Free Trade in a faltering economy

The global downturn has led to new calls for trade barriers, and not only across national boundaries. In Canada, the sovereigntist Parti Québécois is toting the independence of Quebec as the remedy for recession.

J. P. Morgan said that “The only thing that matters is to know what [people] have decided to do. After that, the reasons they give may be of interest.”

Morgan’s comment suggests these calls for protectionism may not be new after all. The economic crisis simply offers new grounds for old arguments. This is certainly the case in Quebec. It may also be behind local calls to undercut international trade.

Canada’s 1988 election seemed to indicate Canadians had put misgivings over free trade with the US behind them. Free trade was put forward by the Conservatives, a party that had resisted the idea for 120 years. If Conservatives were now for continental trade, who would oppose it?

But misgivings persisted, even as Canadians benefited from the new arrangement in their day to day lives. An example of this ambivalence was seen in Canadian Pacific Railway’s new paint scheme for locomotives featuring the Canadian and US flags side by side. After a few years of protests, CPR dropped the design, omitting it even from historic records as if it had never been.

A more serious choice than paint schemes faces us now in a global recession. (“Choice” is what crisis means in Greek.) On one hand are voices calling for “disengagement” from NAFTA in Canada, and to “Buy American” in the US. On the other are the words of Benjamin Franklin on signing the Declaration of Independence: “Gentlemen, either we now all hang together, or most assuredly we will all hang separately.”

Franklin’s is the stronger point—if we do not limit it to national boundaries. He was speaking to delegates who did not yet think of themselves as fellow citizens, but as representatives of different colonies.

To rise above provincialism is our challenge now. Retreating behind borders—continents, countries or mindsets—will further reduce the exchange needed for the world economy to renew itself.

To cling to one partner, supplier or market at all costs is codependent and debilitating. If a sector of a national economy, such as Canada’s banking system, proves able to weather the storm, it deserves not to be isolated but shared with others as a model for renewal.

What is called for is renewed commitment to trust ourselves (“nothing to fear but fear”), to reach and search out new opportunities. These will be found not only on our continent but in a world where integration is an inescapable fact.

A clear perception of the Canada-United States trading relationship—both pitfalls and benefits—is a good place to start.