CKNW Editorial
for June 15, 2001

One of the principal complaints made by anti free traders – indeed it may be the only one – is that Canada will lose sovereignty. Indeed has already lost sovereignty. Often this is expressed by terms like Canada will become an American satellite … or we have no control over our economy … or we will lose all our resources to the Americans … and so on. And we would be wrong to underplay those concerns.

The fact is that few if any countries have 100% sovereignty. The moment you make a treaty whereby you forgo the exercise of a national privilege you lose some sovereignty. When Canada joined the League of Nations in 1920 it gave up some sovereignty though as it turned out, not much and not for long. We lost sovereignty when we became a member of the United Nations. We lose it with the International Monetary Fund and membership in Nato. It’s lost to some degree with membership in almost every international organization we join and every treaty we make. Certainly those countries that have joined the European Community have lost sovereignty and it may be that at the end of the day all national sovereignty will be merged at Brussells. I don’t say that loss of sovereignty is a good thing – just that it is, to some degree, inevitable.

It’s inevitable for another reason – we can’t escape the world economy, the good bits or the bad. Much of that sovereignty loss is involuntary. Does anyone really suppose that BC was as free to do as it wished after the Asian collapse as before? Now Asian ‘flu didn’t take away our right to govern ourselves but it sure as heck affected the way we did.

It came as a great shock to many British Columbians when, after Macmillan Bloedel was sold to Weyerhauser, it was clear that MacBlo wasn’t even a Canadian company much less a BC one but largely owned by foreign shareholders. The day of the large national company is behind us. For example, even though Seagrams, a Canadian company if there ever was one and still decreed to be such for RRSP purposes is about a Canadian as Jack Daniels and has its principal offices in New York. But we should also remember that this isn’t a one way street. The last time I looked there was more Canadian investment in the United States than the other way around. US investors make take money out of Canada but that cuts both ways.

What has come with the information age is the ability to send money flying around the world in nano seconds. This has virtually eliminated the ability of a country to control money. This was brought home to all of us in August 1993 when the UK, trying to keep the value of the pound within the limits agreed to in the EC, couldn’t do so … in effect, one New York financier, George Soros, took on the British Exchequer and won to the tune of a billion dollars. I’m not happy about that nor I daresay are most of you. But it is a fact. The question is, what do we do?

It is open to us to leave Nafta. Given appropriate notice, that is our prerogative. But what would happen to our exports into the American market especially if we did? Of course they wouldn’t end overnight but they would be seriously hurt and hurt more every day as the United States turned more and more to her trading partners and away from us.

From time to time we hear about managed trade as an option … like the Auto Pact. But it takes two to manage and there is little incentive other than in the very short term for the United States to enter into bilateral agreements with a country that opts out of the larger trading unit.

Couldn’t we find other trading partners who didn’t demand so much commitment?

Again in the shorter term, yes. But this would involve two things at least. First, we would be asking industries to abandon many years of business relationships to take up new ones. That’s not desirable nor is it practical. Of course our businesses are looking elsewhere than Nafta to do business but to sever long term relationships is not easy.

Moreover, other areas, especially Asian, are developing their own trading arrangements. This means that we might just be partners on sufferance waiting for an economic Sword of Damocles to drop.

What I find faintly amusing is the hue and cry that always accompanies the United States playing bully boy with us as if that only happened because of free trade. The US have been bullies and sharp traders since Thomas Haliburton invented Sam Slick back in the 1800s. All traders, no matter what agreements are in place, will try to get around those agreements when it is profitable to do so. Perhaps that’s not cricket but it is the nature of business.

Canada is not helpless – not by any means. In fact, when we have litigated trade disputes in recent years we’ve nearly always won. And we who have subsidized the international giant Bombardier ought to be careful with our outrage when we are hit by foreign subsidized companies.

Our choices are really three in number. We can pull out of Nafta and take our chances as a trading nation without a trading partnership, we can stay in Nafta but simply go along with whatever happens, or we can use our considerable economic clout to make things better. We must negotiate skillfully and at home we must help Canadians who, through no fault of their own, are sideswiped by huge changes.

The cold hard fact is that we’re in the game, whether some of us like it or not and the only real issue is how we play that game.