the EU, yet trades profitably with it, giving its citizens one of the highest standards of living in the world with no debt, deficit or downsizing and some of the world's richest social programmes. Switzerland has managed to do the same and no one seriously proposes the Swiss give up their currency or their distinctive institutions.

As for the document's praise of the so-called free trade agreements, the FTA and NAFTA do not deliver free trade at all. What they do is increase American protectionism against Canada's exports. Our trade with the U.S. is less free under the free trade agreements than it was before they existed. Prior to the FTA, 80% of our exports to the U.S. were duty free, a further 15% had tariffs of 5% or less. Over all, the average duty on exports to the U.S. was less than 1% and we had very good protection against American countervail and anti-dumping duties.

What has happened since? Let's look at lumber. Before negotiations for the FTA, the U.S. had never, since the founding of GATT in 1947, levied a countervail or anti-dumping duty on Canadian lumber. When American lumber producers petitioned in 1982-83 for a countervailing duty, the U.S. Commerce Department rejected the application, because they knew there was a high probability the Trudeau government would invoke its GATT rights and that under GATT the U.S. would not be able to prove Canadian lumber was subsidized, and if they did, that such subsidies, being generally available, were not countervailable.

Furthermore, we had the federal Employment Support Act, which was brought in in the early 1970s, expressly to keep Canadian companies viable and employment up while an industry was defending itself against a U.S. trade action. That was the situation before the FTA, so the Americans not once took an action against Canadian lumber, against the Canadian Wheat Board nor against other key Canadian industries.

Now what has happened under the FTA and NAFTA? We have 27% duties on lumber, over ten investigations in as many years against the Canadian Wheat Board while the U.S. aims massive agricultural subsidies against Canadian producers. The above mentioned Employment Support Act which authorized the federal government to provide assistance to mitigate disruptive effects of foreign duties, was of course nullified by the FTA and today the federal government simply stands by watching Canadian jobs and industry go down the tubes.

This fundamental fact bears repeating: FTA and NAFTA did not reduce American protectionism. They increased it. These agreements freed U.S. protectionism against Canada giving it a much stronger hand, while at the same time massively restricting Canada's sovereignty and our ability to react in our own self-interest, to protect our industries, employment, environment and or government policies. The FTA and NAFTA exposed Canadian companies completely by writing into their terms all U.S. trade law, present and future. They replaced the GATT dispute settlement with a panel that costs Canadian companies a small fortune to appear in front of with very little chance of winning and if they do win, the Americans can simply change their law -- as they did on lumber. All with the blessing of the FTA and NAFTA.

These are the agreement your documents is praising as the cornerstones of Canada-U.S. economic relations.

I would like to pose a few questions of my own for consideration by the government members of the Standing Committee:

1) How does the government of Canada justify dismantling the country it was elected to defend?

2) Why did former prime minister Pierre Elliot Trudeau, referring to the Canada-U.S. free trade agreement, write "The commendable goal of promoting freer trade has led to a monstrous swindle under which the Canadian government has ceded to the United States of America a large size of the country's sovereignty over its economy and natural resources in exchange for advantages we already had or were going to obtain in a few years anyway through the normal operation of the GATT?"

3) Why did former prime minister John Turner call the FTA "the Sale of Canada Act" and "one of the most devastating pieces of legislation ever brought before the House of Commons... a bill that will end Canada as we know it and replace it with a Canada that will become nothing more than a colony of the United States?"

4) Why did the current prime minister Jean Chrétien write in his autobiography "Those who argue that free trade is our only hope and perhaps inevitable have either given up on the idea of a unique and independent Canada or haven't thought about the consequences?"

5) Has the Liberal party given up on the idea of a sovereign and independent Canada or does it now regard all of its leaders of the past three decades to have been in a fog about the consequences of a free trade arrangement with the U.S.?

6) Why did the Liberal party campaign vigorously against the free trade agreement and NAFTA promising to "renegotiate or abrogate" both of these deals and strengthen Canada's independence?

David Orchard is the author of The Fight for Canada -- Four Centuries of Resistance to American Expansionism and was runner-up to Joe Clark in the 1998 federal Progressive Conservative leadership contest. He farms in Borden, SK and can be reached at tel (306) 664-8443 and at davidorchard@sasktel.net

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