FROLITICKS

Satirical commentary on Canadian and American current political issues

Can Canada Return to a Former Foreign Policy Partly Based on Non-Alignment?

In the early 1970s while in college, I wrote a paper which concluded that Canada’s foreign policy in the post-colonial era was largely influenced by the non-alignment movement that had emerged globally at the time.  This position was particularly true given that the majority of Canada’s foreign aid was directed at newly established states such as Bangladesh and Cambodia, and several developing countries such as India and Mexico.

The Non-Aligned Movement (NAM) emerged as one of the most significant diplomatic initiatives of the 20th century, offering newly independent nations a third path during the height of the so-called Cold War.  Founded on principles of independence, peace, and solidarity, NAM represented an alternative to the rigid bipolar world order dominated by the U.S. and Soviet Union. This movement, which began with just 25 countries in 1961, grew to encompass over 120 nations, fundamentally reshaping global diplomatic dynamics and giving voice to the developing world’s aspirations for sovereignty and self-determination.  Canada however was not a formal member of the movement.  The movement’s advocacy for the new international economic order in the 1970s, though ultimately unsuccessful, raised important questions about global economic inequality and the need for fairer trade arrangements.  In particular, the member countries used their collective strength to democratize United Nations (UN) procedures and decision-making, something that Canada strongly endorsed.

However, with the dissolution of the Soviet Union in 1989 and the end of the Cold War, the global scene rapidly changed.  The NAM countries initially supported the non-proliferation of nuclear weapons, which in turn Canada greatly supported.  However, member states such as India and Pakistan, went on to develop nuclear capabilities, greatly angering Canada who had earlier provided nuclear technology for peaceful purposes to each country.  In addition, Canada’s ties to American foreign policy had increased during the Cold War and after.  As a result, Canada has unfortunately failed to secure a seat on the UN’s Security Council by not receiving sufficient votes from NAM countries.  It is worth noting that over the years Canada played a major role in UN peacekeeping initiatives along with other nations directed at resolving several conflicts among NAM countries themselves.

In the aftermath of World War II, the North Atlantic Treaty Organization (NATO) was formed as a military alliance between 32 member states, including Canada, the U.S. and 30 European states.  Canada’s contribution to NATO forces has increased over time, making it almost impossible to have a non-aligned defence or security policy.  Canada’s defence spending is expected to increase even more in the coming years.

Moreover, the NAM movement’s effectiveness in the post-Cold War era soon became limited. The rise of a unipolar world dominated by the U.S. created new challenges, while economic globalization exposed the limitations of traditional non-alignment approaches.  Many NAM countries found themselves forced to choose between economic integration and political independence.  In addition, China and India emerged as the second and third respective economic powers, challenging the U.S.   While Canada still supports the dominance of global trading mechanisms, the recent American move to greater bilateral trading arrangements and the use of tariffs has forced Canada to seek out and strengthen trading relationships in Europe, Asia and elsewhere.  U.S. isolationist policies have forced Canada to further diversity its domestic economy and its offshore trading partners. 

In today’s world, Canada is more or less portrayed as a middle power seeking to maximize its autonomy while engaging with competing global powers.  This approach is no longer in line with that of the pre-Cold War era and any move to non-alignment as a foreign policy.  However, this does not mean that Canada cannot take an independent stance when it comes to formulating and implementing its foreign policy.  There is certainly a need to be not too closely aligned with the current American administration’s isolationist approach to foreign matters.

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Elon Musk May Be More Dangerous Than Trump

From a Canadian perspective, president-elect Donald Trump’s recent declarations about Canada’s sovereignty and the imposition of a 25% tariff on the country’s imports are bad enough.  What is even more worrisome is the rise of Elon Musk’s influence in Trump’s circles.  During the election, all of Musk’s posts traveled further and resounded more widely than ever. Mr. Musk’s X account began to dominate the platform, effectively making him the host of his own social media site.  More recently, he has a perch as Trump’s apparent right-hand man, even weighing in on his possible Cabinet choices and joining his conversations with global leaders.  One has to wonder what the role of J.D. Vance will be?

Internationally, Musk has begun an on-line and in-person campaign to try to influence foreign political parties’ policies.  Most notably, he has posted support for the policies of far-right and extremist figures in Europe, criticizing for example the current governments of Britain and Germany.  Recently, Musk has turned his attention to the northern neighbor, praising an interview with Pierre Poilievre, a populist firebrand who leads Canada’s Conservative Party and is expected be the country’s next Prime Minister.  In addition, his financial influence is everywhere because of his companies and investments in the U.S. and Europe.  In some instances, this has led to questions about potential conflicts of interest in light of his many business interests, especially in any future Trump administration.  For example, he once again in a tweet raised Britain’s Online Safety Act which will take effect in March 2025.  The British law requires social media companies like X to prevent children from accessing harmful and age-inappropriate content and to give adults more control over what they want to see online.  Companies that run afoul of the law can face fines of up to 10 percent of their global revenue.

Experiences with Trump’s past foreign policies had been troublesome, especially when it comes to NATO, the Middle East and relations with Canada and Mexico.  The involvement of Elon Musk in positioning the next president with respect to foreign policies is a major concern.  Originally, Trump appeared to want Musk to concentrate primarily on improving efficiencies and policies within federal departments and agencies, obviously leading to potential reductions in services, employees and regulations.  Now, reports are indicating that Musk is attempting to also influence Trump’s future foreign policies, including attempts to have an impact on the domestic politics of several European countries and Canada.  Needless-to-say, American interference in other countries’ governance will not be appreciated by their current governments.

The U.S. has been very vocal about any covert foreign interference in its governance and its elections, and rightly so.  Although Elon Musk is not an elected official at this time, he is expected to be part of Trump’s administration in some official advisory capacity.  Any attempt by Musk to influence or represent the foreign policy of the next administration is totally inappropriate.  That is the role of the Secretary of State.  What is especially dangerous is the opportunity presented to Musk to influence the future president on foreign matters by having his ear on a daily basis.  If I were the next Secretary of State, I’d be very concerned.  It’s one thing for Musk to involve himself in U.S. governance and domestic matters, it’s a whole other concern if he attempts to do so in matters related to foreign affairs and dealings with America’s allies!

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If Tariffs Are “So Great”, How Come Trump Appears To Be Backing Off?

President Donald Trump backed off his threat to levy tariffs on cars imported to the U.S. from the E.U. during a recent meeting with European Commission President Jean-Claude Juncker. It appears that Trump had warned that he would move forward with 25 percent tariffs on auto imports if the meeting with Juncker didn’t go well, prompting the E.U. to respond that such a move would bring significant retaliatory measures on U.S. goods. Wow!  Now Trump indicates that he’s willing to open up further trade negotiations with the E.U.

Trump has also tweeted that his administration is considering introducing tariffs on auto imports from Canada and Mexico, much to the displeasure of the American auto industry. You see, in today’s world, many auto parts are supplied from sources outside the U.S.  Indeed, the average Big Three vehicle is comprised of anywhere between 40 to 60 percent of parts manufactured outside the country.  American auto tariffs will simply disrupt the supply chain, reduce efficiencies, increase costs, cause a major downturn in the industry, and eventually increase the costs of all vehicles to American consumers.

American tariffs on Chinese goods, including steel and aluminum, are already having an impact on the agricultural sector, especially on soybean exports. As a result, Trump has pledged $12 billion to farmers to help ease trade pain caused by tariffs aimed at China which had retaliated against U.S. farm products. However, farmers have made it clear that they don’t want handouts, but prefer to be able to sell their products and are concerned about the long-term damage caused by tariffs.

As for negotiating separate trade agreements with Canada and Mexico, the chances are pretty slim that either country would agree to do so. Mexican and Canadian officials have reiterated that talks on the North American Free Trade Agreement (NAFTA) will remain a three-way negotiation. Canada has a strong participant in Foreign Affairs Minister Chrystia Freeland who has proven to be an excellent representative from the Canadian Cabinet. She has made it very clear that Canada is working to obtain a modern NAFTA which is fair and beneficial to all three countries. Minister Freeland met with Mexican President-elect Andres Manuel Lopez Obrador, who will take office on Dec. 1rst, and was given assurance that Mexico also has the same objectives for a trilateral trade agreement.

I firmly believe that President Trump has underestimated just how much the E.U., China, Mexico and Canada are willing to go to protect their interests and promote free trade. Before the terrible and costly consequences of international trade wars happen, I would suggest that the President take a close look at his strategy and consider backing off even more.  I’m sure even the Republicans, who historically promoted free trade as opposed to protectionism, would very much support such a move.  We can only hope.

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Does Trump Not Understand Fundamental Principles Behind Multi-lateral Trade?

This past week, President Trump announced (tweet, tweet) that he plans to impose tariffs of 25 percent on imported steel and 10 percent on aluminum. Besides affecting trade with Europe and China, the proposed tariffs would particularly affect Canada and Mexico. Canada is the biggest supplier of steel and aluminum to the U.S., and Mexico is the fourth largest source of steel. Both countries have asked to be excluded, and both indicated that they would strike back if Trump includes them in the stiff duties.  Trump’s basis for imposing such tariffs is on the grounds of national security, arguing that the U.S. cannot rely on foreign imports for steel and aluminum. This rationale in and of itself is totally baseless given existing security arrangements among the three countries and the nature of their integrated economies.

Not only this, Trump’s announcement has thrown a wrench into current negotiations among the three countries respecting the North American Free Trade Agreement (NAFTA). The Canadian and Mexican teams are absolutely furious, and rightly so.  The steel and aluminum tariff announcement may have just killed off any hopes of advancing on major sticking points at the NAFTA talks, including setting new rules for auto content in the region.  On top of which, Trump has implied that the two countries would not be excluded from the imposition of tariffs unless a new NAFTA deal is made which would benefit the U.S.  Some negotiating tactic!

The problem for the U.S. is that the Americans export as much steel and aluminum to Canada as they import from Canadian manufacturers. The North American market has nicely evolved over decades to allow both countries to develop more specialized sources of steel manufacturing, benefiting both countries.  This is why U.S. businesses and labour unions (e.g. United Steelworkers or USW) are arguing for an exemption from the planned tariffs. The USW, representing steel workers on both sides of the border, even went on record with the following:

Canada is not the problem. The United States and Canada have integrated manufacturing markets and our union represents trade-impacted workers in both nations. In addition, the defense and intelligence relationship between the countries is unique and integral to our security. Any solution must exempt Canadian production. At the same time, Canada must commit to robust enforcement and enhance its cooperation to address global overcapacity in steel and aluminum. …”

Once again, the Trump administration has demonstrated its complete lack of good economic policy, all in the name of political opportunism. We now have an integrated North American market, exemplified by the fact that Canada is the biggest trade partner with the U.S.  The major problem is that there appears to be a complete lack of understanding as to how multi-lateral trade arrangements work in today’s global markets.  Unfortunately, if Trump’s approach continues, then the NAFTA talks will falter much to the detriment of all three countries and to their respective economies.  Consumers will suffer as will workers.  Hopefully, growing American domestic opposition to Trump’s protectionist trade policies will prevail.  One can only hope!

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Free Trade Versus Protective Policies and Where Is Trump Going On This?

As part of his campaign, President Trump stated time and time again that he wanted to either renegotiate trade agreements such as the North American Free Trade Agreement (NAFTA) involving Canada and Mexico or withdraw from negotiations involving future agreements such as the Trans-Pacific Partnership (TPP). Well, Trump withdrew from his predecessor’s signature TPP trade deal on his first full weekday in office, leaving the 11 other countries that had negotiated the pact to wonder if years of work had just gone down the drain. Currently, NAFTA negotiations are taking place with a ridiculous December 2017 deadline to complete a new deal.

The problem is that trade today involves a global economy with integrated production and services of multinational corporations around the world. Trump’s attempt to introduce protective policies is most likely going to hurt American corporations as much as foreign enterprises and workers.  In order to be competitive, American corporations now rely heavily on goods, services and component production found in other countries.  In the case of NAFTA, those in the U.S. vastly underestimate the important trading relationship most of the 50 states hold with Canada. Indeed, 35 American states trade more with Canada than any other country. Currently, some 70 percent of Canada’s trade is with the U.S. — the majority of which benefits both countries. NAFTA has also benefited Mexico economically in various ways and those American states bordering Mexico.

American, Mexican and Canadian consumers benefit through access to more and cheaper goods and services, as evidenced by the number of American retail outlets operating in Mexico and Canada. With NAFTA, we have evolved into a continental economy, with improvements for labour and the environment — particularly in Mexico as a result of side agreements. What’s interesting is that the Republicans have always been the defenders and promoters of free trade in Congress and the White House, as were leaders of the Conservative Party in Canada. Ironically, we now have a Liberal Prime Minister, Justin Trudeau, who is promoting the benefits of free trade for all three countries.

Yes, there are things that can be improved in NAFTA since its implementation almost thirty years ago. World economies have changed a lot since then, particularly with new technologies. However, most experts believe that its benefits to all three countries far outweigh its costs. Other factors, such as new innovations in communications, energy and robotics have had a greater impact on the labour market and the environment than trade agreements. Simply introducing more protective policies will not change or stop the consequences of rapid innovation in the manufacturing, service, finance and other sectors. Punishing countries through protective policies will simply hurt everyone involved. Such policies don’t only go against the changing realities of our times, but also against common sense.

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U.S. Has Given Way To China When It Comes To Trade And Foreign Investment

In recent years, China, the second largest economy in the world, has made major strides in trade with other countries and in investment abroad. China’s position in Asia has been strengthened by President Trump’s withdrawal from trade negotiations under the Trans-Pacific Partnership (TPP). While the U.S. withdrawal may have slowed the TPP talks, most countries, including Canada and Japan, believe that trade talks will continue, either bilaterally or multilaterally. Australia’s trade minister even went so far as to suggest the remaining 11 countries could ask China to join the deal instead. Moreover, China has offered up its own version of the pact, one that excludes the U.S. and favors China’s more mercantilist approach. Indeed, Canada and China have now agreed to start exploratory trade talks in the fall.

In the Middle East and Africa, China is making major inroads in terms of trade, investment and infrastructure development in several countries. Take the example of Iran where China is currently investing billions in infrastructure improvements such as bridges, rails, ports and energy. As a result of unilateral American sanctions that intimidate global banks, China is the only source of the large amounts of capital that Iran needs to finance critical infrastructure projects. China is also an important market for Iranian oil, even after Western sanctions were lifted in 2016 allowing Iran to again sell oil in European markets. With the completion of rail lines from Urumqi, the capital of China’s western region of Xinjiang, to Tehran, China will have a faster and more direct link to export its goods as far as northern Europe, Poland and Russia — at much less cost than today.

Elsewhere, Chinese President Xi Jinping made a trip through Latin America in November 2016, his third in four years. Bloomberg News reported that he signed more than 40 deals, and committed billions of dollars of investments in that region.  In January 2017, President Xi became the first Chinese president to attend the World Economic Forum at Davos. His aim was no doubt to reinforce the message of Chinese global leadership on free trade.

The TPP was all about the U.S. showing leadership in the Asia region.  In the end, trade experts believe that with U.S. not there, the void has to be filled.  It will be filled by China.  Years ago, I read a book entitled “China Inc.” by Ted C. Fishman*.  Well worth reading, the book highlighted China’s impressive and unprecedented economic gains while becoming a power house.  When it comes to trade and foreign investment, I’m certain that Mr. Fishman would agree today that the Trump administration could be the best thing that’s happened to China in a long time.

* China Inc. (How the Rise of the Next Superpower Challenges America and the World): Ted. C. Fishman (Scribner, New York, N.Y., 2005)

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Trump Doesn’t Get It – You Can’t Go Backwards When It Comes to Job Creation!

About 97 percent of clothing sold in the United States is imported, according to the American Apparel & Footwear Association. In developed economies like the U.S. and Canada, manufacturing and mining is giving way to the service and high tech sectors.  For example, according to the U.S. Bureau of Labor Statistics, in 1960, 1 in 4 Americans had a job in manufacturing.  Today, it’s fewer than 1 in 10. The industrial age is over and the information age is here.  U.S. coal mining declined 25 percent since 2008, which resulted in 50,000 jobs being lost over a four-year period. The mining industry, in general, lost more than 191,000 jobs since 2014.  Trying to resuscitate coal mining is a costly waste of time and resources.  Today, renewable energy is where the growth in the U.S. is, as evidenced by the solar industry’s growth rate of 20 percent annually.  It’s noteworthy that China aims to spend at least $360 Billion on renewable energy by 2020.

How we manufacture has also dramatically changed primarily due to the impact of automation. In order to be competitive and cost-effective, companies have little choice but to automate their processes, thereby requiring fewer employees.  In addition, they require better educated, trained and skilled workers.  Moreover, U.S. and Canadian manufacturers cannot and need not compete with emerging countries which have an abundance of cheap labour. In order to be competitive, they need to innovate and increase their productivity.

Innovation is the name of the game. The tech industry employs millions of Americans and Canadians. Practically all new private sector jobs have been created by businesses less than five years old. In the digital age, the U.S. and Canada have a major advantage, especially when it comes to the growing service sector.  Consumers are increasingly looking for the provision of good, timely and more localized services.  This includes more efficient modes of communication.

Investment in new technologies and people is what drives economic growth and the creation of new jobs. We need to focus on our new, innovative industries that will put us ahead of our global competition, not on the implementation of protectionist policies. You can’t turn the clocks back to an earlier period.  Globalization and new technologies have changed all that.  Whether President Trump likes it or not, tomorrow’s transition in job creation is already happening regardless of his unrealistic promises and ineffective policies.

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