Canada, Stop Fearing the Free-Trade Bogeyman

Canada, Stop Fearing the Free-Trade Bogeyman(Globe and Mail)
By David Binks

For the next two days, Prime Minister Stephen Harper, U.S. President George W. Bush and Mexican President Felipe Calderon are scheduled to meet in Montebello, Que., to discuss ways to improve trade between the three countries. This has prompted a torrent of editorial comment for and against the initiative.

Following soon after Mr. Harper's visit to Latin America and his proposal for a free-trade agreement with Colombia, opponents have worked themselves into a lather. They see closer trade ties as a recipe for unfettered access to Canadian riches by resource-hungry nations, with the so-called "NAFTA Superhighway" - a massive road, rail and pipeline corridor stretching from Mexico to Canada - as the principal means by which our resources will be siphoned south. They agonize over the potential loss of sovereignty, despite post-NAFTA experience to the contrary. They trumpet the term "deep integration" to conjure up the spectre of our Canadian identity in imminent peril from hemispheric free trade. And finally, they argue that free-trade agreements with nations like Colombia that are still struggling with human rights issues would provide legitimacy to unworthy governments.

While Canadians worry about closer ties with our neighbours, the rest of the world moves on. Anyone who has visited or lived in the European Union has likely marvelled at the ease of travelling through an essentially border-free territory or the advantages of having a common currency. They may also have reflected on the fact that none of this economic integration has had any impact on the rich cultural, social and linguistic diversity that is the hallmark of Europe.

Compare that with Canada-U.S. commercial relations, which have become increasingly strained due to delays at the border and to irritants such as the protracted softwood lumber dispute. Even within Canada's own borders, trade is hampered by restrictive regulations and interprovincial rivalries. Canada still has a stock market regulator in every province, and a school teacher certified in Manitoba can't get a teaching job outside the province without going back to school.

Canadians may be angst-ridden about opening up our trade, but the socialist government of Chile, as reported recently in this paper, seems to have no trouble with the concept. The country has entered into trade agreements with an astounding list of nations in virtually every region of the globe, making it by far the richest country in South America.

I won't go into all the arguments for and against free trade for Canada. This debate is already in the public domain and, sadly, it feels like déjà vu. What I can say, without hesitation, is that the unprecedented expansion of access - to goods, services, ideas and opportunities - is the primary driver that has created profound and positive change for nations, businesses and individuals around the world, and Canada is no exception to this rule.

There is nothing new about the idea that trade and prosperity go hand in hand. The greatest and most durable empires in history flourished because of open commerce among their various territories. Foreseeing the explosion of global trade and commerce in the late twentieth century, former U.S. secretary of state George Shultz correctly argued that the free flow of information made possible by the revolution in communications technologies would force closed societies like China, India and the Soviet Union to open up.

Although Canada is behind many other countries in entering international trade agreements, we actually fare quite well with regard to our level of access to goods, services and information. This assessment is based on a comprehensive landmark survey commissioned by FedEx and conducted by the independent, non-profit research institute SRI International. Called "How Greater Access is Changing the World," the study introduces an Access Index that ranks 75 countries on 22 indicators of access to physical items and information in the categories of trade, transport, telecommunications and news, media and information services. Three related subindexes measure the impact of greater access on people, businesses and nations, using 18 to 20 variables in such areas as empowerment, connection, innovation, market reach, growth and competitiveness.

Canada ranks 13th on the main index, one below the United States. By comparison, Hong Kong and Singapore occupy the number one and two slots, respectively, with Nigeria and Bangladesh coming in at 74th and 75th, respectively.

These scores intuitively suggest that access is a key determinant of wealth and quality of life, and indeed there are many examples of the clear correlation between increases in access and decreases in poverty. We've already noted Chile's enormous progress as a result of its many free-trade agreements. In 1978, the year that China began to liberalize its trade policy, poverty levels were at 28 per cent of the population. Twenty years later, the level was 9 per cent. In India, poverty decreased from 51 per cent to 27 per cent during the two decades since the country opened its markets.

It is certainly true that poorer, more closed societies would enjoy more immediate benefits from greater access than highly developed economies like Canada and the United States. However, there is stiff competition for international markets among the top twenty Access Index countries, which includes economic powerhouses like Germany, France, the United Kingdom, Australia and Japan. No country can afford to rest on its laurels in a global economy.

It requires no leap of faith to see the connection between liberalized trade and international influence. Canadians hearken back to a time when, through the genius of leaders like Lester Pearson, we punched above our weight in the world's council chambers. It is difficult to see how we can once again aspire to have such a voice without a corresponding level of free trade with other nations - especially in view of the connection between greater access and better living standards for underdeveloped countries. Think of it as "putting our money where our mouth is."

As one of the world's most inclusive and multicultural societies, we have a head start in the race to build closer relations with Latin America. The Montebello summit meeting is a golden opportunity to co-ordinate our strategy with our most natural allies in this endeavour - the United States and Mexico. Canada needs to step up to the plate. We have nothing to lose but our angst.