Lost in the Global Economy

For the last two years, we Canadians have been told numerous times by the Harper government(s) that we have fared comparatively well due to their successful shepherding through the global economic downturn. Admittedly, this has largely been true. While the economy has suffered, we are in a better position, domestically, than many others. That said, how we as a country interact with the rest of the global economy looks to be a little more precarious given recent events.

As Prime Minister Harper noted last month in an interview with Macleans, his view on foreign policy is that "our long-run interests are tied somewhat to our trade, but they're more fundamentally tied to the kind of values we have in the world: freedom, democracy, human rights and the rule of law." This sounds nice and the Harper government has not failed to remind everyone about our principles, but what happens when our like-minded friends are no longer wise to become too invested with economically? After all, Canada needs trading partners to keep the economy running smoothly. So, whom should Canada strive to build strong economic ties with? The easy answer is everyone and that we should never turn away a potential partner. The reality is, however, that with out limited resources it is in our best interests to cultivate strong, strategic relationships rather than try to spread them out too thin.

In the past, discussion on whom Canada should trade with has focused on two major partners, the United States and Europe. But right now, both are in serious economic trouble as they struggle with issues of debt, unemployment and internal political deadlocks. Add to that the standoff between Canada and the EU over the hunting of seals and the sale of seal products and it looks like the traditional partners may not be the best trading partners in the near future.

What about China? Right from the start, Tory governments were heavily critical of China and its human rights record. Whether or not this was the right thing to do is not for me to say, but it did have a cooling effect on any relationship between Canada and the world's fastest growing economy. Now we see the government scrambling to rebuild ties with China in hopes of not becoming collateral damage of the economic repercussions of the US debt woes (Check out the Canadian International Council's new site OpenCanada.org and their recent Rapid Response roundtable about why the government is softening its stance on China). It is more than likely that it will take a few years of sustained effort to repair the previous damage done to the relationship.

Mr. Harper has just wrapped up a trade tour in Latin American in hopes of building up positive trade relations with the region, especially with Brazil. Attempts have been made to trumpet the benefits of the free trade deals recently signed with Honduras and Colombia but the reality is that these markets won't have a huge positive effect on the Canadian economy. The real prize would be to develop a strong economic relationship with rising star in the international arena, Brazil. But once again, our ties with this new power are not exactly the best they could be, thanks in part to neglect and fierce competition in the airline industry.

The Harper government will have to figure out where its priorities lie and work to (re)build the kinds of relationships that will help strengthen our economy and move past our recent economic problems. The question remains, what will the government do if economic gain comes at the expense of dealing with countries who don't share our values? If recent events give any indication, I predict the economy will come out on top (no surprise there!), but only time will tell.


Cross-posted at DMF Insider