The U.S.’s actions in Venezuela this week have reignited concerns about Canada’s reliance on the U.S. for trade and security.
Given America’s increasingly unreliable status as a geopolitical partner, Canada must urgently press ahead with efforts to diversify its ties with other nations, many have said.
The question is: How realistic are these aims, and is diversification where we should be putting all our efforts?
Since last April, Prime Minister Mark Carney has been travelling flat out to bolster ties with countries of all types — traditional Western allies, Middle Eastern countries with abysmal human rights records, and the economic heavyweights India and China.
Carney has said his aim is to double Canadian exports to non-U.S. countries over the next decade. In some ways, this target is surprisingly unambitious for a leader who is nothing if not ambitious. Leading Canadian economist Trevor Tombe has said it should actually be “easy” for Canada to achieve this goal.
“We’ve already doubled the value of [goods] exports over the past 15 years,” Tombe wrote in an article for The Hub in October. “Doubling again over the next 10 years requires faster growth, but not insurmountable. Instead of growing at just under 5 percent annually, we’d need to push that up to just over 7 percent per year.”
If you add in exports of services, which have grown significantly over the past decade, it should be possible to double international exports by simply continuing recent trends, he says.
However, Tombe notes infrastructure investments will play an important part in facilitating that growth.
We agree. As we wrote in a recent editorial, increasing Canada’s ability to export oil and gas — our most valuable, fungible goods — is the best way to rapidly diversify away from the U.S.
But even then, Canada will remain heavily reliant on America. Currently, Canada sends about 70 per cent of all goods and services to our southern neighbour. Doubling exports to other nations will not radically alter this dependence.
Fundamentally, we are a country that will always have most of our trade eggs in one basket. This is because trade is a function of relationships, and relationships are a function of factors such as shared geography, shared language, shared culture and shared demand for the same things.
Many Canadians abhor President Trump, but Trump cannot undo all the relational factors that make us natural trading partners today and in the future.
In his 1894 novel Pudd’nhead Wilson, Mark Twain wrote, “The fool saith, ‘Put not all thy eggs in one basket’ … but the wise man saith, ‘Put all your eggs in one basket, and watch that basket!'”
So the question is, what is Canada — and Carney — doing to watch our U.S. basket?
On the face of it, very little. Carney has been travelling everywhere except the United States, the one destination we cannot afford to ignore.
At the same time, Carney’s team has not made clear what all his global hobnobbing aims to accomplish. Perhaps Carney has clear objectives, but if so, those should be communicated to Canadians.
On the security front, diversification is not all that realistic either.
In an interview with the CBC this week, former defence minister Peter MacKay noted, “[I]n spite of much of the rhetorical flourish coming from the White House, the Canadian and American military remain very interoperable. They work closely.’
“We have a joint command, let’s not forget in Colorado Springs with respect to NORAD … and U.S. SOUTHCOM and NORTHCOM put Canada in a position of not full integration, but working very, very closely.”
MacKay’s comments echo those made by American and Canadian generals at a major defence conference in Ottawa last March.
“ Since 1940… the United States and Canada have worked together to ensure the defence of North America,” U.S. Gen. Gregory Guillot told the audience at the time. “And today, this partnership remains a critical pillar in ensuring global security.”
Don’t get us wrong: we know that Carney and other leaders have a formidable task right now dealing with the capricious Trump administration.
But the U.S. is not Trump. The U.S. is a collection of states and individuals and businesses, many of which have desires very different from Trump’s. That is where Carney and Canada’s political, business and military leaders should be focusing their attention, as much as they may wish to look elsewhere.
MacKay put it best in concluding his CBC interview:
“This president will not be with us for too much longer. And so I don’t think we want to fool ourselves into thinking that we need to completely break off relations.”
“Yes it’s a good idea to diversify on trade, other relations, including the military … But look, we are going to be working with the Americans for the foreseeable future.”
