From national interest to national existence: Canada in the new world order (lessons for the UK)
No one has illustrated more starkly the dawn of a dangerous age in global politics than Canada’s prime minister and former Bank of England governor Mark Carney. His Davos speech in January may well go down as the ‘Iron Curtain’ speech of our century. In this case, Carney’s speech pulled back the curtain of the ‘rules-based international order’ to find a rusted gearbox of mid-20th century manufacture, long left to turn unattended on the goodwill of its component parts.
However, rather than lay down and be ground up, Carney’s speech was a call to action for what he called ‘intermediate powers’ to assert their autonomy. Here, he speaks with some national authority, as it was Canada that first defined itself as a ‘middle power’ at the dawn of the Cold War great power rivalry 75 years ago.
Canada has felt the harsh reality of the new world of heightened geopolitical competition – and the new imperialism – more than most. Seemingly out of nowhere, Trump began threatening Canada with annexation from the outset of his second term. Predicated on a concocted mix of fancies – from drug flows to uncontrolled immigration – he continues to hit Canada with 35 percent punitive tariffs. Canadians have responded through a widespread and still ongoing boycott of American products and holiday travel.
Despite a recent thaw in relations with China and India under Mr Carney’s leadership, Canada has also been at the sharp end of these countries’ more muscular geopolitics. In the dog-eat-dog new global mosh pit, the prime minister has argued that middle powers like Canada – if they fail to secure their autonomy – will end up ‘on the menu’. As such, Canada is now undertaking a range of transformative reforms with a rapidity that would make even some authoritarian leaders blink.
Domestically, decades of internal market reform inertia have allowed an unaligned patchwork of provincial licensing, standards, procurement, and service regulations to stymie domestic growth. Breaking down internal trade barriers could raise Canada’s real GDP by nearly 7 percent over the long run – having a far greater impact than any FTA Canada could sign with an international partner. It will particularly raise the output of historically underperforming provinces and improve product competitiveness abroad. With a view to finally unlocking domestic trade, the federal government introduced the Free Trade and Labour Mobility in Canada Act where the government recognises comparable provincial or territorial regulations related to interprovincial trade as meeting federal requirements for the movement of goods, services, and labour within Canada.
Greater domestic trade mobility will increase competition in a country dominated by corporate behemoths which have trapped consumers into paying wildly exaggerated prices and will strengthen global market positioning for Canadian brands. Most importantly, free trade at home is the surest defence against further international shocks brought on by the vagaries of self-interested strongmen leaders.
Internationally, Canada’s Defence Industrial Strategy (DIS) was launched last week and is the first of its kind in the country’s history, serving as an ambitious agenda aiming to boost domestic exports as well as Canadian security autonomy. The strategy aims to increase Canadian defence industry revenues by more than 240 percent, grow defence exports by 50 percent, and create 125,000 new jobs over the next decade.
Canada has not historically been a large defence exporter, but the strategy sets the goal of awarding 70 percent of federal defence contracts to Canadian firms within a decade. The DIS puts into practise the country’s aim of diversifying its interests away from the United States, where Mr Carney has said that 75 cents of every federal dollar spent on defence currently goes to the US. With a particular focus on the EU and the UK, Canada has already joined the EU’s Security Action for Europe (SAFE) programme, which offers loans to member states to invest in defence capabilities.
However, decoupling from the US will be as challenging for Canada as it is for Europe, where decades of building in-house expertise and manufacturing capacity were lost due to a reliance on a once dependable ally. While remaining vigilant against international espionage, changing Canada’s defence industrial processes should emphasise reducing friction for smaller Canadian producers – especially innovative ones – selling to its defence ministry. This is a challenge faced by other countries – including the UK - and requires collaboration at the earliest conceptual stages, lubricated by increased and new investment mechanisms where the government shares the risk as well as the reward.
Canada’s reaction to this to a global politics where middle powers are threatened with being squeezed between the movements of tectonic great powers offers a lesson to the UK. Canada’s is a ‘Poland’ reaction, where administrative hurdles are being torn down swiftly. Canada’s dismantling of internal trade barriers is only analogous to the UK’s trade relations with the EU, where newly a proximate relationship must be quickly re-established and UK entry into SAFE secured. However, it is as much incumbent on the EU to recognise there is no autonomous continental security without the UK. The UK must also must unblock its military spending plan without delay. Canada has recognised it no longer has the luxury of prolonged internal deliberations, and neither does the UK.
Mr Carney’s defence of international institutions and his call for other middle powers to band together are right, but countries must be equally prepared to go it alone into the emerging cold wilderness of the 21st century.
Dr Matthew Godwin is an international affairs consultant.
Cover image courtesy of Flickr image by Lauren Hurley / No 10 Downing Street