Since early November, the spectacle of U.S. president-elect Donald Trump’s second administration has featured unseemly and unpresidential attacks on Canada and its economy. The implications for Canada’s interests and global standing are serious and stark. But for those of us who have for decades been called “protectionist,” “anti-global” and “economic nationalists” because of our advocacy for sovereign approaches, the eruption of a twittering cacophony now calling for sovereign responses and strategies is another spectacle altogether.
Some pundits who previously derided economic nationalism as protectionism are now all in, so it’s only fair to ask: where were these fierce defenders of sovereignty when Canada was slowly and systematically eroding its own economic prosperity and, with it, its national security?
We could have used their voices when the United States-Mexico-Canada Agreement (USMCA) was signed in 2018. While virtually all of Canada’s so-called expert class, media and pundits were uniformly cheering the successful completion of a big “free trade” agreement, some of us read the actual document and the analysis by the U.S International Trade Commission and found that several provisions are materially adverse to Canada’s prosperity and sovereignty.
Even for the traditional industrial economy, which benefits from the reduction of trade barriers, the USMCA diminished our future by raising barriers to multilateral trade through restrictive measures, as shown by quantitative analysis.
In the rapidly expanding digital economy, which is pivotal for Canada’s future, the U.S. advanced its intangibles economy with provisions on intellectual property and data in ways that significantly enriched it, while impacting Canada’s sovereignty.
The USMCA had little to do with trade and much to do with what trade economists call “regulatory remote control” — measures that reach deeply into Canada’s domestic economic management, including our future trade deals, macroeconomic management and regulatory autonomy in areas ranging from health care to e-commerce, putting Canada on a path to becoming Puerto Rico without a passport.
We could have also used their voices when the Biden administration, which many in Canada refer to as “friendly,” didn’t just keep many of Trump’s tariffs, it added new sources of friction. Biden killed the Keystone XL pipeline under the guise of environmental concerns, while turbocharging U.S. fossil fuel production and exports. The decision was not about protecting the environment, but about kneecapping a competitor — Canada.
As the global economy shifted decades ago, there was an emergence of strategic behaviour by nation states and their firms to enclose as much of the knowledge commons as they could using legal structures to advance their interests. Inexcusably, Canada didn’t seem to know what was going down.
Fast forward to 2017, when Prime Minister Justin Trudeau was hyperventilating with excitement because a U.S. monopoly, Google, brought its Sidewalk Labs division to Toronto to try and privatize … the government. At the time, I said this was “a colonizing experiment in surveillance capitalism attempting to bulldoze important urban, civic and political issues.”But I was wrong. It was a self-colonizing experiment.
With the exception of a small group of dedicated civic activists and the handful of domestic tech leaders, Toronto’s grandees and self-styled elites — including Trudeau’s chief economic advisor at the time, Dominic Barton — signed a letter endorsing the project that never hid from its damaging effect on Canada’s economy and its sovereignty.
Canada also stood the concept of sovereignty on its head with Trudeau’s “AI sovereign compute strategy,” which subsidizes U.S. data companies. And then there are the signature AI and innovation programs, which still subsidize mostly foreign firms instead of using this precious taxpayer money to advance Canada’s prosperity drivers.
Forty years after the advent of the knowledge economy, we still don’t have a national strategy to capture wealth. Instead, as leading innovation economist Dan Breznitz showed in his recent prosperity series, the government’s ineptitude for sovereign economic governance has reached epic levels.
Canada sleep-walked into the current crisis of sovereignty, thinking that the multilateral global order of 70 years ago would hold up, and continued its pub crawl of trade agreements believing that it was the best way to capture gains in an economy that had been reshaped by the digital transformation. This economy demanded critical attention to sovereign interests. Canadian policymakers and the commentariat alike were asleep at the switch.
In 2020, Trump advisor Jared Kushner publicly said that it was the administration’s deliberate strategy to create an agreement with Canada that weaponized uncertainty, so that the U.S. can come back in six years for more concessions. And here we are. Biden’s own trade representative extended Trump’s strategy of weaponization, saying that, “Discomfort is actually a feature — not a bug.” Why didn’t our government take these public warnings seriously and build resilience and leverage in areas where it could?
No country with our potential inflicts as much damage to its own economic prosperity and sovereignty as Canada. The new economic nationalists will find much to pearl-clutch in most of our industrial policy, and none of it will have Trump’s name on it.
Canada was built on sovereign institutions and approaches for production-economy realms such as energy, agriculture, mining, communications, transportation and finance. But by completely missing the advent of the knowledge economy in the 1980s, it has lost the plot. That has cost us hundreds of billions of dollars annually in national accounts, and in leverage that could have given us more strength around the negotiating table.
To paraphrase a famous quip about strategy U-turns, “we are all economic nationalists now,” even those who finally noticed that Canada’s sovereignty is under attack. Welcome to the club.
National Post
Jim Balsillie is a founder and chair of the Centre for International Governance Innovation, the Arctic Research Foundation, the Digital Governance Council and the Centre for Digital Rights. He is a co-founder and chair of the Council of Canadian Innovators.