Losing CUSMA could make Canada stronger
TORONTO—Twice now, Canada has had to surrender on key policies to keep Canada-United States trade negotiations alive. First, we rescinded the digital services tax on U.S. hyperscalers, giving up several billions of dollars a year in tax revenue. Then, we pulled back on plans to force big U.S. streamers such as Netflix, Disney, and Prime, to put just a miniscule part of their huge profits into supporting Canadian cultural programming.
And it’s not only that. We have promised, no matter what, not to curb Canadian energy and mineral exports to the U.S.
We are dealing with a U.S. administration that intensely dislikes Canada and Canadians, enjoys treating us as a vassal state, is quite prepared to extort (see the Gordie Howe Bridge situation), mocks us by threatening to make Canada a U.S. state, and has little regard for trade policy rules and conventions. For some industries, such as autos and related steel and aluminum industries, the U.S. has declared that Canada should give up its auto assembly industry and just supply the U.S. with auto parts. The pressures are not going to abate.
With each concession we make, it seems that new concessions will be demanded. U.S. President Donald Trump is treating Canada just as he would have treated contractors and suppliers when he was a developer. If we do something he doesn’t like, he simply threatens—as he has on the spread of wildfire smoke across the border.
And because of his obsession with America First, he has embraced a new security document—the Donroe Doctrine—that sees North and South America as part of an American empire and as such, would be subject to U.S. leadership, including foreign policy, and also favour U.S. goods and services.
It is a painful reminder that, unless pushed to extremes, we have limited cards to play in seeking to retain the Canada-U.S.-Mexico (CUSMA) trade deal. While there is bold talk about hitting back hard in response to U.S. provocations, most possibilities—such as curbing energy or raw materials exports, like potash, to the U.S.—would hurt us as much as it would hurt the U.S.
We do have American allies—businesses and unions that value CUSMA and our longstanding economic relationship and they can sway the Trump administration to some extent. But Trump and those around him are unreliable and untrustworthy, so we never know what may come next.
If Canada’s goal is to preserve CUSMA, does it mean to do that at all costs? Or do we have red lines that we will not cross, even if it means the end of CUSMA? We should be at least talking about this. It may be that abandoning CUSMA, while a shock in the short run, may not be as costly as feared.
Trade with the U.S. would continue as we have things the U.S. needs, including Canadian tourists, and Canada is an important market for many U.S. companies and the states in which they are domiciled. As we continue along the present course, more opportunities should open up in the rest of the world.
This is the benefit Trump has brought to Canada: he has forced us to abandon a number of dubious assumptions about our place in the world and to take the first steps of many in rethinking what kind of country we want to be and how we attain a greater capacity to succeed as a sovereign and prosperous nation that can advance its own social, cultural, environmental, and political values.
By losing CUSMA , we will already be positioned to take the difficult, but necessary, steps for success while living with the inevitable short-term pain.
This means we will have to push against serving as a vassal state and operating as a branch plant economy where many of the leading industries are branches of U.S. multinationals. This means working much harder to build and advance Canadian-controlled corporations serving the global economy, retaining more of the value of the intellectual property we create in our universities, and owning and utilizing our own data. We will have to be more creative, and not afraid to use past instruments of success, such as Crown corporations A transformed Canada Post as part of our digital sovereignty strategy, for example?
We will need to build the institutions for a better Canada, including a new economic council to look at the big challenges we face. We have already started on defence and a sovereign wealth fund. We will need to expand Canadian culture and creativity. We will need to make better use of our savings to build a more successful and productive economy. We will need to be more strategic.
And we will need to sustain a key Canadian value—inclusiveness—so that our health, education, and housing policies serve all in a participatory society that provides and enables opportunity for all. A lot of these things we should do, with or without CUSMA, but without CUSMA they will be even more important.
There is something else that is critical. We have to overcome the prevailing negativism found in too many quarters. While Canada is far from perfect, we have accomplished much in this vast land. We are a relatively decent society that seeks to make housing, health care, and education widely available, and to seek to do better. Federal equalization payments, despite political meddling, recognize that all Canadians are entitled to basic public services, and this is enshrined in our constitution. Our levels of healthy life expectancy and educational achievements are higher than those of the U.S. and income distribution is fairer.
Trump and his cronies may hate us, threaten us, mock us, and try their hardest to hurt us. But we don’t have to kowtow. We have alternatives and that’s where we should spend our energy. We don’t have to be a vassal and shouldn’t want to be.
David Crane can be reached at crane@interlog.com.
The Hill Times