Canada-US Relations

Paul Martin’s Dilemma
Author(s): 
January 3, 2006

How to maintain essential policy freedom, discipline continental integration pressures, and charting a distinct course for Canada at home and in the world, has for generations, preoccupied Canadian policymakers in managing relations with the United States. In recent years, however, their commitment to these goals has been thrown into question.

The bilateral relationship has been remarkably friendly by international standards. Canadians have at times been inspired by American political leadership; though today they are highly critical of the Bush Administration’s abuse of its military and economic power, its disregard for international law and refusal to abide by its international commitments. Nor do they want their leaders to be complicit by their silence.

Thus, talking tough to the Bush Administration is bound to play well for Paul Martin during this election. Canada-US relations are a perennial hot-button issue. And Canadians, according to recent polls, see the Liberals as best able to stand up to the Americans and defend national interests and values.

But this country’s economic elites are no doubt squirming uncomfortably at Martin’s statements. These conspicuous displays of independence belie Canada’s diminishing policy autonomy and heightened economic vulnerability over the last two decades. But, more importantly, they could threaten the much greater compromises that would be required to fulfill the elites’ vision of a fully formed continental market down the road--what they refer to as their deep integration agenda.

Though never spelled out, creating a truly continent-wide free market requires political integration--the harmonization of a vast array laws, policies and regulations. NAFTA and US security imperatives have done much to advance this process, but there is a long way to go.

Because of the vastly unequal size and power between the partners, the new continental single market under construction (underpinned by its infrastructure of harmonized policies and regulations) increasingly resembles the US market. Canada (and Mexico) continue to align their policies more closely with the US. Since the elites generally favour the more “market friendly” US rules, this is seen more as a benefit than a cost.

On the other hand, because of its huge power advantage, the US could potentially ignore with little consequence, the rules of the continental market if an important national interest were at stake. Canadian negotiators thought they had finessed the power politics problem with a dispute settlement mechanism, but the softwood lumber debacle has proved how wrong they were, and has caused considerable anxiety among the economic elite.

As economic integration has proceeded, a deep fault line has become evident in Canadian society: between the attitudes and values of the economic elites and those of the general public. The former have converged toward their American counterparts: on deepening economic ties with the US, on supporting US policies, and on government market roles. They have accepted that achieving their goal requires that Canada regress to a semi-autonomous, semi-democratic state. They also know that, while what has been given up so far is significant, it pales beside what is required to fully complete a continental single market.

The attitudes and values of the Canadian public on the other hand, have not converged. If anything, they have grown farther apart, both from Americans and from their own elites. Nor do they want to be drawn deeper into a Fortress North America.

This fracture within Canadian society poses a serious dilemma for Paul Martin. He is a charter member of the economic elite. He believes in the idea of creating the single integrated continental market. His government has been pursuing an aggressive, stealth agenda of policy and regulatory harmonization since he was elected. Its most recent manifestation is the little known North American Security and Prosperity Initiative. Though vaguely defined, it is moving the country incrementally toward broad continental regulatory harmonization agreements in areas such as health, safety and environment; toward a common energy and resources policy; common security policies, a common trade policy etc., all with a view to eventually realizing Tom d’Aquino and John Manley’s vision of a single unfettered continental market and the informal political association that is its unstated companion (though with no vote for Canadian citizens).

I believe Martin is aware of the extent of Canadian policy autonomy that would have to be sacrificed, although perhaps he has convinced himself that he can somehow slow or contain the process.

Electoral success, however, requires strong assertions of national independence. Most people don’t want Canada to move further down this deep integration road. They want to be able to elect a government that can make fundamental choices about the kind of society they want. Canadians don’t want these choices foreclosed through back-door bilateral agreements and behind-the-scenes regulatory measures shaped by US demands. So Martin has to throw up a smokescreen around the goal of a single continental market.

If he were up-front about the consequences of this Fortress North America push, Canadians could have an open debate about its merits as happened in 1988. However, by doing this he would risk losing political support. Thus, to help secure his hold on power, he has pulled out the “standing up for Canada” card even though it makes the elites nervous. The downside of this is that it could, as Ambassador David Wilkins warned, alienate the US Administration, which needs to be kept on-board with the Plan. Worse, it could have the unintended consequence of awakening Canadians to the dangers of traveling further down this road to a single continental market.

Herein lies Paul Martin’s dilemma.

Bruce Campbell is Executive Director of the Canadian Centre for Policy Alternatives.

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