The potentially ruinous trade struggle now underway between the United States and China could well lead Canadians to wish a plague on both their houses.
Following decades of stupendous growth, the Chinese economy, by some measures, is now bigger than that of the United States, and the current trade negotiation has become a battle of the titans.
But even as Canadians feel powerless in the face of two trade bullies that take turns kicking sand in our face, U.S.-China trade relations matter to this country.
Canada is, of course, affected by the global impact of escalating threats between the giants that many economists have compared to events that led to the Great Depression. But the more immediate issue is how, in a new era of muscular nationalism, Canada can keep avenues open for future trade with those two crucial export markets while sheltering our own domestic industries from the worst of the collateral damage.
Despite Canada’s strong traditional backing for the United States, Foreign Minister Chrystia Freeland was once again unsuccessful on Wednesday in getting the U.S. to end its arbitrary tariffs on Canadian steel and aluminum. And after years of supporting China’s opening to the world, that country has turned on us because we followed the law on Huawei executive Meng Wanzhou.
Listening to experts on the subject of dealing with the two trade superpowers, it becomes increasingly obvious that Canada’s strategy has much to learn from the study of bullying in the playground.
“Bullying is repeated, aggressive behavior … that involves a real or perceived power imbalance,” wrote Frank Smoll, a sport psychologist, in a discussion of playground bullying.
And while some have advised responding thump for thump — either against the U.S., against China, or both — that is not something recommended by bullying experts. Food trade expert Jennifer Clapp, Canada chair in food security and sustainability at Ontario’s University of Waterloo, agrees.
“We’re not in a position to take a hard line because we can get really punished,” she said. But caving in to one side or the other doesn’t work either.
As everyone knows, becoming a bully’s sidekick does not necessarily protect you from thumps once they know they have you in their power.
Canada plays fair
And while taking a hard line may score political points, Gordon Houlden, director of the University of Alberta’s China Institute, said Canada has had a long reputation, going back at least to the Pearson era, for playing the role of peacemaker and supporter of rules-based negotiation and diplomacy.
“We Canadians are legends in our own mind,” said Houlden, an Asia expert who also keeps a close eye on U.S. trade policy related to Asia. “We assume always that we do these things because we’re virtuous, but the cynic in me says no, that as a trade-dependent country — more trade-dependent than either the United States or China by a country mile — that we do this because it is in our own best interest.”
A standard recommendation when faced with a bully is to seek allies and present a common front, a point made by Munk School Asia scholar Lynette Ong on CBC Radio’s The Current this week.
While the giants want to set their own rules and make trade partners comply, Canada and 13 other less powerful exporting economies, including the EU, South Korea, Brazil, Japan, Australia and Mexico, have been trying to make common cause.
Another place to find friends is within the trade titans themselves.
Despite the Trump administration’s move toward one-on-one trade deals where the bigger party holds the biggest stick, there remains significant U.S. support for trade rules that prevent constant turmoil.
And while China’s political system does not lend itself to outspoken internal opposition, it is certain that within that country there are also those who believe in rules-based fair trade.
If Canada plays the long game, internal allies in both countries may come to power.
Of course, the fact that the rules-based World Trade Organization continues to exist, if in a weakened state, leads to another classic anti-bullying rule: Complain to an adult.
Anti-bullying wisdom also recommends that the bullied should remain assertive and unemotional, as Freeland continues to be.
As Houlden said, Canada cannot expect to win every battle, but on important issues — including the steel and aluminum tariffs imposed by the U.S., and the Canadian citizens being detained by China — we should not give up, even if our attempts lead to repeated failure.
And if we want to make ourselves less susceptible to future bullying, Canada must learn the lessons of its current predicament, said Waterloo’s Clapp, who researches the economics and political economy of world trade in food.
For instance, while Canada has been successful in exporting canola, soybeans and meat to China’s single enormous market, we now see there could be advantages in diversifying crops and export destinations — including producing more for the Canadian domestic market to be processed, if not consumed, at home.
It may be to this country’s benefit to be politely but firmly anti-bully, to stand for rules and follow them, to act in support of global trade fairness that helps others and does not just satisfy our own short-term interests.
And once the battle of the titans is over and cooler heads prevail, we may find they, too, will be glad we did.
Follow Don on Twitter @don_pittis