Free Trade, Canadian Style

Francois Moreau

THE COMMERCIAL, INDUSTRIAL and technological integration of the three North American states—which began several decades ago—has markedly accelerated following Washington’s conclusion of a free trade agreement with Ottawa and its impending negotiation of a similar accord with Mexico. This is the continental expression of capital’s tendency toward internationalization, which is also expressed in the increasing globalization of production and trade as well as in the formation of economic blocs in Europe and Asia.

But North American continental integration has become a political issue in the three states concerned. The workers’ movement must take a position on this process that represents the interests of the continent’s working classes and popular masses. Such a position must be developed with a view toward the character of the U.S. and Canadian states.

The United States and Canada are two imperialist powers dominated by a monopolistic local big bourgeoisie. This is clearer in the case of the United States than with Canada. But the imperialist status of the Canadian bourgeoisie is easily demonstrable. Despite a sizeable foreign presence within Canadian industrial manufacture, around seventy-five percent of the overall assets of Canadian enterprise are held by Canadian interests. Firms under Canadian control are important on a world scale. They rank sixth among the 1000 most important enterprises in the world, after the United States, Japan, Great Britain, Germany and France. Foreign investment by Canadian firms occupies the same rank.

A Junior Imperialist Partner

Canada also has a native financial capital that dominates the Canadian economy and plays a significant role on the international financial scene. Canadian banks ranked third in international loans during the 1970s, just behind the United States and Great Britain. Though they were then outdone by Japanese, German and French banks during the 1980s, they retain an important position. Canadian banks are Mexico’s fifth largest creditor, holding approximately six percent of its foreign debt. They are represented on the banking committees which—with the assistance of the International Monetary Fund—dictate policy to the debtor countries. Canada is also a member of the Paris Club, which supervises the Third World’s debt.

On the political level, Canada participates in the annual summits of the seven big industrial countries. Its air defense command is part of the U.S. strategic nuclear apparatus. Through an agreement on defense production, Canadian armament firms are integrated into the U.S. military-industrial complex. Canada is also a partner in U.S. imperialism’s covert war against the Third World, notably through the agreement that links its Communications Security Establishment to the U.S. National Security Agency.

Canada is a secondary imperialist power, much less strong than the United States or even the big European capitalist powers and Japan. The Canadian bourgeoisie is not sufficiently strong to play a truly independent role in world affairs. Historically, it has always preferred to be associated with a more important power—first Great Britain, then the United States—through which it can negotiate a share in the booty.

The Canadian state was established as a British dominion, led by a local bourgeoisie largely of Scottish origin. This bourgeoisie was charged with preserving British domination over the northern half of the North American continent, both against the threat of the United States and against rebellions of the various conquered peoples: first the indigenous nations, then the Quebecois and the Acadians. Canada loyally participated in the major British imperialist wars—the Boer war, the first and second world wars. But as the British empire grew weaker, Canada gained increasing autonomy, eventually becoming fully independent.

Just after the Second World War—as it was faced with the irreversible decline of the British empire as well as the incontestable world hegemony of the United States—the Canadian big bourgeoisie chose to change horses From that time on, it would be associated with U.S. imperialism.

Consequently, the Canadian bourgeoisie began laying the groundwork for continental economic integration as early as the 1950s. Opening its mines and industries to foreign investment, it paved the way for a growing U.S. presence in both sectors during the 1960s At the same time, the Canadian bourgeoisie preserved its control of finance, commerce, transport and communications. It thereby enabled itself to fully participate in the post-war boom, developing several dozen multinational firms of respectable size—principally in sectors it controlled, but also in a few industrial sectors.

Though it made itself Washington’s de facto junior partner, the Canadian bourgeoisie nonetheless developed its own policy toward the Third World. With the requisite agreement of the big powers, the Canadian army—which is unable to mount any independent action—specializes as a “peace-keeping force” in the service of the United Nations?

Furthermore, Canada has taken advantage of its lack of a colonial and imperialist history—at least outside its own borders—to occasionally distance itself from U.S. policy in the Third World. Refusing to respect U.S. embargoes against Cuba and Nicaragua, for example, provides Canada with an inexpensive way to improve its image in the Third World, since it is clear that American imperialism will defend capitalist interests—including Canada’s—there.

Nonetheless, Canadian foreign policy is characterized overall by the extent to which it follows Washington’s own. This trend was particularly pronounced during the second half of the 1980s, despite occasional attempts to develop a more independent policy.

The Paradox of Canadian Nationalism

Hoping to retain its position in the big power scheme, the Canadian bourgeoisie recognizes the concomitant importance of preserving its domination over the conquered peoples within the Canadian state itself. English-Canadian nationalism reflects the bourgeoisie’s fear that the national aspirations of Canada’s dominated peoples might weaken Canada in relation to the United States. It is a big power nationalism rather than a progressive nationalism.

Nonetheless, it must be understood that English-Canadian nationalism is fed in large measure by popular resentment against both the strong presence of U.S. business in Canada and its insensitivity toward the communities where it operates. Decisions made in New York or Detroit headquarters could mean the devastation of entire cities that depend on a single U.S. employer.

Canadian nationalist sentiment is especially strong in those industrial unions within the English-Canadian workers’ movement—such as the auto industry—that directly confront U.S. firms. Minimizing or ignoring the responsibilities of the Canadian bourgeoisie and its similar machinations, popular indignation is aimed at perceived U.S. domination.

Witnessing Ottawa’s compliance with Washington’s economic and monetary policies, the Canadian public brands its government as subservient But these policies are equally desired by the dominant sectors of Canadian finance capital, which has large investments in the United States.

By attributing to some supposed U.S. domination policies that the Canadian bourgeoisie advocates in its own self-interest, Canadian nationalism makes a mistake about where to aim its fire. This false perception is encouraged by bourgeois ideologues, for whom the economic policies of the Canadian government are always the necessary result of continental integration with the United States. They obscure the fact that these policies also correspond to the interests of the Canadian big bourgeoisie, and that alternative policies would also have been possible if they had been desired.

The Social Relation of Forces

Moreover, beginning in the 1970s continental integration became a means by which the Canadian bourgeoisie could counter pressures from the workers’ movement, which is much stronger than its U.S. counterpart on both the trade union and political levels. Until the mid-1960s, the unions in the United States and Canada developed in a similar way, with English-Canadian unions lagging behind U.S. developments by a few years Beginning in the mid-1960s, however, the evolution began to diverge. The rate of unionization in Canada continued to rise, reaching around forty percent in the early 1980s. Meanwhile, this rate began to fall in the United States; today it is less than twenty percent.

On the political level, the radical protest movements that had swept across Western Canada and the United States in the 1930s underwent divergent evolutions as well. In the United States, these movements were reabsorbed by the big bourgeois political parties—particularly the Democratic Party, which played the populist card in the 1930s.

But in Canada the large bourgeois political parties were not successful in recapturing these movements, which spawned new political forces such as the Commonwealth Cooperative Federation (CCF)—the social democratic party inspired by British Fabian socialism. Beginning on a regional basis, this party won political hegemony within English Canada’s organized workers’ movement during the 1950s, to the detriment of the Liberal Party. This development led in turn to the formation in 1961 of the New Democratic Party (NDP), which was founded jointly by the CCF and the Canadian Congress of Labor, the main trade union federation.

Hence the relations of forces between the classes are less favorable for the Canadian bourgeoisie than for their U.S. counterpart In addition to the NDE the Canadian bourgeoisie confronts the national question in Quebec, which periodically threatens the unity of the Canadian state and complicates political control of social relations. The struggles of Canada’s native peoples represent yet another threat to the Canadian bourgeoisie’s control over a large part of “its” territory.

This bourgeoisie has therefore been forced to make many more concessions than its U.S. equivalent on a number of fronts—trade union rights, social security, unemployment insurance, health insurance, welfare, public education, and so forth. For the most part, these concessions were made in the 1960s and 1970s, when the Canadian bourgeoisie was enjoying a period of great prosperity that it believed would continue forever.

Beginning with the 1974-75 recession—and even more so after the one in 1980-82–the Canadian bourgeoisie resolved to take back the concessions it had made to the workers’ movement, thereby pushing things back as close as possible to the U.S. level .In party politics, this meant abandoning the Liberals for the Conservatives, the more right wing of the two large bourgeois parties. Since 1984, the Conservatives have systematically implemented a policy of anti-worker attacks, albeit with limited success up to now. Nonetheless, the bourgeoisie is determined to persist in these attacks.

The Stakes in US.-Canadian Free Trade

For the Canadian bourgeoisie, the primary reason for concluding a free trade agreement with the United States was to solidly anchor Canadian society within a continental framework through which—given that the United States would enjoy preponderant weight—they could roll back the social gains of the Canadian workers’ movement. The real objective of the free trade treaty could not have been the elimination of customs tariffs, since they do not affect more than twenty percent of Canadian-American trade and are levied at a rate of less than five percent Moreover, these tariffs had been steadily decreasing since the 1940s.

The treaty was aimed at enshrining the rights of the large enterprises and thereby insulating them from the whims of any future Canadian government which might desire to annul the free trade agreement. Still, it is doubtful that even an NDP government would go this route, for it would signal a direct confrontation with both the Canadian and U.S. bourgeoisies.

The free trade treaty guarantees the conditions necessary for Canadian and American enterprise to decentralize and move their production at will, while simultaneously forbidding any “disloyal” competition through subsidization or development of state-owned — companies. Both the U.S. and Canadian oil industries are protected against any future whimsy whereby a Canadian or provincial government might try to limit exports of natural gas to the United States.

Finally, the treaty forbids “subsidies” that have the effect of modifying competitive conditions for a given firm. The U.S. government understands “subsidy” to mean virtually all social or labor force policies.

Given that entire regions of Canada are dependent on federal transfers and subsidies, their rapid disappearance would provoke crises of catastrophic proportions, particularly in the Atlantic provinces. The Canadian bourgeoisie wants to eliminate these programs gradually—in an effort to avoid provoking painful social crises, and in recognition of the electoral stakes.

On these points, there will be a lot of friction with the U.S. government, which doesn’t share these preoccupations. But this is a disagreement over the timing of application; it in no way reflects a divergence concerning either the treaty’s general direction or its ultimate objective. The Canadian bourgeoisie hopes to conquer a space in the U.S. market that would compensate for the concessions it—or, more accurately, the Canadian workers’ movement—has made to the United States in the free trade agreement.

For its part, the U.S. bourgeoisie wants to consolidate its zone of influence in the Americas in order to face up to the growing competition from the trade blocks forming around Germany and Japan. The free trade treaty with Canada represents only the initial step in Bush’s considerably larger strategy, the so-called Enterprise of the Americas. For now this consists of merging the three Americas into a North American economic system. The treaty with Canada would serve as a model for a subsequent free trade agreements with Latin American countries, beginning with Mexico.

Working-Class Fightback

The policy of the international workers’ movement toward specific proposals such as the Single European Act or the U.S.-Canadian free trade treaty must begin by analyzing how these proposals will affect the class struggle rather than from the competitive position of “national” enterprises. Hence it was correct for the Canadian and Quebecois trade union movements to oppose the free trade treaty with the United States, since the treaty was part of a program of anti-worker attacks.

However, the campaign waged in Canada against the free trade agreement was imbued from the start with a Canadian nationalist perspective that inevitably slid into English-Canadian chauvinism. While the trade unions mobilized their members on the basis of a generally correct explanation of the class stakes involved, the public campaign waged under the aegis of the Pro Canada Committee rendered class questions secondary.

This committee fought against the free trade agreement from an English-Canadian nationalist perspective. The rare capitalist ready to sign on to the fight against free trade—because it might hurt his sector—was given center stage. The committee’s discourse—along with that of the intellectuals prattling about “Canadian culture”—dominated the campaign.

Such a limited campaign spelled defeat for the struggle against free trade. It enabled the Liberal Party —using a demagogic, nationalist appeal that was implicitly bourgeois in content—to capture much of the anti-free trade sentiment. The result was a division of the vote against free trade between the NDP—which had the active support of the trade unions—and the Liberal Party, for which the free trade issue was a veritable life preserver, given the marginalization it might have faced in these elections. The Conservative Party was returned with a forty-three percent parliamentary majority. With that, the treaty was a go.

The Special Case of Quebec

The Canadian nationalist character of the Pro Canada campaign against free trade had a particularly ill-fated impact in Quebec, where it directly contradicted Quebecois nationalist sentiment Although Quebec’s trade unions had waged a campaign against free trade, the Conservative Party harnessed the support of the province’s two main bourgeois parties to win the big majority of Quebec’s parliamentary seats.

These two parties were able to portray the opposition to free trade as a desire to protect the privileged position of Ontario in the Canadian market—something that wasn’t totally false. Quebecois national interests, they asserted, called for the development of commercial trade with the United States to reduce Canada’s hold over the Quebecois economy. This perspective corresponds to the ambitions of the Quebecois bourgeoisie, which has grown a lot stronger since 1960, but which has still not become the dominant force within Quebec’s economy.

In this instance, Quebecois bourgeois nationalism directly contradicted the broad-based sentiment against free trade within the Quebecois working class. This could have caused a political rupture. But the Canadian nationalist character of the Pro Canada campaign allowed Quebec’s bourgeoisie to get through this potentially dangerous period without much damage.

These developments raise important questions concerning the role of oppressed nations within multinational imperialist states. Although they are oppressed, these nations are highly industrialized and proletarianized societies with all the characteristics of imperialist countries, except for their political domination by another imperialist country and the weakness of their national bourgeoisie, as in the case of Quebec.

Paradoxically, the formation of economic blocs enhances the credibility of bourgeois independence projects in such nations. Consequently, the formation of international economic blocks will sharpen the structural crises confronting multinational states in which economic unity is increasingly decayed.

Moreover, the mainstream media’s continuous heralding of the independence movements in Eastern Europe introduces insoluble contradictions into bourgeois ideological discourse, weakening efforts of the multinational imperialist states to preserve their domination over their respective oppressed nations. Canada is one of the victims of this contradiction.

July-August 2018, ATC 33