"Merger of the Century" is stirring a conversation in both Canada and the United States. And kneejerk reactions, by those who haven't read it, miss the actual reasoning behind the book that cannot be lost in all the noise so I will repeat them here. The Wall Street Journal and Foreign Policy this week didn't miss the point in the pieces they wrote about the book.
The book is designed to pose to the publics and policymakers existential questions facing Canada and America. It then becomes a thought experiment and solutions ranging from a full-on West-East German style merger to a gigantic joint venture to develop and defend the North to a European Union arrangement.
It also looks at what Canada must do if there is no merger, full or partial, soon.
Coincidentally, Oct. 4, marked the 26th anniversary of the Canada-U.S. Free Trade Agreement, an initiative that was also rejected out of hand even though it was made after three years' study by Liberal cabinet minister Donald Macdonald.
(Remember the hysteria that Canadians would lose health care and pension benefits?)
The deal has been hugely successful for a generation, but has not advanced to a monetary or customs union (as is the case in the Caribbean, West Africa and Europe). Even worse, there is slippage -- the border is a problem again and the world has changed, thus the existential issues:
-- The U.S.-Canada border is militarizing and thickening to the detriment of Canada's trade while other free trading nations have successfully in that period of time eliminated borders for workers and capital.
-- This is due in large measure to the extensive drug smuggling from Canada to the United States that has forced U.S. officials to deploy drones and set up listening posts along certain high trafficking portions of the border.
-- Canada, with its relatively small economy and population, cannot hang onto, develop or defend its gigantic, neglected north or Arctic territory. We have 120,000 miles of coastline, the world's largest, and a navy of 8,500. The military is smaller than Singapore's.
-- Russia in 2007 declared that "the Arctic is Russian"
-- China plus others have targeted our resources with some success.
-- Canada does not have the capital or manpower or technology to develop this hinterland. The federal government has neglected the region forever.
-- Canada is economically dependent upon the U.S. economy -- most of its "trade" is transfers between corporations.
-- Canada has not shown the political will to nation build. Some 30 years ago oil and natural gas were discovered in Alaska's north and in Canada's northwest. Within 8 years, an oil pipeline was built through Alaska and 2 million barrels a day began flowing to markets around the world. Three decades later, Canada's north hasn't even obtained a building permit for a pipeline to take natural gas or oil to markets. There aren't even any plans or infrastructure in place to do what Norway has done with its high-Arctic natural gas: Build LNG facilities that ship the energy all around the world.
-- Canada's First Nations track record is abysmal. The 10 provinces also have untapped resources and with few exceptions (James Bay in Quebec and the oil sands in Alberta) remain untapped because First Nations land claims have remained unresolved, even unaddressed, for decades. By contrast, Australia solved its claims legislative, created an efficient adjudication process and took off economically as a result to the benefit of its aboriginals and general populace.
-- Canada's GDP is slightly larger than the revenues of China's four biggest oil companies.
-- Canada has the Dutch Disease or a currency that is too high given its poor productivity levels (17th in the world compared to U.S. at 5th) thus driving out manufacturing and causing tourism to plummet. The only solution would be monetary union with the U.S. but that's a taboo subject and shouldn't be.
-- Canada has a brain drain of roughly 150,000 per decade, a population the size of Quebec City. For years, immigration policies have favored other countries and made U.S. migration difficult.
-- Emerging economies and state capitalism surround the U.S. and Canada and are aggressively and effectively winning the new Cold War with their arsenal of "soft" economic weapons. These include secretive sovereign wealth funds, government-controlling corporations buying out assets wherever they can and diplomatic pressure to gain control of ore bodies, oil fields and farmland. Canada's oil and mining industries are being gobbled up.
-- State capitalists like China, Russia or Arab nations do not provide investment reciprocity: China takes over Nexen Inc. in Calgary but Canadians cannot buy a Chinese oil company; Abu Dhabi buys Canadian oil companies but Canadians cannot buy their companies or invest in their stock market. These two countries need to forge protective, not protectionist, policies.
-- China is the largest owner of farmland in Africa, and just bought 5 per cent of Ukraine. South Koreans attempted to take over half of Madagascar's farmland and were only repelled after a revolution and coup d'etat. Arab nations are buying up huge tracts of farmland. All these and other examples are outlined in my first chapter.
These existential threats and challenges are what both national conversations should address. My book contains a thorough menu of prescriptions that anyone interested in the future of Canada, and the United States, should read. And it's Canada, more than the U.S., that needs to decide what it wants to be in order to grow up and be a freestanding nation-state.
Instead, federal politicians in Ottawa focus on whether or not to make the national anthem "gender neutral". American politicians focus on the Middle East and how to bridle 30 renegade Republicans.
The idea of integrating these two countries more than is now the case is an idea whose time has come. This is what the national conversations should include and, apparently, are beginning to engage.
Merger of the Century: Why Canada and America should become one country
Harper Collins Canada
National Post -- excerpts Monday Sept. 30 and Tuesday Oct. 1
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