Canada too dependent on US to gain from China

The US administration has adjusted its foreign policy, making settling trade disputes with other countries its priority. The US has been exerting enormous pressure on most of its trade partners, including Canada. The US president even took a jibe at Canadian Prime Minister Justin Trudeau at the G7 Summit in Quebec, Canada, in June, revealing the two leaders’ tenuous personal relationship.
The US economy is about 10 times the size of the Canadian economy, and Washington has a dominant political and economic influence across the world. And since Canada is highly dependent on the US economy, it even has to accept most of the US’ diplomatic demands.
For example, in the first quarter of 2018, Canada’s exports to the US accounted for 75.8 per cent of its total export volume and imports from the US added up to 52.3 per cent of its total imports. On the other hand, US exports to and imports from Canada accounted for only 18.2 per cent and 12.9 per cent of its total exports and imports. Which makes clear Canada’s over-reliance on the US market.
Besides, the North American Free Trade Agreement (Nafta) was signed during the Bill Clinton administration to promote common development of the US, Canada and Mexico, as their economies are complementary, setting an example for model regional economic integration. But the incumbent US administration used its overwhelming economic advantage to renegotiate Nafta and forced Canada to agree to open its dairy product market to the US dairy industries. Notably, the new US-Mexico-Canada Agreement includes what many view as a “poison pill” clause, which says that if one member country wants to reach a free trade agreement with a non-market economy, its proposal should be agreed on by the other two members. This clause attempts to restrain the economic moves of Canada and Mexico and subject them to the US’ whims.
The US and Canada have close political ties and there is no border defence between the two countries allowing people to move freely from one side to the other. Since there is no hostile rival in the region, Canada relies on the US for its national security, particularly within the Nato framework, and has served the US global strategy. Although Canada has gained certain advantages on some diplomatic issues, it has also paid a high price for allowing the US to safeguard its national interests and rights. On many international relations issues, Canada chose to side with the US, especially when it came to ideological differences with developing countries. Last month, Canada even detained Huawei senior executive Meng Wanzhou on the behest of the US, unwittingly becoming a party to the China-US dispute.
But since Trump became US president, US-Canada relations have not progressed smoothly. The US not only imposed tariffs on Canadian steel and aluminium products but also claimed Canada is a threat to the country’s economy. Moreover, the two countries have sovereignty issues over some islands, and Canada even arrested five American fishermen for entering its waters. So US-Canada relations now face unprecedented challenges.
By continuing to follow the US, either passively or actively, Canada will eventually harm its national interests. The US can sacrifice the interests of other countries, with the exception of perhaps Israel, for the “America First” policy.
In international affairs, by following US policies, Canada could lose the trust and cooperation of most developing countries. For instance, in the UN Human Rights Council, Canada didn’t understand the developing countries’ specific and special situations and thus lost their trust to some extent.
China is the largest export destination for Canada after the US. In fact, in April 2018, Canadian exports to China exceeded those to the US thanks to an increase of 23 per cent. But, refusing to notice that trend, Canada acted as a loyal adherent of the US in the Meng detention drama. If Canada insists on following the old track, it may not benefit much from a big trading partner like China.
The author is a professor on international studies at Renmin University of China.