With limited new investment and seemingly endless plant closures, Canadian vehicle production has been stagnant for two decades. The sector has shed about a quarter of its work force. Trade liberalization hasn’t only affected General Motors and other foreign auto companies that decided to migrate. Canadian auto parts giant Magna, which has built 33 of its 139 North American production facilities in Mexico, eagerly relocated a portion of its labor for the same reasons.
The clang of Canadian vehicle production isn’t likely to get much louder under the new United States-Mexico-Canada Agreement. In the same week the deal was signed in November 2018, G.M. announced it would be shutting down its century-old assembly plant in Oshawa (as well as the Lordstown plant in Ohio among four American facilities).
Yet not a whisper of condemnation of the agreement was uttered by Canada’s major political parties. No one dared blame open trade, even though the door is wide for a further exodus of middle-class manufacturing jobs. Rather than express “disappointment” and resignation, the next federal government should adopt the negotiating strategy of the United States trade representative, Robert Lighthizer, President Trump’s point man on the China file, and demand production and investment guarantees in exchange for market access.
There’s no denying that Mr. Lighthizer’s boss is partly responsible for the free-trade hot potato, but seizing on that conflates the issues. Which could be strategic.
After an early instance of Mr. Trump vowing to rip up a global trade deal, Chrystia Freeland, then Canada’s trade minister, delivered an unsolicited rebuke against the growing anti-trade movement, calling it a threat not seen since the Great Depression. “We’re living in an era of nativism and protectionism, something that I think is very dangerous for the world and for Canadians,” she told the Senate trade committee in late 2016.
Dropping an outrage bomb destroys any opportunity for candid discussion. It polarizes the Canadian electorate to politicians’ peril. An Ipsos survey released ahead of Monday’s election found populist sentiment in the country on the rise, with 67 percent of Canadians agreeing that “Canada needs a strong leader to take the country back from the rich and powerful.”
Already, a relative outsider has won office by speaking the language of populism. Ontario Premier Doug Ford’s campaign rhetoric blamed “his Liberal rivals for the economic insecurity plaguing those who are struggling,” says Frank Graves, president of Ekos Research. Ekos and The Canadian Press conducted a survey last year that reached the same ominous conclusion: populism is brewing.
Inside and outside the country, plenty of believers in globalization are assuring each other that Canada is immune, Canada is different. Yet some of the middle-class electorate is already connecting their declining prosperity with the deals championed by Ottawa. How long until their frustration boils over? An even greater risk than real talk on free trade would be a populist challenger in the next election who defies the pundits and wins.
Jeff Rubin is a former chief economist at CIBC World Markets and a former senior fellow at the Centre for International Governance Innovation. He is the author, most recently, of the forthcoming “The Expendables: How the Middle Class Got Screwed by Globalization.”
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