CANADA TODAY is under threat. The country's capacity and even existence as an independent nation, able to shape its own political, social and economic future, are at risk. Relations between Canada and the United States (US) are decidedly chilly these days: the Iraq war, trade disputes, name-calling, and bickering at the border.

It doesn't mean that the relationship will grind to a halt. With more than half a million people and a billion dollars worth of trade crossing the border daily that is not going to happen.

Every day thousands of cars, trucks, trains and planes roll across the Canada-U.S. border as more than $1 billion in trade circulates between the countries. Year in and year out, Canada and the United States are each other’s biggest trading partners. The longtime relationship is worth hundreds of billions annually. Canada’s exports to the U.S. accounted for $348.4 billion – about 84 per cent – of the $410.7 billion in goods shipped out of the country last year. Conversely, about 71 per cent of Canada’s $356 billion in imports last year arrived from the U.S. Together the United States, Canada and Mexico have a trading relationship worth more than $700 billion a year; an increase of 88 percent between 1993 and 2003.

Economic retaliation is unlikely because the North American Free Trade Agreement (NAFTA) has changed the trading relationship between the two countries. Many plants in Canada now have North American product mandates and are producing for the entire Canada-U.S. market, while those in the U.S. operate in the same fashion. That means a huge amount of cross-border trade is now intra-company trade. That creates a strong incentive for business to lobby both governments to avoid economic disruptions or retaliation no matter what the nature of the relationship at the top. The U.S. has a vital interest in keeping the border open. Its economy would be hurt, whether in the integrated auto and other manufacturing sectors, or in petroleum and other vital resource sectors. Thus, both countries would be highly motivated to minimize disruptions and normalize cross-border traffic quickly should another terrorist attack occur.

The most important priority for Canadian diplomacy over the next few years is to reach a new accommodation with the United States because it is only when that relationship is comprehensible, predictable and sound that the country can again assume a meaningful world role.

There is a wide gap in attitudes between the business élite and the Canadian public. Business leaders are closer to U.S. policymakers in their attitudes on a range of issues, from the war in Iraq to missile defense to Kyoto. Unlike the general public, they favour minimalist government and low taxes. They believe we must fall into line with U.S. policies at all costs or risk our economic security. Many would like Canada to become more like the U.S. Although small in number, this group has great capacity, as the record shows, to shape the public debate and influence policmakers. Allowing corporate North America to define our interests as a nation implies, in the end, complete regulatory harmonization with the U.S. and the subordination of our economic, social, cultural, environmental and defence policies to U.S. policies. Business elites and many of our own politicians argue that Canada can and should enter into a relationship with the U.S. which is similar to the relationship between the countries of the European Union (EU). However, it is a mistake to think that harmonization or integration with the U.S. will cause the U.S. to adopt Canadian or Canada-friendly policies. While the EU countries enjoy a relatively balanced relationship, Canada and the U.S. are far from equal partners. The economic and military superpower status of the U.S. makes such balance impossible. Thus, although it is rarely acknowledged by our economic and political elites, the practical implications of closer ties to the U.S. are that Canada will be forced to adopt U.S. policies through immense economic pressure. Everything from health care to immigration to security to control of resources would be affected. How would Canada maintain any sort of distinct identity or sovereignty in such conditions? The simple answer is that it wouldn't. Canada would become an American colony in all but name; it would not become the 51st state, because that would mean political integration on a par with the level of economic integration, which is not a factor in any proposals for deep integration (FTA, NAFTA, etc.).

This is an even more pressing issue at a moment in history when the U.S. is governed by an administration that is repealing civil rights and liberties, pulling money from social programs, disputing the scientific evidence for climate change and increasing pollution, and most disturbing of all, withdrawing from agreements and treaties which have allowed the world to develop an international rule of law. While Canada remains committed to multilateralism, the U.S. has refused to participate in a long list of important international conventions and treaties, including the Kyoto Protocol, the Rome Statute of the International Criminial Court, the land mines and nuclear test ban treaties, and many others. Nor has the U.S. respected the U.N. in launching its war against Iraq, a predatory invasion of the Iraqui people for their oil & gas resources.

Meanwhile, every public opinion poll continues to demonstrate that the overwhelming majority of Canadians don't want to be just like the U.S. Canadians may respect the U.S. ideals of freedom and democracy, enjoy some U.S. movies, T.V., music and authors, and remain committed to the close neighbourly relationship between the people of the two countries, but that doesn't mean that Canadians want to adopt every aspect of U.S. policy or sacrifice our ability to make unique democratic decisions of our own. Most of us still believe that there are important differences between the U.S. and Canada, and that these differences should be preserved. Many Canadians disagree strongly with the policies of the current U.S. administration, and object to implementing similar policies here at home. Unfortunately, our voices are rarely being heard when compared with the abundant propaganda of the "continentalists", and those advocating "deep integration".

"Continentalists" and "deep integration" proponents rarely miss an opportunity to warn that another terrorist attack is inevitable and that an extended border disruption (or series of border disruptions) would be devastating for the Canadian economy unless we protect ourselves by entering into agreements with the US. What is needed, they say, is a comprehensive negotiation where trade-offs across sectors are possible.

"Deep integration" is an economic term. It refers to economic integration that goes well beyond removal of formal barriers to trade and includes various ways of reducing the international burden of differing national regulations, such as mutual recognition and harmonization. "Deep integration" means, in reality, subjugating many of Canada's policies to those of the United States — including trade, immigration, energy, water, our dollar, taxation, defence and the environment — but without any corresponding voice in the governance structure — that is, the U.S. government — where decisions affecting many aspects of Canadian life would be made.

For example, "deep integration" means:

a)     giving the US whatever access to our energy that they want, even if that means dropping our pledge to deal with climate change through the Kyoto agreement.
b)     water exports to the United States;
c)     take on major new defence expenditures (presumably by buying lots of U.S.-made military technology);
d)     give up policies on culture and agriculture, including the Canadian Wheat Board; and so on.

Canadians would not only become almost powerless in addressing their fundamental future economic concerns, but would also lose the capacity to control the social environment and the ability to adjust to change because social policy would also end up being driven by U.S. policies.

What kind of Canada do proponents envisage at the end of the proposed deep integration path? And what guarantees would we have that, no matter what economic or security integration agreements are in place, the Americans wouldn’t still close or disrupt the border? The FTA dispute mechanism was supposed to protect us from U.S. actions against softwood lumber, cattle, and other exports, but has disastrously failed to do so.

Here, then, is the real story behind “deep integration”. Canada’s business class simply cannot compete with its U.S. counterpart. They refuse to pay for the necessary research and development, refuse to train their workers, are constantly begging for more tax cuts, and are notoriously risk-averse. As well, Canadian companies are eager to simply sell out to U.S. corporations. Since 1989, more than 95 percent of foreign investment in Canada has gone to buying up Canadian companies. Head offices are pouring over the border. The sheer lack of entrepreneurial vision is evident in Bay Street’s determination to tie itself to what more and more economists are declaring a declining economic power. The growing consensus is that smart countries and companies are getting in on the game where the growth is: China, India, Brazil, Russia, and South Africa. But not Canadian companies.

One of the reasons: the US is now beginning to lose its technology-based competitive advantage. The countries of western Europe, Japan, Korea, and even China have set ambitious national goals and are building universities, inviting immigration, and have clear objectives regarding industrial development and new technologies.

The United States is the economy and country to which Canada’s business leaders want us to tie our star. But even worse, the Government of Canada and Canada's business class actually believes they can negotiate a good deal with the current U.S. administration and Congress. This is delusional, given the rapid devolution of the U.S. into an imperial theocracy. It’s time for Canadians to look elsewhere for leadership; our economy, not to mention our country, is far too important to leave to the failed imagination of Bay Street CEOs.

Under their interpretation of co-operation, Canada, the U.S. and Mexico would insulate themselves against competition from the rest of the world with a common external tariff, and with an outer security perimeter against external threats. But as fast as they would construct these walls on the outside, they would tear down almost every fence on the inside with an across-the-board harmonization of rules, regulations and laws on everything from who could seek asylum in North America to military operations to pollution and environmental controls. In fact, they would go so far as to give Canadians and Americans absolute freedom to decide where they would work and where they would live.

The Europeans have built an economic and social partnership to address shared problems by creating shared political and administrative institutions. But it would be naïve to believe that similar institutions could be effectively created and made to work genuinely in a Canada-U.S. or a Canada-U.S.-Mexico partnership. The United States, as an imperial superpower, acts on the basis of economic and military power, not shared decision-making, and, given the country's great size, would not consider serious sharing of decisions and power with a much smaller country. The United States is instinctively unilateral in its approach.

If Canada is to pursue "deep integration" with the United States, then logically we should seek political union as well so that Canadians in the different provinces would have some opportunity to influence decisions. But this logical implementation of "deep integration" would also mean the end of Canada as a distinct geopolitical entity and the conversion of our provinces into U.S. states.

Despite accelerated economic integration over the last 15 years, opinion polling reveals a deep and growing divide in attitudes and values between Canadians and Americans. It shows that the vast majority of Canadians do not want to be more like Americans. On the contrary. Nevertheless, a majority of Canadians have come to terms in principle with NAFTA, and a substantial minority favour even closer economic integration. However, most Canadians don’t understand the term economic integration, and support drops sharply the more NAFTA and deep integration initiatives are perceived to impair domestic policy freedom. For the vast majority of Canadians, continued support is contingent on maintaining policy independence and retaining Canada’s unique social character. The confusion around the issue of integration and independence is understandable. The linkages are often subtle and indirect, and it takes time for effects to become apparent. And the mainstream media gatekeepers and pundits have steered away from this issue.

"Continentalists" promote a "strategic bargain," in which Canada and the United States, over time, would move to a customs union with a common made-in-Washington trade policy toward the rest of the world and the free movement not only of goods and services but also of people and capital. (So much for maintaining Canadian ownership of banks, TV networks or transportation systems.) This would also affect foreign policy: If the United States decided to use trade measures to punish China, attack the Europeans or demonize the Cubans, we would have to follow suit.

Deep integration advocates see a customs union as the next stage in the deepening of the continental market. Key features associated with a customs union are the creation of a common external tariff applied to all nations not part of the free trade area, and the establishment of a common trade policy. However, many advocates of a customs union also insert elements of a common market into their definition. A common or single market is seen in the literature as a still deeper stage of economic integration. It would include removing barriers to trade and investment in agricultural, cultural, legal, communications, and financial services. It would include the harmonization of a vast range of regulations and policies (economic, social, environmental, cultural, immigration, etc.) to achieve the free movement of goods, services, capital and labour.

This is an important point. The lesson to recall from the FTA is that what was initially presented as a proposal for a conventionally defined free trade agreement resulted in a comprehensive deep economic integration agreement that went far beyond the border into the very heart of domestic policy-making power. An alleged customs union negotiation would be similarly open-ended, making it hard in advance to fully evaluate its costs. We also know from the FTA experience that much will be surrendered for little gain.

The standard economic case for a customs union is that removing rules of origin (which currently prevent back-door entry of imports from a non-member country into the NAFTA area through a member that has lower tariffs on the those imports) will eliminate costly administrative procedures and thereby reduce transaction costs of doing business. Proponents have built economic models that greatly exaggerate the overall efficiency gains to the economy (2-3% of GDP). Many of us remember the wildly exaggerated estimates of economic benefits of tariff elimination generated by similar models during the FTA debate. Nor do they mention possible costs of removing rules of origin as an incentive to source production within Canada. But the focus on rules of origin is a diversion The far greater cost is that a common trade policy—given the huge difference in power—would mean effectively handing over Canada’s trade policy to U.S. authorities. It would have huge implications for both our domestic institutions and our relations with the rest of the world.

Contrary to proponents’ claims that Canada’s positions and protections in multilateral trade agreements, such as the World Trade Organization (WTO), are very similar to those of the U.S., there are in fact major differences between them, affecting crucial public policy areas. They include public services such as health, education, and other social services which, unlike in the U.S., are not organized on market principles; they include cultural industries, which are subsidized and regulated in direct opposition to free trade principles. Also on the table would be agricultural marketing boards, the Canadian Wheat Board, telecommunications, and banking. The U.S. has long objected to these policies and would definitely target them for elimination. In heavily protected U.S. sectors such as sugar, textiles, beef and tropical fruits, Canada would ironically be pushed to raise its tariffs to U.S. levels. It would mean complying with U.S. trade embargoes on Iran and Cuba and ending Canadian trade preferences with, for example, Commonwealth countries. And it would foreclose future independent policy initiatives. Imagine, for example, under a common trade policy persuading American drug companies and policy-makers to allow the export of cheap generic AIDS drugs to poor countries.

If, like the FTA, a negotiation were to go beyond the traditional scope of a customs union, the potential for ceding regulatory and policy space would grow exponentially. A major Canadian objective would obviously be exemption from U.S. trade protection laws. But the U.S. Congress would insist that this be off-limits and would (as it does now) say that, if Canada wants exclusion from U.S. trade laws, it has merely to adopt U.S.-style laws and practices.

Since the signing of the Free Trade Agreement, Canada's economic life has become deeply integrated into a newly developed North American economy dominated and directed by U.S. corporate and government interests. The results of this integration are now clear. As critics predicted, the free flow of capital without government regulation has resulted in job losses - 276,000 high-paying industrial jobs have been lost - and we are now even more dependent on the American economy as a destination of our exports, and therefore less able to direct our own economy.

Economic growth in the 10-plus years of free trade has been the worst since the 1930s. Following the deregulation imperative of free trade, we have both abandoned the tools of industrial development that brought us the auto industry and deliberately pursued policies that weaken the domestic economy in the interests of trade. By pursuing trade with a low Canadian dollar we have exposed Canadian industry to the most extensive and prolonged sell-off of Canadian assets in our history.

The results of this for ordinary working Canadians have been the longest period of stagnation in standard of living levels in the country's history, a dramatic erosion of social programs and protection for workers, extreme levels of economic insecurity for millions of workers and their families, and a loss of democratic control by citizens over the future of their communities. All of these economic facts can be traced primarily to the FTA and the North American Free Trade Agreement (NAFTA). The nature of those binding and legal agreements prevents from reconsidering our options.

After a decade of rapid integration with the United States and the harmonization of public policy with that country, Canada is experiencing the fastest and most dramatic increases in social and economic inequality in its history. The severe erosion of programs such as UI/EI, social assistance and income redistribution, and the erosion of our progressive tax system, have systematically changed the relationship between individual citizens and their community - because government is a reflection of community. As citizens perceive government as less and less relevant to them, we feel less and less commitment to the collective that is neighbourhood, community and country.

Economic integration with the United States is changing our very definition and conception of culture and therefore our sense of who we are. In the United States, culture is seen as a commodity no different from any other commodity - it is equated with entertainment in the marketplace. Canada's efforts to promote our unique identity and reflect it to ourselves confront increased burdens as the United States watches over any "unfair subsidies" to our so-called "cultural industries." As we become integrated with the most powerful example of consumer society in the world, we face the threat of commodification of our cultural traditions and their gradual assimilation into the American entertainment industry.

When Canada signed the FTA and NAFTA it agreed to do what literally no other country in the world has ever agreed to. It agreed to give up, forever (barring the abrogation of the trade agreements themselves), the legislative and regulatory authority to protect and conserve the country's energy resources for its own needs. In effect, we have completely abandoned that part of our national sovereignty that allowed us to determine our energy policy based on the current and future needs of Canadian consumers - both individual and industrial. It is perhaps the most stunning and dramatic example of the abandonment of the national interest by any government in the history of Canada.

But it is not just oil and gas that have been affected by our free trade relationship with the United States. The free trade imperative is now threatening to force deregulation of electricity as well. Our water is threatened by provisions in NAFTA that define water as a "good" and therefore tradable, opening up the possibility that U.S. water shortages will be met by the diversion of Canadian rivers.

Canada's environment is increasingly threatened by the nearly total integration of the North American economy. Canada's ability to meet the requirements of environmental treaties has already been seriously compromised by a NAFTA case that successfully challenged our attempt to halt the cross-border movement of toxic waste. Since the signing of the free trade agreement the federal government has attempted to pass just two new pieces of environmental legislation. Both failed the free trade test and were, in effect, overturned by the provisions of NAFTA. It is impossible to know how many other pieces of legislation were considered by the government but rejected. The chill effect - declining to pass legislation for fear it will attract a costly NAFTA or WTO challenge - has crippled Canada's ability to pass laws and regulations to protect its own environment.

For decades Canada occupied a unique and often very difficult terrain in the international field. A small country by population standards and dwarfed by the American colossus on its border, Canada nonetheless wielded the influence of a middle power much larger than its size would have suggested. We were once seen by developing countries and other smaller powers as a voice of internationalism and multilateralism. We often championed human rights and took a leading role in the boycott of the Apartheid regime in South Africa. Canada's foreign aid was generous and the Canadian International Development Agency had a reputation for taking a genuine interest in development issues. It was not just an agency promoting Canadian industry and foreign trade. Since the 1960s Canada developed and maintained a reputation for being a nation committed to peacekeeping, indeed defined the modern notion of that international role. The past 13 years of the new free trade relationship with the United States, in which Canada's commitment to free-market policies of economic globalization has increased, have witnessed a fundamental shift in Canada's foreign policy and its peacekeeping tradition. Right now, Canada has soldiers fighting in an undeclared war and the Canadian command has absolutely no say in directing them. They are not peacekeepers; they are not even Canadian soldiers. They are, in effect, American conscripts.

If Canada was to go along the United States on the integration of Canadian forces under the new U.S. Northern Command, or on ballistic missile defense, Canada would squander the respect Canada gained within the international community for its stand on the Iraq war, reinforcing the image of Canada as a mere proxy for the superpower.

Canada's generous foreign aid policy has been replaced by a diminished contribution to developing nations and an extremely aggressive trade policy that mimics that of the United States and is in complete support of the structural adjustment policies of the IMF and the World Bank. CIDA is now a shameless promoter of Canadian industry - including the nuclear industry - and has tarnished its reputation as a development agency. Canada, partly through deliberate policy shifts and partly because it feels it cannot risk offending what is now its almost exclusive trading partner, has become little more than an echo of American foreign policy interests.

In the context of the new imperatives of the economic globalization, both sovereignty and democracy have suffered. Economic globalization has demanded of nations that they give up those aspects of sovereignty that allow for democracy. A nation's ability to regulate and guide economic development and the actions of capital are key to a nation's well-being in a free market system. The signing of the FTA and NAFTA have fundamentally altered Canada's sovereignty and its democracy. In order for Canada to create a "level playing field" with the United States it has systematically gutted its social programs, its progressive tax system, its commitment to industrial development, and its laws and regulations balancing the power of employees and employers.

In order to accomplish this free trade objective, the Canadian and provincial governments and other political institutions have gone to great lengths to lower Canadians' expectations of democratic governance. Using scare tactics regarding the large deficits of the early 1990s, the deliberate misrepresentation of government employees, huge cuts to health and education budgets, and a relentless campaign to promote tax cuts, governments at all levels have convinced many Canadians that their values can no longer be reflected in government policy. It is not an exaggeration to suggest that as a result of this campaign, and the cuts to government services, democracy in Canada is in crisis. Unprecedented levels of cynicism and anger toward government and political parties have led to the lowest voter turn-outs in the country's history.

The denigration of Canadian political institutions and democracy has been accompanied by a growing and alarming disregard for civil liberties and human rights in this country. Nowhere is the link between globalization and trade and the downsizing of democracy more obvious. The rapid Americanization of Canada's institutions and political culture demands both long-term and immediate action. Only by giving Canadians a genuine opportunity to engage in a dialogue about their country and its future direction can this alarming erosion of democratic participation and the resulting decline of the nation be halted and eventually reversed.

The aftermath of September 11 taught us a great deal about how deeper economic integration has heightened our vulnerability. It reminded us that the Bush administration will not hesitate to unilaterally rewrite the terms and conditions of entry into its market, regardless of NAFTA; it will not hesitate to link our compliance with its security demands to access to the United States market. It reminded us that we have a border and that it matters. It reminded us that we are different and that our different laws and institutions are under siege. People are beginning to connect integration and loss of independence: NAFTA meant deeper economic integration and increased vulnerability which, with September 11, meant the Smart Border Accord, which in turn meant pressure for still deeper integration.

To want to chart a different course does not imply a better course. This is not about moral superiority, or being anti-American. It is simply that we have different values and interests. We want to be able to reaffirm and preserve our founding myths, our historical experiences, and the values that have shaped and defined us. We want our laws and institutions to reflect our unique social character and our successful blend of individual and collective rights. We want to chart a course that affirms our highly original political experiment: our complex (tri-national and multicultural) federation with its long and extraordinary history of resolving tensions and conflicts peacefully. We also want, as we have in the past, to make our mark in the world: to help strengthen the fabric of international law, to advance world peace, social justice, democracy, and the environmental sustainability of the planet.