Recently, the Canadian Foreign Policy Journal (CFPJ) released its last issue dedicated to Canada’s relationship with key emerging markets. iAffairs’ managing director, Katarina Koleva talked to Professor Laura Macdonald, who with Jeremy Paltiel, are the editors of this special issue describing Canadian attempts to move beyond the traditional US market. Laura Macdonald is a Professor at the Department of Political Science at Carleton and also at the Institute of Political Economy. She received a SSHRC grant to explore Canada-Latin America relations under the Harper government. That involves various components – a section on migration, one on mining investment and Latin America, and then broader issues related to trade, aid, and bilateral relations.
iAffairs: Professor Macdonald, how did you come up with the idea about this special issue?
Laura Macdonald: I have been studying the Canada-Latin America relationship over the course of this SSHRC grant, beginning in 2012 and I have been struck by the fact that the Harper government said they would make the Americas a top foreign policy priority, but in fact the results were not very significant. In terms of the relationship, there were a number of free trade deals signed, a slight increase in development assistance to the region, but not that much substantive change in the relationships. Then, I began talking to my colleague Jeremy Paltiel who also got a SSHRC grant to look at Canada-China relations and I suggested it may be a good idea if we do a joint project where we compare Canadian foreign policy in those areas.
So, first of all, we did a panel at the Canadian Political Science Association meeting, two years ago, on the issue of Canada’s relations with emerging markets. This has been a primary concern of Canada and other countries to try to move into emerging markets and increase our trade with those countries as trade with the US stagnated. We invited participants who spoke about Africa – David Black (Dalhousie University) and David Hornsby who is based in South Africa. We found that we have a lot in common in terms of the perspectives and shared frustrations with the Harper government’s policies.
Because of the success of the panel, we decided to turn it into special issue of a journal. Overall, all of the participants were struck by the lack of a sustainable commitment on the part of the Harper government to improve relations with any of these countries. From the perspective of the Americas, I looked specifically at Mexico and Brazil, and in both cases we did not have very positive diplomatic relations under the Harper government, despite their talk on putting all their efforts on economic diplomacy. With Mexico specifically, Canada’s decision to impose the visa requirement on Mexicans despite the fact that they are a NAFTA partner really created strong grievances against Canada. And while the absolute amount of trade has increased, the proportion of our share of the Mexican market did not increase substantially.
And similarly with Brazil, Canada has never been successful in establishing a strong relationship with the Brazilian government; there have been a series of irritants over the years, like mad cow disease and the revelation that Canada had engaged in spying on Brazil. There is a lot of competition, particularly in air space, a long-standing trade dispute between Embraer and Bombardier. So, the relations were not very positive and once left-wing government took power in Brazil, we also had fundamental differences over trade and political issues. Brazil was trying to establish itself as a regional hegemon and was not interested, along with many other governments in the Americas, in developing deeper ties with Canada.
So, we specifically looked at Canada’s Global Markets Action Plan which was a plan that Harper government developed to support trade with emerging markets, but they chose to focus on small producers, which do not, actually, trade so much. The government tried to get them into trading, but even if you put a lot of efforts into that, you will still not get a lot of rewards in terms of the absolute amount of trade and investments on the part of the small producers. Overall, it has not been very effective in increasing Canada’s position.
iAffairs: How do we explain Canada’s double-speak?
Laura Macdonald: This was actually our question. We argue that there is a combination of factors involved, largely related to Canada’s historical development as seeing ourselves as a nation of the West and very much closely tied first to Britain and then to the United States. Canadian producers have a lot of difficulties breaking out of the ideological framework; that what really counts is the US and Europe relationship and that other countries are sort of backward and not worth the effort to promote bilateral trade.
So, there is this sort of mental framework and also the fact that Canada is a member of Western clubs like NATO and NORAD, and institutions in North America. And shared with the US, the perception in G7/G8 is our leader meets every year with other Western leaders. This institutional framework that was set up in the post-World War II era is designed to foster those relationships between Western countries and doesn’t easily allow actors from what might be called the developing world.
iAffairs: Comparatively, most of Canada’s trade flows have typically gone to high income economies. What does this mean for emerging economies?
Laura Macdonald: You can think of historical institutionalism, the concept of path dependency, and indeed that helps to explain our focus on Western markets, but that does not take into account the fact that the global economy is changing very rapidly. China represents a huge portion of that global economy. Right now, especially developing countries have switched their trade patterns towards China and East Asia because that is where the growth is going to be. Just look at trends in the global economy, that’s obvious. So if we keep trading with the US, Canada could do okay, but it is not going to represent the increased benefits available to us.
iAffairs: Is there a difference in how Canada perceives Latin America compared with other emerging market regions?
Laura Macdonald: I think that when it comes to Latin America, there is a set of views of countries like Mexico as not being sophisticated enough for the Canadian market. Additionally, Canada also views them as competitors for the market of the United States. After all, Canada entered NAFTA because we were forced into it after the US and Mexico decided to go ahead with a bilateral agreement. Canada was pretty much opposed to Mexico entering the trade deal, but it did not have a choice when those two decided to sign a free trade agreement. Canada figured, it may as well join the party and make the best out of it, but the government was never really happy with Mexico barging into Canada’s special arrangement that we had with the United States. So, starting with that bad start all the way to our current relationship, I think, Canada’s been skeptical about Mexico and hasn’t seen many benefits from Mexico, hasn’t invested heavily in Mexico, and ultimately, views it as a competitor for the American market and for the attention of the US government. And rightfully so, because it is a competitor. But Canada hasn’t really shifted towards thinking of the continent as a regional economic space connected by value chains across borders.
iAffairs: And what about the Trudeau government. Is it different at all?
Laura Macdonald: When we started working on the special issue, the Harper government was still in place, but now there has been a strong shift in the rhetoric and, indeed, the practice. The Trudeau government has committed themselves to lifting the visa requirement and it looks like that will happen at the North American Leaders Summit. I think, that’s essential for the Mexican business and Mexicans because many resent the visa deeply. I think the Harper government didn’t realise how important that legislation would be for Mexicans and how they would perceive it as a slap in the face. It reinforced the xenophobic discourse that we see coming out of our sphere a little bit – especially with the likes of Donald Trump. The fact that Canada was falling into the same trap was particularly egregious. So, I expect Trudeau will lift that visa requirement and promote greater business ties with Mexican President, Peña Nieto.
In fact, even though Harper said that Latin America will be a big focus for Canada and he, and some of his ministers, spent a lot of time in Latin America, there weren’t many visits of Latin American leaders to Canada. So, there was a lot of Latin American skepticism of Canada in the region. I think that the Trudeau government is taking some positive steps to correcting those perceptions, but it is not very clear to me what they have in mind beyond that. Of course, another emphasis of the Summit will be on clean energies and investment in sustainable energy solutions, so I think that might be a way forward to think about a new type of North American economy that is more sustainable. Lastly, I think that the three leaders right now have a lot in common to achieve that.
iAffairs: What would be your recommendations to the Trudeau government?
Laura Macdonald: Number one would be reversing the visa requirement for Mexico, although I am also concerned that we should also speak out to Mexican leaders about problems of government, of democracy, and of human rights in that country.
I think that, in general, Canada has to commit to internationalism and showing ourselves as a country that is interested in the world and in the Americas. In terms of Harper, he was perceived as just following the American lead: being upset about Chavez and Venezuela, and not pushing the Organization of American States to open up Cuba.
We also need to be promoting processes of peace-building and support for civil society in the hemisphere. In the Harper government there was a chill on NGOs and civil society actors, many of whom were cut off from funding under the Canadian government. There is an aid review going on right now, which I think will be very positive.
iAffairs: Some words on Brexit and the consequences for Canada and Latin America?
Laura Macdonald: I would say, for Canada, I really think that CETA is probably dead. I can’t imagine the trade agreement with the EU going ahead now because the EU will be in crisis and the agreement was already running into obstacles. That is one issue the shows Canada needs to be looking to other markets. The EU is not very promising, I would say, for improving our trade relations in the coming period.
I think, it is also interesting that we see the rise of xenophobic, anti-immigrant discourse that threatens both Europe and Canada. If Trump were elected for instance, I don’t know if NAFTA would survive. The Mexican Finance Minister has said that the only good thing about Trump is that his election might draw Canada and Mexico closer together. Canada will not escape that kind of vitriolic rhetoric that is directed at Mexico. We share a border with the United States as well. So, I think that these are different phenomena, with different root causes, but similar types of rhetoric and political direction. Still, I am optimistic that Hilary Clinton will be elected, and that would make a much sounder footing for relations in the hemisphere. Trump would be a disaster for Latin America.