Making Choices

INTRODUCTIONAs the federal government gears up for an internaitonal policy review in the fall of 2004, it is worth reflecting on what Canada's core international economic interests are and how they can be nurtured for the benefit of Canadians. We will no doubt hear much talk of the need to diversify Canada's trade. We should bear in mind, however, that Canada's international business links cannot be driven by government fiat. I shall make two core arguments:* Concepts such as diversification and dependence are not helpful. We are better off focusing on what our core economic interests are, asking what Canada's priorities should be, and working to protect those interests.* Canada's top trade priority is, and must remain, its relationship with the United States. From there, we need to choose priorities very carefully, and we should not expect miracles.CANADA'S CONUNDRUM, CANADA'S CHOICESWhen it comes to trade, we all know the statistics. As of 2003, 79.7 percent of Canada's goods and services exports ($364.8 billion out of $457.8 billion) went to the United States. Meanwhile 64.2 percent of the stock of direct investment in Canada as of 2002 ($224.3 billion out of $349.4 billion) came from the United States, and 46.7 percent of Canada's direct investment abroad ($201.8 billion out of $431.8 billion) went to the United States.1This dependence upon the United States-for lack of a more elegant way of putting it-can be seen as either a blessing or a curse. On the one hand, having privileged and (nearly) tariff-free access to the largest and most dynamic market on earth cannot possibly be seen as a bad thing. As one of our members once phrased it, we had the opportunity to tow Canada to any part of the world, what country would we want to tie up next to?On the other hand, it is true that being this close to a country with the sheer size and weight of the United States perennially raises questions about maintaining Canadian identity, sovereignty, and freedom of action as an independent country. Canada, like it or not, is the smaller of the two partners. As a result, this leaves us sometimes in an awkward position, particularly when the United States acts as a demandeur.In 2003, the Canadian Chamber of Commerce convened a series of roundtables as part of the federal government's consultation initiative on the foreign policy dialogue. In a series of roundtables across the country, business leaders dealt extensively with (among other issues) the question of Canada's relationship with its larger neighbour in light of increasing economic integration.Interestingly, our roundtable participants did not see a correlation between increased economic integration with the US and the loss of Canadian identity or sovereignty. The Canada-US relationship, they argued, will always be an asymmetrical one. Rather than dwelling on this fact and bemoaning this situation, we need to accept this, define some core interests (e.g., access to the US market), and defend those interests vigorously.2Even difficult periods such as the disagreement in 2003 over the war in Iraq indicate, if anything, that Canada still has the ability to make its own policy choices based on its own perception of its national interests. The tone of the discussions left something to be desired but, in the end, we made our decision, and they made theirs.Sometimes it is helpful to take a step back and look beyond the trade numbers. For our country, there are few more fundamental public policy issues than our relationship with the United States. From the War of 1812 to the underground railroad, from reciprocity through two World Wars, from the Cold War to the NAFTA age-a good deal of our history and our life as a nation has been defined by our relationship with the United States.This always has been, and always will be, part of the reality and the conundrum that is Canada. Much of our political life and our public policy environment flows from the fact that Canada exists on the doorstep of the economic, military, and political colossus called America. …

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