June 2007: Whose Canada?

Who'll shape our future? All Canadians or just the élites?
June 1, 2007

The CCPA has been for more than two decades at the forefront of analysis on the threats to Canadian society from deepening integration with the United States–perhaps better described as the gradual Americanization of Canada. This integration, which took shape with the 1989 Canada-U.S. Free Trade Agreement (CUFTA) and was expanded to include Mexico in the 1994 North American Free Trade Agreement (NAFTA), looms even larger since the September 11, 2001 attacks in New York and Washington.

Whose Canada: Continental Integration, Fortress North America, and the Corporate Agenda, co-published by the CCPA and McGill-Queen’s University Press, provides a critical look at the legacy of free trade and how corporate Canada is pushing for deeper integration while Ottawa cozies up to Washington. It also argues that another Canada is possible and outlines such a vision.

This new book is a collaborative effort of 26 Canadian scholars, researchers, and social activists. Together, we assess progress or deterioration in such areas as trade and economics, social policy, culture, the environment, and natural resources within the current context of Canada-U.S. relations, defined as they are by 9/11 and the U.S. policy transformations that followed. We chronicle Canadian business responses to 9/11 and policy shifts enacted by the Bush administration by examining the corporate sector’s proposals (both incremental and comprehensive) for Canadian alignment with U.S. geo-strategic goals and for strengthening security, resource, social, and economic integration.

We explore the political drive towards that alignment, which has been strengthened significantly under the Stephen Harper-led minority Conservative government. We argue that the notion of a “slippery slope” (as raised by CUFTA and NAFTA opponents) was accurate--especially their belief that one step towards integration would generate pressure for further steps. And we outline a number of possible scenarios for Canada’s future and its ongoing relationship with Washington, suggesting that another Canada is possible--one in which people resist integration and deepen democracy.

The 22 chapters in Whose Canada? provide a comprehensive analysis of these topics. Here’s a glimpse into their content.

Economic integration: Dubious benefits, troubling prospects.

Several chapters address the economic and social record of free trade. Andrew Jackson argues that the economic gains from CUFTA have been dismal, that manufacturing productivity has stagnated, that a positive restructuring of Canadian industry has failed to take place, and that the Canadian economy’s age-old problems (i.e., an excessive dependence on natural resources and an underdeveloped “knowledge-based” economy) have yet to be resolved. In terms of the social impact, Jackson documents pressure for convergence in the areas of economic and social policy and suggests that concerns regarding the potential for “downward harmonization” to the U.S. social model “were amply justified.”

The focus of Mario Seccareccia is on the interaction between trade liberalization and macroeconomic adjustment. Although CUFTA and NAFTA contributed to notable growth in Canada’s export sector, the more important contributing factors in this growth spurt were the macroeconomic and monetarist policies leading to a lower exchange rate, depressed wages and prices, and restrained domestic growth. As a result, the Canadian economy has become more crisis-prone and vulnerable to international shocks. Seccareccia also addresses pressures to bring about greater monetary integration in North America, including proposals for a monetary union, and cautions that this would have serious implications, especially for the role of the state.

David Robinson focuses on unionized labour in Canada and the devastating effects of free trade on bargaining power and worker benefits. He highlights the dismal performance of the Canadian labour market in the wake of trade liberalization over the past decade and cautions about the potential impact of further economic integration. He believes that, while Ottawa retains considerable manoeuvring room when it comes to maintaining higher labour and social standards, deeper integration will nevertheless intensify the pressures to harmonize such standards downward.

Finally, Marc Lee considers what is widely believed to be the next phase of greater economic integration between Canada and the United States: some form of a “customs union.” He assesses the potential benefits of a customs union and examines the implications of a common trade policy with the United States. He concludes that the likely benefits of a customs union are small, and frequently overstated by its promoters. On the other side, he identifies serious economic and political costs associated with this economic arrangement, including risks associated with the actual negotiation.

Costing free trade: Impacts on essential services and public policy.

International trade agreements have multiplied dramatically in the past two decades. Steven Shrybman argues that even more remarkable than the increase in quantity is the extraordinary extension of the scope of these agreements to include areas of law, public policy, and government services that have previously been considered strictly domestic matters. Not unexpectedly, transnational corporations and Canadian trade negotiators have actively fought for provisions that eliminate or strongly diminish trade and investment barriers.

According to Kathy Corrigan, the main problem with such policy objectives is that almost any tax, subsidy, or regulation--practically any law made by any government--has great potential to conflict with Canada’s new international trade commitments. She looks at the implications of trade treaties for public policy at the sub-national level, particularly in the areas of education and municipal services.

Jim Grieshaber-Otto, Scott Sinclair, and Ricardo Grinspun make a similar point, arguing that new trade deals are structured to give inordinately strong protection to private foreign investors, while limiting the ability of governments to pursue policies in the public interest. They focus on the Canadian health care system, which is currently being transformed by incremental commercialization, public-private partnerships, and outsourcing.

Canada’s ability to develop and implement cultural policies is Garry Neil’s focus. This ability has eroded, and continues to erode, due to CUFTA. Since the signing of this agreement, important Canadian content rules have been weakened, restrictions on foreign ownership lifted, support measures for magazines removed, and support to government-owned or government-subsidized distribution and production systems slashed.

Finally, Dorval Brunelle and Benoît Lévesque analyze the effects of free trade on Quebec’s development model, suggesting that Quebec is currently at a crossroads. On the one hand is the prospect of deepening free trade and neoliberal policies, the preference of the Jean Charest government; on the other hand is a new development paradigm with the potential for establishing another “second-generation” Quebec model, one that accepts the shift to a market-oriented economy but insists on the need to address social, community, and cooperative imperatives.

Costing free trade: Impacts on the environment and natural resources

Contributors Elizabeth May and Sarah Dover analyze the threats that free trade poses for Canada’s environment, the role of the North American Commission for Environmental Cooperation, and in particular the harmful impact of NAFTA’s Chapter 11 on domestic environmental regulation. They also examine how Ottawa has adopted the Washington administration’s objective of developing continental energy markets oriented to U.S. energy demands. Prime Minister Harper, a long-time supporter of Canadian oil and gas interests, has now joined Washington in its sabotage of global action on climate change through rejection of the Kyoto Protocol. The lessons, in terms of further resource integration with the United States, are clear, and it is likely a U.S. demand in new negotiations will be access to Canadian fresh water.

Marjorie Griffin Cohen provides an analysis of continental electricity markets, and in particular Washington’s push to create an integrated continental energy market under the control of its own Federal Energy Regulatory Commission. She asserts that the main issue for Canada and Mexico is deciding whether their electric energy systems should remain independent and controlled by their own public regulatory agencies, or be subsumed within a continental system responsive to the energy objectives of Washington and private U.S. corporations.

Remaining in the energy area, Larry Pratt assesses the prospects of further continental integration for Canada’s oil and gas industry. The abandonment of national development strategies in favour of a free trade regime shifted Canadian production towards the U.S. market and promoted U.S. investment in Canadian energy markets. The costs have been a reduction in Canadian ownership, stunted development of upstream industries, and lack of insulation from an erratic world market. Moreover, as the Alberta oil patch is depleted, exploration moves into the much heavier, expensive, and environmentally damaging oil deposits of the tar sands.

Michelle Swenarchuk addresses a controversial aspect of the Canadian intellectual property rights debate--patents on life--and how it has been influenced from south of the border. This particular aspect of U.S.-Canada cross-border harmonization has significant consequences. Evidence from the academic, medical, and health sectors shows that patents on life often inhibit advancements and disclosure, with serious implications for scientific freedom, medical research, and health care.

September 11 and the deep integration agenda

After 9/11, security and global geopolitical concerns rose to the top of Washington’s agenda. Stephen Clarkson and Maria Banda analyze this changing policy paradigm, which entailed not only a reordering of basic priorities, but also the establishment of new institutions, such as the massive Department of Homeland Security. During an initial phase, Washington assembled a broad coalition of states (including Canada) to implement “anti-terrorist” and retaliatory measures aimed at regime change in Afghanistan. Before long, the neoconservatives in the Bush White House used 9/11 to twist the new national security paradigm into a series of unsettling and contentious projects, the most controversial being a pre-emptive attack on Iraq.

In a second contribution, Stephen Clarkson and Maria Banda explore how Canada’s corporate sector launched after 9/11 a round of proposals aimed at achieving stronger relations with Washington across a number of policy areas. Most prominent was a 2003 proposal from the Canadian Council of Chief Executives (CCCE) for a North American Security and Prosperity Initiative. Failing to lure Washington into serious talks without Mexico’s presence, the Canadian business lobby finally decided to pursue a trilateral approach. Soon after, Washington’s Council on Foreign Relations (CFR) summoned in 2004 an influential group of politicians and corporate leaders from the three countries to “develop a road-map for the future of the North American community.”

In his contribution, Tony Clarke focuses on the architects of these proposals: Canada’s corporate class. He argues that Canada’s now unambiguously continental capitalist class wants to ensure that Canada remains attractive as a centre for new investments in a more uncertain security climate. He traces how free trade already has led to a far-reaching restructuring of North American industry, and how U.S. corporations have not only furthered their penetration of the Canadian market, but have also sought to acquire Canadian assets. Moreover, Canada’s leading corporations, he argues, now operate in key sectors of the U.S. economy (including, most notably, finance) and depend on the U.S. market to an unparalleled degree, all of which has profound implications for Canadian public policy.

On the political front, Duncan Cameron traces the origins of the current drive towards deep integration to earlier Canadian debates between economic nationalists and continentalist élites, and then evaluates the prospects of a “new continentalism.” A significant segment of today’s Liberal Party has been supportive of deeper integration with Washington, and it was Prime Minister Paul Martin and other Liberal leaders who paved the way for Harper’s Conservative government. Even more so than in the past, business groups and right-wing think-tanks have now aggressively mobilized their resources to promote the continentalist agenda. Still, the new continentalism does have several unique features, including an attempt to link trade and security.

The influence of the CCCE and the CFR recommendations was apparent when Prime Minister Paul Martin, President George Bush, and President Vicente Fox announced the Security and Prosperity Partnership of North America (SPP) in March 2005 at their summit in Waco, Texas. One of Stephen Harper’s first steps as prime minister was to renew the Canadian commitment to the SPP in the March 2006 summit in Cancun, Mexico, where the three leaders announced the creation of the North American Competitiveness Council (NACC), a body of corporate CEOs who will “provide recommendations and priorities on promoting North American competitiveness globally.” The NACC is already planning how best to advance its agenda in closed meetings, while the three leaders are planning another summit in Ottawa this August. Thus, the deep integration agenda continues to move forward under the mantle of the SPP.

This incremental strategy, which aims at policy harmonization across key areas, was engaged by the Liberal government, and is the preferred approach of Stephen Harper while heading a minority government, since it avoids the pitfalls associated with a comprehensive negotiation of a NAFTA-plus agreement. Bruce Campbell believes this incrementalism is less harmful to Canadian sovereignty since it does not entail the broad trade-offs across sectors that characterize comprehensive negotiations. However, it does make mobilization and resistance harder to organize. Actions that proceed by stealth across numerous issue areas are more difficult to spot, while their cumulative effect can be extremely damaging.

Unholy alliance: The coming together of trade and security

Steven Staples chronicles deeper defence and security integration. He notes that the current comprehensive approach to transforming the Canada-U.S. relationship, which links security and defence with economic goals, differs fundamentally from the strictly economic arrangements that defined CUFTA and NAFTA. Business leaders have abandoned past claims that free trade deals are strictly about economics and now admit that long-standing Canadian positions on a variety of issues have to be reconsidered. This has led to the formation of a strategic alliance between corporate Canada and the country’s defence lobby that is encouraging Ottawa to support U.S. military, security, and foreign policy objectives. These objectives are defined in the context of the so-called “Bush Doctrine,” which is characterized by unilateralism, military build-up, pre-emptive warfare, the restriction and suspension of basic civil liberties, and the explicit fusion of security, military, and economic objectives to advance U.S. interests.

Security and defence integration has been multifaceted. Efforts to formally involve Canada in U.S.-led “missile defence” were stopped in 2005, at least temporarily, due to intense public pressure. However, Ottawa agreed to expand the mission of the North American Aerospace Defence Command (NORAD) in order to allow the transmission of satellite and radar data on incoming missiles to the U.S. command. In May 2006, the Harper government quietly renewed the NORAD agreement, with significant changes (for example, the agreement no longer needs to be renewed every five years). Canada also decided to create Canada Command (CANCOM) to work with the U.S. Northern Command, which has responsibility for U.S. military operations in North America.

Ottawa’s review of defence policies, including the government’s 2005 International Policy Statement on Defence, legitimized an ever-closer military relationship with Washington. The final report of a Bi-National Planning Group within NORAD, released in May 2006, shows, according to UBC professor Michael Byers, that the real intent is “nothing less than the complete integration of Canada's military, security, and foreign policy into the decision-making and operating systems of the U.S.” With military and security integration advancing quickly, the nature of the Canadian armed forces and their international role is changing. This is most evident in the case of Afghanistan, where Canada has taken a leading role in NATO’s counter-insurgency warfare.

One agenda item that has been affected by this new posture is borders and immigration. In particular, policy autonomy in the areas of security, privacy, immigration, and refugees has been identified as a concession to be offered in exchange for secure market access. Sharryn Aiken details how Canadian security and immigration policy responses to September 11 have threatened to curtail the rights and liberties of many Canadians, especially ethnic minorities and refugee claimants. Aiken outlines the legal and institutional changes that have taken place, which include: an increase in the surveillance powers of the state, acknowledging an association between immigration and crime; the raising of barriers to refugee claimants, and the condoning (and in some instances, encouragement) of racial profiling.

A citizens’ alternative: Revitalizing democracy, upholding the public good

The policy debates initiated by political and business élites assume that deepening integration is inevitable and that the only relevant questions refer to scope and process. What is absent from this “debate” is an option involving a lesser degree of integration and an entirely different set of policy goals, focused on revitalizing democracy and upholding the public good. That is the shared vision that we put forth in this volume.

Although the policy constraints imposed by NAFTA, the WTO, and other trade agreements are serious, and the erosion of our social fabric and environment are painfully real, a great deal of policy space remains reasonably intact for governments at all levels. Bruce Campbell argues that, while significant, the loss of policy space has been overstated, and any government willing to act creatively and assertively still has room to manoeuvre. He proposes a three-pronged strategy to halt the erosion of Canadian sovereignty and to reclaim national policy freedom:

First, government must reassert and rebuild its capacity to actively manage the economy using a variety of macroeconomic, labour market, industrial policy, and public investment tools. Government should be more active and aggressive in regulating foreign investment and domestic resources, strengthening the cultural sector, and rebuilding public infrastructure.

Second, there should be wise management of the relationship with the United States: that is, Canada should conduct its economic business with the U.S. in a spirit of cooperation and mutual respect, as befits neighbours with deep interlocking interests and an unparalleled history of friendly co-existence, but should also resist, reshape, and reverse further integration.

Third, the focus should be on maintaining and strengthening multilateral institutions. Our government should use multilateral forums to forge agreements in the area of human rights, the environment, health, culture, and taxation that are enforceable and that supersede and circumscribe such trade agreements as the WTO and NAFTA.

A number of the book’s contributors develop specific policy proposals that fall within the broad parameters of Campbell’s strategy. Combined, the contributors to this volume offer an alternative vision of Canada--a vision of an economy and society based upon a different set of values and principles than those of free trade and neoliberalism. The contributors agree that Canadians should challenge the “no-alternative” spin and analyses emanating from business think-tanks and mainstream academics, and instead insist that the problem is not the lack of alternatives, but the lack of political will to pursue them. We turn now to the question of political will.

Moving forward: Resisting assimilation, deepening democracy

Murray Dobbin posits that devising a strategy for resisting “deep integration” is no different from developing a strategy to resist the harmful effects of a broader neoliberal agenda. He argues that a strong and united élite not only introduced neoliberal ideas to public discourse, but also marginalized opposing viewpoints in the process. Neoliberal ideas have now become accepted as “natural” and are rarely questioned by Canadian politicians or citizens. And deep integration is simply the latest stage of this corporate agenda--one that requires what Dobbin calls “a counter-hegemonic response.”

Dobbin believes this is ultimately a struggle for our democracy, given that the political right has skilfully seized control of almost all of Canada’s major democratic institutions. They have accomplished this by crafting an ideological project which he calls “a counter-revolution of lowered expectations.” Its success is evidenced by the ways that Canadians have accepted fewer government responsibilities, lower levels of economic growth, smaller wage increases, and the view that a social democratic alternative is unfeasible. According to Dobbin, these right-wing campaigns have led to a shift in Canadian political culture, a shift that must be addressed and countered if “systemic Americanization” (perhaps a more accurate term than “deep integration”) and its consequences are to be effectively challenged.

While Canada’s current political state of mind is problematic, Canadian values are not. Dobbin suggests that a bright spot in this ideological battle can be found in the progressive social and cultural values of Canadians, which have persisted and grown stronger over the last decade, even though the political expectations of a significant percentage of Canadians may have changed. Several authors conclude that, if greater integration with the United States is to become a major political issue for public debate, then progressive civil society groups will have to lead the battle.

In practice, resistance to deeper integration has already been real and significant: the ratification of the Kyoto Protocol, the tabling of the Romanow Report on the future of health care, the massive opposition to joining the Iraq invasion, and Canada’s decision to opt out of the Bush-sponsored missile defence program in 2005--all prove that resistance is far from futile. Various groups have also defended civil, minority, immigrant, and refugee rights against the “anti-terrorist” onslaught.

The political context for deeper integration changed with the arrival of a hawkish minority Conservative government in February 2006. Economic and political élites have seized the moment in order to push for integrationist initiatives, both above and below the radar, mitigated only by the realities of the political conjuncture. The Harper government’s rapid embrace of a multi-pronged business-led integration agenda under the SPP, its actions on military integration, including the extension and deepening of Canada’s mission in Afghanistan, its capitulation to U.S. demands on softwood lumber, and its steadfast support for the Bush administration’s Middle East and certain United Nations policies–these are just some of the ways in which the Conservative government has moved to harmonize Canadian policies with those of Washington during its first year in power.

Harper’s agenda is tempered by the limited manoeuvrability of a minority government and his determination to appear moderate to an electorate that he hopes will give him a majority in the next federal election. If the Conservatives do win such a majority and those constraints disappear, the integrationist agenda will likely be advanced aggressively and some of the worst-case scenarios analyzed in our book could become a reality.

It is clear that Canadians must mobilize to assert their values and their vision of the future, and that they must elect politicians and governments that reflect those values. Facing a disjuncture between their core values and the economic and political interests of élites, it appears that Canadians have arrived at a critical crossroads. They can continue to be dragged to the right, down a one-way road towards deeper integration with the United States and a continued loss of autonomy, or they can turn left and take on the arduous but worthwhile task of nurturing a democratic, tolerant, equitable, and sustainable society.

(Ricardo Grinspun [York University] and Yasmine Shamsie [Wilfrid Laurier University] are the co-editors of Whose Canada? This article draws from their detailed overview chapter in the book, which includes sources and references. Copies of Whose Canada? may be obtained from the CCPA. Click here to order your copy.)