Donald Trump’s election promise to tear up trade agreements seems to have unleashed the Liberal Party’s inner Milton Friedman.
Since November, Ottawa has seen the most passionate defence of free trade from a non-conservative party in more than a century, with the prime minister and his cabinet taking every opportunity to persuade the new Trump administration to rethink its plans, or at least spare Canada.
Speaking last month in Berlin – but also over the crowd’s heads to an audience in Washington – Prime Minister Justin Trudeau declared that, “we, collectively, value trade, and the promise of prosperity for all our citizens that comes with it.”
Why? Because, “at the end of the day, by making it easier to buy and sell products, we can expand opportunities for our businesses.”
Foreign Affairs Minister Chrystia Freeland has vowed that Canada will stand against a “rising protectionist tide in many countries.” This is consistent with her belief, stated as far back as 2014, that “if we want our middle class to be prosperous — which is the core of our agenda — having trade deals with the world is absolutely essential.”
Not to be left out, Ontario Premier Kathleen Wynne chimed in that “we need to make sure that our neighbours understand the mutual benefits of Canada-U.S. trade and specifically Ontario-U.S. trade.” Alberta Premier Rachel Notley went one better, actually flying to Washington to make the same case in person.
The three-part message has been relentless: trade is a win-win proposition, protectionism makes us all poorer and it’s up to Canada to convince the world of that. Or, as newly-appointed International Trade Minister Francois-Phillippe Champagne put it: “We’re at a point in history where we have to argue for the advantages of international trade, and that’s where Canada has distinguished itself.”
Longtime Canadian position
It’s not a new message. In fact, it is so old that Trudeau and the premiers could have cribbed their talking points from the Fathers of Confederation. Speaking in 1865, in the face of rising American protectionism, George Brown declared: “I go heartily for the union, because it will throw down the barriers of trade and give us the control of a market of four millions of people.” The next year, the United States repudiated the free-trading Reciprocity Treaty with the British North American colonies. Two years later, Confederation became a reality.
As we celebrate 150 years of Confederation, Brown’s words are a good reminder that Canada was born of a desire not just for free trade, but specifically for free trade among the provinces of the newly confederated country as a buffer against occasional foreign protectionist winds. In the intervening years, we seem to have forgotten that if free trade between Canada and other countries — which we cannot always control — is an economic boon, surely the same reasoning still applies perforce to trade within Canada, which we can control.
A recent study by economists Trevor Tombe and Lukas Albrecht estimated the annual benefits of eliminating trade barriers among the provinces at between $50 billion and $130 billion, or $7,500 per Canadian household per year. Where is the political outrage?
Where, in his Berlin speech, was Trudeau’s denunciation of provincial liquor monopolies and dairy boards? Or of the hundreds of non-tariff trade barriers that make selling or transporting goods between Canada’s balkanized provincial markets much more expensive, and sometimes impossible?
Where were the kind words for Gérard Comeau, who was fined $293 for buying beer in Quebec and driving it home to New Brunswick, and whose case has now been appealed to the Supreme Court of Canada?
Canadian Free Trade Agreement
Last July, Canada’s premiers concluded their meeting in Whitehorse with the announcement that they had reached a “historic” agreement-in-principle to replace the feeble and exception-riddled Agreement on Internal Trade with a new “Canadian Free Trade Agreement.” Since then, there have few updates and no details. The original communiqué, which spoke dubiously of “exclusions” for favoured industries, left out free trade in alcohol altogether and punted it to a “working group” that, to the knowledge of my contacts in the industry, has yet to meet. Hardly cause for optimism.
Any improvement on the status quo would be welcome, but it is frustrating that our founding national promise of interprovincial trade is still a topic for parochial horse-trading and negotiation. If Trudeau and the premiers truly believe what they say about the benefits of free trade when lecturing Donald Trump, they should lead by example and dismantle, once and for all, the patchwork of protectionist laws and regulations in their own backyard.