Our new free trade agreement with the United States, the ACEUM, entered into effect last week. This is certainly good news. The spectrum of a life without a free trade agreement north american gave cold sweats to the world of business.
Now that we can take a step back, Canadians will have to rethink their relations with the Americans, and be introspective.
It was still to the brink of disaster to cause mood swings of an american president. How can you find this normal ?
More dependent than we think
First, allow me to make my profession of faith : I love free trade. NAFTA was not perfect, but this agreement has enormously enriched. In 1998, during the economic boom in american, nearly 40 % of québec’s GDP was exported to the United States.
NAFTA was a happy marriage, but not egalitarian. Two of my colleagues at UQAM, Julien Martin and Florian Mayneris, just a demonstration.
Their study (https://www.cirano.qc.ca/fr/sommaires/2020PE-34) shows that 80 % of all our imports depend on the United States ! It is absolutely huge and unique in the world.
There are in these imports of products manufactured in the United States. But also products manufactured anywhere in the world, and which pass between the hands of Uncle Sam before going up the border.
Of products manufactured in China or India what a president out of alignment may decide to commandeer. Ninety-five percent of our mexican imports pass through the United States, mostly by truck. Imagine the power that this gives to the Americans. We have the knife under the throat.
In some cases, there is even talk of products in which the content is canadian. Remember when Donald Trump decided, one morning, to block the export of masks 3M to Canada. These masks were made with the pulp of red cedar from British Columbia !
The mentality of the colonised
Some people think that this level of addiction is normal.
That’s the price to pay to have free trade.
Not only is this false, but we act as a colonised country, accepting such a fate.
The study I’m talking about over the top shows that Canada is the only developed country that depends as much on a single trading partner. The countries that are a bad deal that we are Macao, Hong Kong, Laos, and Nepal. Nations economically dominated by China.
There are also the select club made up of Tajikistan, and Belarus, which are ultra-dependent on Russia. The other countries who are also dependent in that we only one trading partner are small islands and countries of the third world.
What to do ?
Our geography explains of course, our dependence on the u.s. economy. But we need to do something.
This is not in us closing ourselves that we will improve our fate or by producing everything ourselves. It is necessary to continue to import, but it should be better to import. As in doing more business with our other business partners.
But what is the most urgent need is to reduce our dependency on supply chains in the united states. It is necessary that canadian companies are sourcing directly to the source rather than going through the United States.
What is it to sign free trade agreements left and right if our imports continue to transit the United States ?
A relationship too personal ?
For young people, free trade between Canada and the United States is taken for granted. Go spend a few days in New York is as natural as to go to Toronto.
This achievement is fragile. Too fragile. Our good trade relations with our only neighbour have always been promoted through personal relationships preferred among our prime ministers and u.s. presidents.
We know the deep friendship that binds the families of Reagan and Mulroney. The golf games of Jean Chretien with president Clinton. The family photos with Obama and Trudeau. But it took a president only half crazy for everything derail.
Jean-Denis Garon is a professor at ESG UQAM