The Americas: Canadian Free Traders in Retreat

Republished on on February 07, 2006

Wall Street Journal,
November 13, 1987

MONTREAL—The recently concluded
U.S.-Canada free-trade agreement is in trouble north of
the border. Both opposition parties, the socialist New
Democratic Party led by Edward Broadbent and the
Liberals led by John Turner, have come out strongly
against it. And politically, the opinion polls show
these parties virtually neck and neck, far ahead of the
Progressive Conservative government of Prime Minister
Brian Mulroney. Free trade may have become embroiled in
the peculiarly Canadian tangle of political and regional
pathologies that go far to explain why the country has
never fulfilled the prophecy, made by so many of its
public men in the early 1900s, that the 20th century
would belong to Canada.

Canada`s political system, adopted
more or less uncritically from Britain, makes no
provision for regional balance, as provided by the U.S.
Senate. On the national level, Canada is essentially a
unitary state, dominated by the interests of the
population centers in "central Canada"—Ontario
and Quebec. Traditionally, this has meant high tariffs,
so that inefficient industries (and labor unionists) in
central Canada are in effect subsidized by consumers in
the periphery regions.

The consensus among central
Canada`s elite in favor of protectionism, or
"Canadian nationalism"
as it was ingeniously renamed
in the 1960s, was so complete that Brian Mulroney`s
sudden decision to seek a free-trade agreement after his
election in 1984 came as a surprise. Fear of
protectionist rumblings in Washington, and pressure from
Progressive Conservatives in pro-free-trade western
Canada, undoubtedly played a part in his decision to
push an idea he actually opposed while running for his
party`s leadership in 1983.

Unfortunately, by the time the
agreement was concluded, Mr. Mulroney`s government was
already profoundly unpopular. Mr. Mulroney is a "Red
—he belongs to the Progressive Conservative
equivalent of the Eastern establishment-wing of the
Republican Party. His political strategy was to appeal
to the party`s traditional opponents in the
French-speaking province of Quebec while also courting
Canada`s powerful "new class" of bureaucrats and
other tax consumers, calculating that its traditional
supporters had no place else to go. Needless to say, he
has ended up pleasing no one.

In fact, Canada`s ethnic and
regional divergencies may be so great that no such
balancing act can succeed for long. The preceding
Liberal government of Pierre Trudeau ended amid equally
universal opprobrium. Both of Canada`s major parties are
thus discredited. Demonstrably not being either of them
is the chief asset of the NDP, which has been leading
some opinion polls for the first time in its history.

As a socialist party, the NDP is
against free trade and anything else that depoliticizes
the economy. But it is also responding to the labor
unions of central Canada, upon which it vitally depends,
notwithstanding some vestigial alliances in Canada`s
other regions. Its popularity has put great pressure on
Mr. Turner`s Liberals, terrified of being outflanked on
the left.

Mr. Mulroney need not call a
federal election until 1989, and his majority in the
House of Commons is large enough to impose the
free-trade policy if he wishes. However, he has proved
to be a weak leader, easily swayed by pressure groups.
Many Liberals and NDPers are confident the agreement can
be stopped, finishing off the government in the

Still, the game may not be over.
Western Canadians seem to be in the process of finding
some place else to go. Earlier this month, a new
pro-free-trade group called the Reform Party was founded
in Winnipeg: It is widely expected to win seats in the
next federal election, and will certainly place Mr.
Mulroney under severe countervailing pressure.

Free trade has also found
supporters in Quebec. Provincial Premier Robert Bourassa
has endorsed it, perhaps because of his personal
commitment to hydroelectricity megaprojects that need a
U.S. market. Even some prominent Quebec separatists
favor free trade, for the interesting reason that
improved economic links with the U.S. will make it more
difficult for their opponents to claim that severing the
Canadian connection would mean instant poverty. Overall,
a Toronto Globe and Mail poll found a plurality
of Canadians nationwide favoring the free-trade

But it is hard to avoid the sinking
feeling that special-interest groups may yet prevail
over this sensible consensus. Recently John Turner
defended his vacuous, xenophobic trade sentiments on
television and was afterward spontaneously congratulated
by journalists on his "speaking up for Canada."
Canada could remain, in the words of its own de
Tocqueville, the Victorian commentator

Goldwin Smith,
"rich by nature, poor by policy."

Mr. Brimelow, author of "The
Patriot Game: Canada and the Canadian Question
(Hoover Institution Press, 1987), is a
senior editor of Forbes magazine and a visiting
associate of the Americas Society.