The first North American Free Trade Agreement came into effect in 1994. Within just six years Canada’s trade with the United States had grown by 80 per cent and was almost three times our trade internally with one another.
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At the time, there were those Canadian nationalists who were sure we would be swallowed up by the Americans. Our national dream, it was thought, could not survive that sort of imbalance.
But Canada’s trade was just reverting to form.
Since before Confederation, trade often moved more easily north-south than across British North America. The three Maritimes provinces had been reluctant to join a new country with Ontario and Quebec (indeed, P.E.I. did not join initially) in part because they feared protectionism in central Canada would upset the sweet arrangement they had shipping raw materials and goods into the prosperous northeastern states.
Today, external trade, most of it with the U.S., accounts for roughly twice as much of Canada’s GDP (33%) as internal trade (18%).
This is nothing to be ashamed of. We sit next door to the largest, richest economy on earth and we have been able to make a comfortable living for ourselves by taking advantage of our geographic good fortune.
However, as President Donald Trump’s tariff head game has shown over the past six weeks, Canada would do well to safeguard its independence by becoming a more serious country, one that takes care of its own economy and security.
A country serious about its independence would have built pipelines to the East and West Coasts so that if the Americans become reluctant to take our oil, we would have two ways — sales to Asia and sales to Europe — that would lessen the pain of American tariffs.
A strong nation would also have had a strong military. The fact we don’t is not just a Liberal problem (although it mostly is). For 50 or more years, through Conservative and Liberal governments, we have been unwilling to buy the tanks, planes, ships and technology needed to handle our own national security.
The Trudeau Liberals have made our military deficiencies far, far worse. Ironically, despite claiming to be proud Canadian nationalists, the Trudeau government has made us even more reliant on the American military.
To prevent the tariff scare from happening again, in addition to a robust military, we also require improved border security (which Ottawa is working on), an end to supply-managed agriculture, more competitive personal and business tax rates, more mines to extract the minerals other countries are hungry for, more oil and gas development, an end to asinine EV mandates, tanker bans and net-zero power-grid fantasies that will never stop climate change, but which might cost in excess of 240,000 private-sector jobs.
And we need a national strategy to increase per-worker productivity by as much as a quarter.
But more than anything, we need a lowering of interprovincial trade barriers.
Trucking regulations that make it difficult to ship goods from one end of the country to the other. Provincial marketing boards that exclude agricultural goods from other provinces. Professional standards for teachers, nurses, engineers, tradespeople and others that prevent easy movement of skilled workers. Securities laws that vary from province to province and obstruct the free movement of investment capital. And so on.
Trevor Tombe, an economist at the University of Calgary, estimates that internal trade barriers add as much as 22 per cent to Canadians’ cost of living — about as much as Trump’s tariffs would have.
Removing internal trade barriers could save the average family as much as $6,000 a year ($500 a month), which would lessen the shock of future U.S. tariffs.
That’s what a serious country would do.