(Globe and Mail)
After more than a century
of a progressively deepening economic relationship with the United States, is the trend line about to change?
The casual assumption has been that it was irreversible, that Canada and the United States
would become more and more commercially intertwined until they rolled up into a big economic ball, separated by not much more than their names on the map.
That may still turn out to be the case, but
there is enough evidence to start questioning the assumption.
The rise of China: U.S. dominance is threatened by an economic superpower that has four times its population. Through the last century,
Canada lived next door to No. 1, and all the eggs naturally fell into the one basket. This is likely to change. Our trade volumes will diminish south of the border and move to the new economic magnets; China
and, perhaps, India.
U.S. fiscal and trade deficits: They are deplorable, the dollar is in decline, and the social security net is headed for crisis. Most experts will tell you that the long-range
20-year fiscal U.S. picture has seldom been so bleak. In these circumstances, Canada would have to start offloading some of its cross-border trade dependence. It's already happening, due to the declining
American dollar.
Globalization: It may not be dying, but it's hardly the big wave any more. The anti-unification votes in Europe, the rise of American nationalism and the signs of a return to
nationalism elsewhere will have an impact on Canada. Pressure for more market consolidation in North America is petering out. Quebec, formerly a leader in the free-trade drive, has soured on the United
States.
Values: Most studies, including one on religion this week, show that Canadians and Americans are no longer converging. If anything, conservative forces are in the ascendancy in the United
States, while Canada remains on its soft-centrist liberal track.
The American model: This no longer has the appeal north of the border that it once had. Canadians like the American people and admire
American ideals. But they see a society moving further away from those ideals.
Today, much has changed. The troubled relationship has similarities to the late 1960s and the 1970s when Richard Nixon,
Vietnam, Watergate and racial tensions soured Canadians on their neighbour. But, while bilateral bliss was restored following that period, there is less likelihood of it happening now. Though the 9/11
terrorist attacks have led to a broadening of co-operation on the security front, even in that area -- missile defence being an example -- there is discord.
So we could be entering a watershed period,
when Canada's overwhelming dependency on American trade begins to recede and greater degrees of separation characterize other areas of the bilateral relationship.
There are pluses, but the risks are
greater. For the last century, it's been easy -- a blessing -- to live next door to the most powerful economic engine in history. But if that engine sputters and gives way to a new giant, the security
blanket is gone. The transition period for Canada will be long and harsh. |
