Canada Globalization and Canadian Free

Canada Globalization

Globalization and Canadian Free Trade Policy

The debate over globalization is one which has occupied market theorists, politicians and the working class alike for generations. However, in the post-Cold War era, the recalibration of world markets and political relationships has instigated the breakdown of barriers to the thorough implementation of free trade. Under the philosophical banner of globalization and taking the form of economic alliances crossing over international borders, thus removing the obstructions of international duties and other domestic market protections, free trade has been a primary determinant in the relationship which currently binds and frustrates Canadian-United States relations. As examined in the C.D. Howe Institute's March 2006 article "Steer or Drift? Taking Charge of Canada-U.S. Regulatory Convergence" by Michael Hart, the breakdown of trade barriers between Canada and the United States is a process which is producing collectively positive results and which must be intensified through a strengthening of Canadian identification with U.S. economic, political and legislative character traits. A view which is also held by current Canadian leadership, it is nonetheless disputed vociferously by a great many groups. This reality is represented in Bruce Campbell's January, 2006 meditation on the topic, "Canada-U.S. Relations: Paul Martin's Dilemma," published by the more centrist advocacy group, the Canadian Centre for Policy Alternatives.

Background:

In 1989, Canada and the United States entered into their first Free Trade Agreement, which began the long process of removing tariffs from importation of goods between the two states. With its initiation, a sharp divide emerged in the Canadian public, representative of the same rift forming throughout the world. The advocacy for globalization and trade liberalization enjoyed great strength amongst Canada's elite, whose interest in their nation's commercial and political structures saw new opportunities for access to an enormous U.S. market. In contrast, labor groups, environmental groups and human rights activists objected strenuously to policy which appeared to favor industrial development at the expense of public interest.

When, in 1994, the North American Free Trade Agreement (NAFTA) was adopted, this conflict of ideology came even further into play in Canadian social and political affairs. Linking Mexico to the continental agreement, NAFTA established a continental economic alliance in which the economic scale of one party substantially out-sizes that of both its partners. In the twelve years which have passed since its signature into effect, NAFTA has yielded justification for the views held by both sides of the debate. Those who had argued in favor of its importance to Canadian economic growth have been vindicated by evidence of such as a direct result of its increased stature as an exporter to the United States. Those opposed, however, have also been given just cause to file grievance with the increased susceptibility which globalization has dealt Canada to acquiescence in the face of American social, political or economic pressure. Free trade is an issue which is colored by deeply ingrained ideological impulses as well as by personal interests in economic opportunity. These latter are displayed by those both in benefit of globalization and those who have suffered from its inequities. In their respective articles concerning the current status of free trade between Canada and the United States, Michael Hart and Bruce Campbell offer views on the debate which, while not necessarily in opposition of one another, nonetheless elucidate contrasting perceptions of the outlook for an economic interdependence of the two nations.

Public Policy Perspectives:

In 2006, the C.D. Howe Institute published Michael Hart's article concerning the need for a closing of the gap between Canadian and American regulations in a number of contexts. A pointedly conservative view, the article's thesis supposed that the full potential for economic growth through trade liberalization had yet to be realized between the two nations.

A fundamental issue affecting the bottom line for firms on both sides of the border is a set of regulatory differences which have constructed major obstacles to the progress of globalization. Variations in standards of approval for the salability of goods and products between the U.S. And Canada will have the effect of lengthening the time it takes for such items to reach the marketplace, adding costs to production and cutting into profitability. The cost in lost opportunity is considerable and in many cases, unnecessary outside the realm of adherence to legal bureaucracy. The study by the C.D. Howe Institute assesses that "compliance with different national and sub-national rules, together with the repetition of redundant testing and certification of products, processes, and providers for different markets, raises costs for manufactures and providers operating in an integrated market." (Hart, 4)

Some of these differences are so seemingly small on the surface, such as the variations between Canada and the U.S. regarding product sector-classifications or safety standards for non-prescription toiletries. There are also some detailed differences on larger scales, such as with distinctions in drug-approval procedures and in the legislative thrust of environmental law. In either condition, the extremity of regulation in the U.S. And the relatively minimalist nature of such in Canada are the direct results of two considerably different economies. The modest, export-fueled economy of Canada differs considerably from the plenteous and resilient U.S. economy, resulting in some incongruities that are not a product of free-trade but are made evident thereupon.

As a result, many trade leaders have endorsed an increasing harmonization between Canadian regulation and U.S. regulation. Almost without exception, this integration means exactly what it did for Mexico. For Canada, a closer mutuality of economic fate with the U.S. will rest on its ability to conform to standards held by its vastly larger trade partner.

However, it is the benefit of this mutuality which is at issue for many. The C.D. Howe Institute pointedly resolves in its recent study that everybody loses under the current range of inconsistencies. From the corporate CEO to the blue collar general public, each individual engaged in the economy created by NAFTA will ultimately be negatively incurred upon by increased costs for all manner of purchase item and resource good.

In Campbell's article, a greater focus is designated to the repercussions of globalization to Canadian independence. In a critique which betrays neither an outright support of free trade nor a complete dismissal of its merits, his article observes that some of the costs to Canada of its relationship with the United States will only intensify the permeation of American economic, political and even social traits through the northern border.

By sheer virtue of its far greater scale of economy, the U.S. inevitably levies a dominant control over the very same regulatory aspirations which Hart suggests must be fully realized if Canada is to see the extent of its free trade potential. In January of 2006, just before his resignation as leader of the Liberal Party of Canada, Paul Martin was in the midst of accelerating Canada's policy investment in globalization.

Passing a piece of legislation called the North American Security and Prosperity Initiative, Martin sounded off what the writer for the Canadian Centre for Policy Alternatives characterizes as an obfuscated but resounding endorsement of regulatory reflection between Canada and the United States. "Though vaguely defined, [Martin's policy] is moving the country incrementally toward broad continental regulatory harmonization agreements in areas such as health, safety and environment; toward a common energy and resources policy; common security policies, a common trade policy etc." (Campbell, 1)

Now under new leadership, Canada's free trade situation has been altered in some ways since the passage of this legislation. The headlong path to economic likeness between the two nations has been in some ways stunted by the intervention of inevitable political and ideological differences between two nations which are fundamentally divergent in some ways. The differences in economy size have given Canada over, Campbell implies, to differences in governmental philosophy, social ideology and cultural identity. As a result, there are large scores of the Canadian population, or the entire population as the author appears to suggest, that fear these above mentioned concessions to Americanism.

The divide in Canada over free trade is not necessarily unique from that held in America. Paul Martin, as leader of the foremost political party in Canadian history, was a wealthy elite who, by that virtue, stood as a beneficiary of the upwardly concentrated economic growth of free trade. His espousal of measures which conceded Canadian volition to U.S. patronage was consistent with his status and perhaps accounts for the success with which the opposition party would be in a position to willfully oust the prime minister in favor of Conservative leadership.

Governmental Responsibility:

If Hart's view is to be taken as accurate, the Department of International Trade of Canada has a fundamental responsibility already taken upon it by the adoption of the FTA and NAFTA. The trade ministry is chiefly responsible for overseeing an adherence of domestic and foreign trade partners to international regulations, domestic regulations and those of domesticity to the immediate partner. This diffuse responsibility is the bureaucratic bottleneck which he points to as being a significant stumbling block to Canadian growth. The cost to its economy is greater than just lost opportunity as it extends to further damage the credibility of a relationship which the public views as suspect, in accordance with Campbell's estimation.

The oversight of international regulation is undertaken by the World Trade Organization, which brings the globe's free trade partners together to broker affairs of economic cooperation or contract. However, this has proved to be an agency with too diluted a focus to effectively maintain balance between such partners as Canada and the U.S. Campbell addresses most of the regulatory differences between the two nations as being historical and incidental in some ways, indicating that perhaps the inconsistencies are simply in need of concentrated attention. This notion accounts for the 2005 launch of a Trilateral Regulatory Commission, partnering Canada, the U.S. And Mexico in an agreement to acknowledge a central forum for regulation of trade discrepancies. Though its authority and effectiveness have both yet to come fully into form, this board represents an opportunity to streamline the commerce-related legal provisions which differ in sometimes small but deeply felt ways.

Political Implications:

Globalization advocates in Canadian governmental leadership will tend to hoist economic indicators from the years which parallel the greatest export indexes to the United States, following the FTA and NAFTA. And there is statistical bearing for that assertion, found in places where the effects of free trade were most immediately enacted. "Studies of the early years of FTA trade show that Canadian exports grew more rapidly in sectors where tariffs were cut the most, with nonresource products growing two times as rapidly as resource-based products." (Morici, 492) From its 1989 inception to the end of its first decade, the agreement would prove to be a stimulant to the growth of the Canadian economy as a whole. Its elevation to a role as a top -- and in some years the top -- trading partner of the United States have changed the nature of its own economy. Investment from the U.S. In Canadian markets expanded and the Canadian market consistently swelled. The trend would continue with the inception of NAFTA in 1994. According to the Canadian government, from that point until "1999, Canada's economy grew by an average of 3.3%, while the U.S. And Mexican economies grew by an average of 3.9% and 3.1%, respectively." (Canada, 1)

Today, however, Canada is at the crossroads of which both Hart and Campbell speak. Already committed to free trade and economic integration with the United States, Canada's political leadership shoulders a heavy burden of defining its nation while attempting to mirror its neighbor's economic resiliency. Paul Martin had been in favor of free trade, but also feared the reprisals of a public which was resentful of American social policy, militarism and its violation of international policy. The Martin government was even vocally critical of all of these facets of its close ally's international and domestic affairs. Even so, he pursued an agenda which attempted further economic integration by homogenized legal oversight of the free trade alliance.

This has been underscored by a circumstance which illustrates the danger of such homogenization. Again, U.S. dominance must be considered a threat to Canadian independence under a move toward regulatory integration, given its easy potential to "overwhelm Canadian cultural industries, compromise the independence of Canadian foreign policy, and undermine political support for Canada's more generous social safety net." (Morici, 492) These are the formative basis for the objection which all manner of non-governmental organization have voiced to further proliferation of free trade. Environmental agencies, women's rights groups and leftist political organizations have all been critical of the government's submissiveness to an America which differs so vastly in its value system.

Ultimately, the U.S. dominance has taken the form of economic discretion not afforded to its partner. As leadership changed hands in February of 2006, with the historical elevation of Conservative Party leader Stephen Harper to Prime Minister, Canada continued to view free trade as an imperative. But Harper pronounced his willful resistance to a U.S. dominance over Canadian economic or political identity and has backed this claim with his stance in an ongoing dispute between the two nations. Despite the posturing of both the Canadian and U.S. governments, which poses a uniformly positive front over the progress of free trade, a lumber dispute that has been under contention for four years has become a key issue of defiance for Haper.

After it accused Canada of dumping softwood into its market at below-value prices, the United States imposed a tariff upon this type of lumber in order to drive its cost back upward. Under Harper's leadership, "Canada is seeking a refund of 4.5 bln usd in duties on Canadian softwood imports since May 2002, but the U.S. has balked at the demands." (AFX, 1) Its ability to impose such tariffs in spite of NAFTA's provisions and its capacity to resist Canadian efforts at reconciliation in spite of WTO oversight illustrates that its economic dominance is genuinely the most significant governing factor in the implementation of free trade. As of this month, the World Trade Organization has ruled in favor of the U.S. right to impose such a tariff, though P.M. Harper still roundly rejects this decision.