{"id":170100,"date":"2020-05-06T15:35:11","date_gmt":"2020-05-06T19:35:11","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=170100"},"modified":"2020-05-06T11:38:03","modified_gmt":"2020-05-06T15:38:03","slug":"coronavirus-shows-why-canada-must-reduce-its-dependence-on-the-u-s","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/05\/coronavirus-shows-why-canada-must-reduce-its-dependence-on-the-u-s\/","title":{"rendered":"Coronavirus shows why Canada must reduce its dependence on the U.S."},"content":{"rendered":"
May 6, 2020<\/div>
\r\n<\/div><\/div>

By Philippe Lagass\u00e9<\/a>, Carleton University<\/a><\/em> and Srdjan Vucetic<\/a>, <\/strong>L\u2019Universit\u00e9 d\u2019Ottawa\/University of Ottawa<\/strong><\/a><\/em><\/p>\n

Canadian foreign policy has long embraced both a deep continental relationship with the United States and a devotion to liberal internationalism. In light of the COVID-19 pandemic, the time has come to re-evaluate our approach.<\/p>\n

While Canada has been able to manage the coronavirus crisis so far, our ability to continue to keep the pandemic at bay and successfully rescue the economy will likely be even more difficult.<\/p>\n

If the U.S. cannot get a handle on the virus<\/a>, and if its leadership chooses a protectionist route to economic recovery, Canada\u2019s return to normalcy will be that much harder. That\u2019s especially true if the Canadian government is not able to secure exceptions from Washington\u2019s protectionist measures, as it has recently.<\/p>\n

Similarly, if international trade and movement are slow to re-establish themselves, and if protectionism becomes a worldwide response, Canada can expect a cumbersome recovery.<\/p>\n

Canada and the United States share a border and other geographical ties. But the coronavirus has underscored the need to ease our dependence on the U.S. Niagara Falls, Ont., is seen from the American side of the falls.
\n(Pixabay)<\/span><\/span><\/figcaption><\/figure>\n

Mostly benign<\/h2>\n

Canada\u2019s dependence on the United States has been mostly benign. Yes, American decisions on softwood lumber and steel\/aluminum tariffs, and limitations on other free trade agreements found in the USMCA<\/a> hurt Canada, but Canada also greatly benefits from its commercial relationships with its neighbour.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

But as COVID-19 radicalizes the already radical presidency<\/a> of Donald Trump, Canada may be forced to confront its dependence on the U.S. more directly and with greater urgency.<\/p>\n

Short-lived tensions \u2014 including Trump\u2019s unsuccessful attempt to halt exports of masks to Canada and his musings about stationing troops near the border<\/a> \u2014 may be harbingers of longer term restrictions, disagreements or spillover effects that slow or stifle Canada\u2019s attempt to rebound from the current crisis.<\/p>\n

Worse, the rise of nationalism and geopolitical competition points to the likelihood of a fragmented international order built around a handful of large protectionist or self-sufficient power blocs. Liberal principles of free trade and movement may come under increasing pressure, leaving Canada particularly vulnerable to the whims of protectionist powers.<\/p>\n

The \u2018Third Option,\u2019 COVID-19 edition<\/h2>\n

So, what, if anything, can be done? In 1972, following the shock to the world economy brought about by former U.S. president Richard Nixon\u2019s decision to effectively end the Bretton Woods system of fixed exchange rates<\/a>, Pierre Trudeau\u2019s government introduced a policy idea called the \u201cThird Option.\u201d<\/a> It was essentially a call for more self-sufficiency at home and stronger ties with the rest of the world to lessen dependence on the United States.<\/p>\n

<\/figcaption><\/figure>\n

Though the Third Option dissipated after a few years, the idea behind it never quite died off. COVID-19 renders Third Option thinking not only respectable but also responsible again.<\/p>\n

Witness, for example, increasing appeals for a more self-sufficient Canada,<\/a> and Foreign Minister Fran\u00e7ois-Philippe Champagne\u2019s efforts to co-ordinate Canada\u2019s pandemic response with both \u201ctraditional\u201d and \u201cnew\u201d international partners<\/a>.<\/p>\n

Whether general or issue-specific, multilateral or \u201cplurilateral<\/a>,\u201d ties with partners in Africa, Asia, the Americas and Europe are in Canada\u2019s best interest, simply because they constitute a counterweight to the United States. True, some of these ties will always be shallow, others short-lived, and still others both. Yet, some ties might well lead to the establishment of deeper and closer strategic relationship with the rest of the world.<\/p>\n

More diverse trading relationships will be essential to ensure Canadian resilience. In light of the recently concluded Comprehensive Economic and Trade Agreement<\/a>, the European Union, for all its shortcomings and uncertainties, is one good candidate for such a relationship.<\/p>\n

No heavy reliance on allies<\/h2>\n

The principal challenge of the COVID-19-era Third Option, though, is not finding new partners. Rather, it\u2019s Canada\u2019s ability to do things on its own without relying on too heavily allies and partners.<\/p>\n

\"\"<\/a>
Canada needs to break free of its dependence on the United States if it\u2019s to soar.<\/span>
\n(Dennis Larsen\/Pixabay)<\/span><\/span><\/figcaption><\/figure>\n

We may see Canada invest in national manufacturing of medical goods as a result, akin to the munitions supply program that ensures the Canadian military has the ammunition it needs.<\/p>\n

But the pandemic has also highlighted that Canada\u2019s COVID-19 response has arguably been too reliant on international assessments. Canada will need to strengthen its own ability to assess and craft effective responses to global crises, not only in the area of public health, but finance, security and defence, climate change and migration, among others.<\/p>\n

While global problems require global solutions, the pandemic has highlighted that national responses remain vital and should not be overly dependent on allies and international bodies.<\/p>\n

Building the capacity to pursue the Third Option will take time, money and, most importantly, a political culture willing to reconsider the fundamentals of Canadian foreign policy. To get there, Canadians must be willing to think harder about Canada-U.S. relations and an increasingly fractured international order.\"The<\/p>\n

About the Author:<\/strong><\/em><\/p>\n

Philippe Lagass\u00e9<\/a>, Associate professor and Barton Chair, Norman Paterson School of International Affairs, Carleton University<\/a><\/em> and Srdjan Vucetic<\/a>, Assoc. Professor, Graduate School of Public and International Affairs, L\u2019Universit\u00e9 d\u2019Ottawa\/University of Ottawa<\/a><\/em><\/p>\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Philippe Lagass\u00e9, Carleton University and Srdjan Vucetic, L\u2019Universit\u00e9 d\u2019Ottawa\/University of Ottawa Canadian foreign policy has long embraced both a deep continental relationship with the United States and a devotion to liberal internationalism. In light of the COVID-19 pandemic, the time has come to re-evaluate our approach. While Canada has been able to manage the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-170100","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/170100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=170100"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/170100\/revisions"}],"predecessor-version":[{"id":170101,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/170100\/revisions\/170101"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=170100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=170100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=170100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}