Locked in: Canadian Trade Policy and the Declining Liberal Order

Abstract

The current liberal Rules-Based International Order (RBIO) is in decline. One symptom of this is the extent to which the US is changing its international strategies and its expectations of other countries in its battle with China for a hegemonic position in a new global context. The chapter argues that the consequences of this have been poorly recognized by middle powers like Canada. Canada’s steadfast commitment to rules-based trade, based on existing but rapidly eroding rules is demonstrated in our analysis of recent trade policy choices including the renegotiated NAFTA agreement (CUSMA) and a variety of new trade agreements. However, being ideationally locked into a set of rules that no longer bind the great powers as much as they may have done in the past may be counterproductive. In an increasingly mercantilist and conflictual international environment, the rules in question need to be rethought. In a brief concluding section, the chapter suggests that Canada’s interests may be better served by facilitating a more agile state, rather than a constrained one, rebalancing the rights and obligations of states and capital, and promoting trade and investment relationships that undo the historic injustices between the Global North and the Global South.

For very useful comments received on an earlier draft, we would like to thank the co-editors of the volume, and Stuart Trew, Scott Sinclair, Carlo Dade, and other participants at the workshop convened on 14 October 2021. Stephen McBride gratefully acknowledges funding from the Canada Research Chairs Programme.