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Sleeping With the Elephant
The future of NAFTA and Canada - United States ties
Pierre Elliot Trudeau remarked that Canada’s relationship with the United States is like that of “a mouse in bed with an elephant…no matter how friendly…one is affected by every twitch and grunt.”
Yet, despite current economic stagnation in the United States, Canada has managed consistent growth and most economic measures indicate a healthy economy. Indeed, on May 21st the Canadian dollar reached a five-year high relative to the US dollar. But, not only does a high dollar threaten the low-currency advantage of Canadian exporters, it is unclear how long the Canadian economy can survive stagnation south of the border, given its dependence on exports to the US.
Of course, NAFTA has increased trade between Canada, the United States, and Mexico, and this has benefited many Canadians. But there are a number of outstanding dilemmas: for instance, what has NAFTA done to Canada’s economic and cultural sovereignty? And, how "free" is free trade, given the prevailing levels of subsidies, tariffs, and countermeasures on both sides of the border? Such questions are played out daily in often tense negotiations over the terms of lumber and dairy trade, or the coordination of defence policy and border security, to name a few.
In addition, recent political and diplomatic strains in the relationship have left Canadians pondering how substantive Canadian sovereignty really is, and whether the US will be reluctant to maintain this healthy trading relationship. At times this concern can appear overblown. After all – as with any business arrangement – the United States also benefits from a healthy trading relationship across the 49th parallel.