EU Membership for Canada is a Terrible Idea

12 03 2026

The idea of Canada joining the European Union has moved, rather quickly, from pub talk to serious discussion. It is now being entertained in mainstream media coverage, in polling, and by a small but noticeable set of commentators. In March 2025, the polling firm Abacus found 46 per cent of Canadians supporting EU membership, with 29 per cent opposed. By March 2026, Abacus put support at 48 per cent and opposition at 28 per cent. Support for deeper ties with Europe is even broader. This is no longer a fringe thought experiment. It is a bad idea with enough elite and public traction to require a direct rebuttal.

For the record, I’ll say that I voted against Brexit. Being part of the EU makes sense for the UK, because it is in Europe. But Canada isn’t in Europe, even if it likes to call itself “the most European of non-European countries.”

My first objection is cultural and regulatory. Canadians flatter themselves when they imagine that they and “Europe” form a single coherent values bloc. Europe is not one country, but even as a family resemblance category it is less like Canada than many Canadians assume. The EU is not the UK with croissants. Regulation is not just technocracy; it is values written into administrative code. Labour law, speech regulation, privacy law, agricultural standards, energy policy (the gap between how the median European and the median Canadian think about global warming is huge), church-state settlements (some EU countries give churches the right to levy taxes on all of their nominal members), and approaches to migration all reflect different social bargains. Canada is, by self-description and by public opinion, unusually attached to multiculturalism as a national good. Pew’s recent cross-national work found Canadians among the most likely in the world to cite their multicultural society as a source of national pride, while earlier Pew work showed much more ambivalence in parts of Europe about rising diversity.  It is true that some of the EU countries on the Atlantic seaboard have sizeable non-white populations and have given their children of post-imperial migrants citizenship. That’s not true of all EU countries. Many continued to define nationality in blood and soil terms. Until recently, the descendants of Turkish guest workers in Germany could not become German citizens because they weren’t of German ethnicity, even though ethnic Germans from Kazakhstan were welcomed despite having only distant German ancestry. Even Denmark, a relatively liberal country, limits the proportion of residents in a given neighbourhood who can be of a non-Western ethnicity to a certain percentage (originally 50%, now 30%).  Consider this media report from 2021 (not 1921).

“This week, the Danish Minister of the Interior and Housing announced plans to introduce a requirement to reduce the share of persons of “non-Western background” in designated areas to a maximum of 30 percent within ten years…”

Such a policy would be unthinkable in North America. A country can cooperate closely with the EU without pretending that full regulatory harmonisation across the Atlantic would be politically frictionless. In fact, I think that the many of the NDP-leaning Canadians who like the concept of joining the EU would be astonished if they learnt about some of the policies of the countries they admire, from a distance.  

My main objection, however, is economic. It is not that Europe does not matter. It plainly does. The EU is Canada’s second-largest trading partner, and bilateral trade has grown significantly under CETA. But Canada’s economic problem is not a lack of legal imagination. It is geography. The relevant framework here is the gravity model of trade. In its simplest form, countries trade more when they are economically large and geographically close, and trade less when they are small or distant. Distance is not just miles on a map. It is shipping time, logistics complexity, regulatory frictions, supply-chain synchronisation problems, time zones, and all the little coordination costs that accumulate into real money. That is why gravity models remain the workhorse of modern trade analysis.

Once one sees the problem through that lens, the Canada-EU fantasy becomes much less attractive. Canada can certainly diversify at the margin toward Europe, and it should. But diversification at the margin is not the same thing as reorienting the core of a continental economy. In 2025, 71.7 per cent of Canada’s merchandise exports still went to the United States. The EU, by contrast, accounted for 8 per cent of Canada’s trade in goods in 2023. Reuters reported today that 68 per cent of Canadian exports in January 2026 still went south. Those numbers are not artefacts of bad policy. They are what gravity predicts when a mid-sized economy sits beside the largest consumer market in the world and has spent decades building integrated cross-border production systems in autos, energy, food, and manufacturing.

Very often, the most direct driving route between major Canadian cities lies through the US. (The opposite is true for some driving routes between US cities such as Detroit and Buffalo). The border between the two countries is arbitrary and runs through natural geographical and, in some cases, cultural regions. For instance, the settlement by English-speaking New Englanders spilled over the northern border into what is now the Eastern Townships of Quebec. Canadians frequently interact with the people in the nearby American communities, less with people in distant Canadian communities. All of that matters.

The reality of gravity models and the tyranny of distance has two implications. First, tariff-free or low-friction access to the US market is not just one equally attractive option among many. It is the central organising fact of the Canadian economy. Second, replacing continental integration with transatlantic integration would be highly trade-distortionary. It would push firms toward more distant partners not because those partners are more efficient, but because politics had artificially made nearer trade less secure. Economists normally describe that as trade diversion rather than trade creation. Yes, CETA has increased Canada-EU trade. Yes, Europe can absorb more Canadian goods and capital than it does now. But the relevant question is not whether Europe matters. It is whether a rational Canadian government should even appear to privilege barrier-free access to a market thousands of miles away over barrier-free access to the market next door. The answer, on elementary gravity grounds, is “hell no”.

Canadian academics should say this more clearly than they have. Canada should deepen CETA, expand non-US trade where it is commercially sensible, and reduce internal barriers at home. It should also fight, hard, to preserve as much tariff-free access to the United States as it can. But joining the European Union would yoke Canada to a regulatory and mobility regime that fits imperfectly while pulling attention away from the overwhelming economic fact of Canadian life: prosperity in Canada depends, and will continue to depend, on managing our continental relationship intelligently. Before this idea hardens into conventional wisdom, academics should say so plainly. I was saddened to see in this CBC article that some Canadian academics seem to be supportive of this crazy concept.

P.S. Almost all of the objections to Canadian membership of the EU apply with almost equal force to the idea of a CANZUK customs union linking Canada, Australia, New Zealand, and the UK.


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Canadian Nationalism as a Meta-Coalition of Distributional Coalitions

11 03 2026

Since November 2024, Canada has seen a very visible revival of anti-American nationalism. Pride in being Canadian rose sharply as tariff threats and bellicose rhetoric from the United States pushed many voters and consumers into a “Buy Canadian” mood. I have never liked this sort of nationalism, and I do not like its latest incarnation either. The reason is straightforward. Nationalism is rarely just sentiment. It is usually the political language through which distributional coalitions demand protection, preference, subsidy, exclusion, and symbolic deference. Patriotism, in the older and more honourable sense, is something else. A soldier accepting modest pay for dangerous service (WWI soldiers earned less per day than they could have got in civilian life), or an athlete giving time and effort for national representation (many Olympic athletes are unpaid), is contributing to a common enterprise. People who voluntarily donate to special charities set up to pay off the national debt also fall within that definition of patriotism. That sort of patriotism is a close cousin of the civic-minded person who donates lots of money to local charities in their will. Nationalism, by contrast, all too often becomes the banner under which cartels and other organized producer groups demand that everyone else pay. Economic nationalism is bad when it is undertaken by the representatives of capital. It’s bad when it is undertaken by the representatives of organized labour, as when a faction within the Canadian branch of a pan-North American “international union” calls for the formation of a distinctly Canadian union. It’s also bad when it is undertaken by artists and intellectuals, as when there is a campaign to make replace US novels like Kill a Mockingbird with Canadian ones in the high school reading curriculum of a Canadian province.

The best framework for understanding this comes from Mancur Olson, the American economist and social theorist best known for his work on collective action and the political economy of organized interests. Olson first became famous for The Logic of Collective Action in 1965, but the key work here is his 1982 book The Rise and Decline of Nations. Its central insight was that stable societies with long histories of freedom of association accumulate what he called distributional coalitions: organized groups small enough to overcome collective action problems and cohesive enough to lobby for advantages at the expense of the larger economy. These are not merely “interest groups” in the harmless civics-textbook sense. They are tariffs, licensing cartels, restrictive work rules, producer boards, regulatory choke points, occupational monopolies, market-sharing devices, and every other arrangement by which a narrow coalition can secure a larger slice without enlarging the pie. The longer a country has existed and has had freedom of association, the more of these growth-destroying distributional coalitions it has. (The UK is a classic case of that and one discussed at length in Olson’s book). Olson’s claim was not that every association is malign, but that societies thick with such coalitions become rigid, slow-moving, and resistant to adaptation. That was part of his explanation for British stagnation: too many entrenched organizations, too many veto points, too much protection of incumbents, too little flexibility. And he used harsher cases too. The Indian caste system and South African apartheid interested him not only because they were morally ugly, though they were, but because they institutionalized barriers, privileges, exclusions, and labour-market rigidities on a colossal scale. In Olson’s framework, apartheid was not just a racist order; it was also an extreme machinery of distributional protection: the concept of the “white race” was used in South Africa as the basis of a sort of meta-coalition of interest groups who enriched themselves in ways that actually reduced total GDP.

Albert Breton had already produced similar insight before Olson published that 1982 book. Breton was a Canadian economist associated with public choice and the economic analysis of political institutions. His key essay here is “The Economics of Nationalism,” published in the Journal of Political Economy in 1964.

Here is a key passage from the first page of his paper:

It is the object of this paper, first, to show that societies in which political nationalism exists in vest resources in nationality or ethnicity; second, that these investments are made because they are profitable; and third, that they are not profitable for everyone in a society but only for specific and identifiable groups. Taken together, the second and third points mean that investments in nationality are not so much income-creating as income-redistributing.

 Breton treated nationality as something with instrumental political uses: a way of organizing claims, creating barriers to entry, tilting the competitive playing field, justify corporate welfare, allocating benefits, and defining the boundary between those entitled to favoured treatment and those who are not. That is why Breton is so useful. He allows one to see nationalism not simply as a spontaneous expression of collective feeling, but as a political technology for constructing an in-group within which transfers, protections, controls, and privileges can be justified. Put in somewhat stark terms, Breton says that a nation is simply a coalition of individuals and groups of individuals who have decided to call themselves a nation so they can command resources. Olson supplied the broader theory of how organized minorities immobilize economies and reduce GDP; Breton, writing a bit earlier, supplied a way of seeing nationality itself as one of the most powerful organizing devices such minorities can deploy in ways that enrich individuals (particularly the most strident nationalists) while making the world as a whole poorer. Put the two together and nationalism looks less like a mysterious force of history and more like a meta-coalition: a coalition of coalitions, held together by a shared claim that the protected insiders are “the nation” and the political system ought to protect the interests of producers who are part of the nation. On that reading, Canadian nationalism and U.S. nationalism can function as a passport-based legitimating ideology for domestic producer interests, while Quebec or French-Canadian nationalism can function as an ethnolinguistic legitimating ideology for a differently bounded but structurally similar set of producer interests.

That is why the recent surge of economic nationalism in Canada should worry anyone who cares about prosperity. (Quebec economic nationalism, which seeks to shield producers in Quebec from competition from both U.S. firms and firms in English-speaking Canada, also appears to have surged). Once nationalism is politically activated, even if it is in response to someone else’s nationalism, the queue of suitors forms immediately: firms wanting procurement preference, individual workers who want foreign workers to be excluded from their little corner of the labour market (e.g., the Canadian academics who argue that there should be a crackdown on the hiring American citizens by universities), incumbent firms (the chartered banks with lousy customer service) wanting foreign rivals kept out, cultural and tech interests wanting “sovereignty” policies, and ministers wanting to dress industrial favouritism up as nation-building. One can already hear the old corporate welfare music returning: not healthy competition, but shelter; not openness, but strategic insulation; not boosting hourly productivity and TFP, but a patriotic vocabulary for old-fashioned rent-seeking. The danger is not merely a few wasteful programs. It is that a broad Canadian nationalist distributional coalition will use the current mood to entrench a whole latticework of costly procurement rules, local-preference schemes, technology nationalism, and retaliatory symbolism that lowers productivity, reduces GDP, and makes preservation of CUSMA more difficult. The demands the US is making on Canada in CUSMA negotiation are pretty reasonable and include getting rid of dairy supply management, something that should be done anyway.

In its defence, Canadian nationalism does at least have one redeeming feature: it can undercut Quebec nationalism and the narrower, and thus more prosperity destroying, producer coalitions that shelter beneath that flag. But one should not confuse the displacement of a provincial rent-seeking coalition by a national one with a victory for economic openness and rationality. It may simply be a cartel merger on a larger territorial scale. Needless to say, U.S. economic nationalism, or even the movement for a tariff-ringed Fortress North America (a sort of economic nationalism for the nation of North America) is also prosperity-destroying, albeit less so simply because the units are larger and more natural. For the record, I’ll note here that I was opposed to Brexit: I’m aware that the EU has some economic nationalist tendencies that have resulted in external tariffs, but the net prosperity-destroying effect of European nationalism is less than that of nation-state nationalisms, such as the drive to take the UK out of the EU and then impose protectionist restrictions on, say, French cheese exports to the UK.   


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17 11 2025

When Canadian Prime Minister Mark Carney framed his new infrastructure and resource agenda as a “nation-building” project, he tapped into an old Canadian ambition: escape velocity from the gravitational pull of the U.S. market. The motivation for this sudden interest in trade diversification is Donald Trump’s stated intention to use tariffs as leverage to force Canada to become the fifty-first state. That threat has sharpened Ottawa’s incentive to diversify exports in a way that successive Canadian governments, dating back at least to the Ottawa Economic Conference of 1931, have aspired to but consistently failed to achieve.

Image source: 2016 presentation by Lawrence Schembri of the Bank of Canada to the AIMS think tank in Halifax.

This historic pattern has been remarkably stable. The history of Canada’s efforts to divert trade away from the United States is a boulevard of broken dreams. Whether Canada pursued Commonwealth preferences (the sentimental favourite of the political right in Canada), Pierre Trudeau’s “Third Option” in the 1970s (which envisioned closer trade ties with the social-democratic countries of the EEC), the Asia pivot of the 1990s (which involve Team Canada trade missions in which a plane load of politicians and businessmen flew on a glorified sales mission), the structural fact remained: the U.S. absorbed the overwhelming majority of Canadian exports. Geography, cultural similarity, scale, integrated supply chains, and risk-minimizing behaviour by firms kept the share stubbornly high. The Team Canada trade missions of the late 1990s appear to have had nearly zero impact on Canada’s international trade, as academic researchers have statistically demonstrated. The relative importance of Asian export markets to Canada did increase after 2000, that appears to have been driven entirely by economic growth in Asia rather than Canadian government policy.

The question right now is whether the latest tranche of so-called fast-tracked projects, which involve such commodities as so-called critical minerals, LNG, graphite, and electrons flowing down wires, can meaningfully reduce Canada’s degree of export dependence on the United States. The real question is not whether these projects are “nation-building” in an abstract national-identity sense, but whether they actually shift the geography of Canadian exports. On that metric, only one of these projects really matters, for reasons I will explain below.

I decided to invest a bit of time in trying to figure out which of the newly announced projects is likely to do the most to change the overall headline figure. So I looked at some of the documents related to four projects with clear export potential—Northcliff Resource’s  (TSX:NCF)  Sisson mine (tungsten/molybdenum), Crawford (nickel), Ksi Lisims (LNG), and NMG Phase 2 (graphite) and then tried to estimate how many dollars of exports each of them would likely generate in 2030 and 2035, if all of the plans come to fruition without delays. I know that’s a highly charitable assumption, given we are talking about Canada. For fun, I also tried to estimate how many full-time jobs each project would create since there is a lot of concern in Canada right now about the country’s high unemployment rate, the outflow of talent to the US, and falling fertility rates.

ProjectEstimate of annual exports (US$)Exports to USExports to RoWShare of project sales that are exportsShare of exports going to USApprox. FTE operations (2030 & 2035)
Sisson Mine (NB – tungsten/moly)$0.31 bn190m120m90%60%300 FTE
Crawford Nickel Ontario$560m$340m$220m70%60%1,000 FTE works in the greater Timmins area
Ksi Lisims LNG (BC)$6.86 b$0 bn$6.86 b100%0%700 FTE (operations)
NMG Phase-2 – Matawinie + Bécancour (QC)180m110m70m85%60%350 FTE (mine + battery plant)
Iqaluit hydro (NU)$0 (no exports)000%–20 FTE, likely seasonal
North Coast Transmission Line (BC)$0 (no direct commodity exports)000%–order of 100–150 FTE (grid ops & maintenance)

I could show you my rough work, but I estimate the total annual export value in 2035 or US$7.9billion or C$10.3billion. Of these exports, I estimate US$7.3 billion or C$9.5billion, will go to countries other than the US. As well, it seems that for most of these projects, with the obvious exception of the Iqaluit summertime hydroelectric project, virtually none of the commodities produced will be for the domestic Canadian market.

The arithmetic is unambiguous: roughly 87% of incremental export value from Thursday’s announcement is expected to come from just one of the new projects announced by Carney, that’s the LNG project. The LNG from this facility will overwhelmingly go to Asia, where energy is much more expensive than in North America and there is a desperate desire to stop using Russian energy. The export revenue and export diversification potential of the other projects is pocket change. The critical minerals and processed graphite are supposed to feed into the North American EV supply chain. (During the Biden era, Canada hoped that it would be part of emerging North American value chain. That’s why it put massive tariffs on Chinese EVs. The vision of the future that animated the Canadian government was of Canadians driving around in EV Chevrolets and Fords that were manufactured in the Great Lakes region of North America).

How Much Will Any of This Contribute to Diversification?

If it is built on time and on scale, the LNG project could have small but positive impact on the variable that the Carney government claims it wants to move downwards, the percentage of Canadian exports that go to the US. In 2023, Canada’s total exports of goods and services were about 600 billion USD. Ksi Lisims is designed for 12 mtpa of LNG, supplied by roughly 1.7–2.0 bcf/d of gas, with first shiploads leaving Canada in late 2029.  In 2030, it will start earning foreign exchange for Canada. Now if we assume, for the sake of simplicity, that the price of a bcf of LNG will be the same in 2030 as it is today and that Canada’s overall exports will from between now and 2030 will increase at the historically expected pace, a fully operational Ksi Lisims LNG facility could account for roughly 0.7–0.8% of the value Canada’s total exports in the calendar year 2030. That’s not nothing.

When I look at the few concrete steps the Carney government has taken to diversify Canada’s trade away from the US, I’m convinced they are mostly symbolic. In that sense, they are strikingly similar to the Global Britain rhetoric we heard in the UK for a few years after Brexit. The UK spoke about striking ambitious trade deals with distant countries but was unwilling to do much in that area, in large part because of the domestic political costs of some of the trade deals proposed. I’m also concerned that policymakers are allocating an increasingly scarce resource, attention, to issue that have no export potential. The fact that a really important LNG project sits on the same list as some tiny projects suggests that the list-makers aren’t prioritizing.


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A History-Informed Defence of the Proposed CFL Rule Changes

27 09 2025

Despite common ancestry in English rugby football, Canadian football has long stood apart from its American cousin. The Canadian Football League (CFL) plays on a field that is 110 yards long, with two 20-yard end zones, and 65 yards wide, compared to the NFL’s 100-yard field with 10-yard end zones and a width of 53⅓ yards. Bigger country, bigger football field, you might say. These differences at the pro level exist alongside three downs instead of four, and they cascade down into university and high school play as well.

English: The second Harvard-McGill football game, played under the rugby rules. The Harvard players are on the left (in white), and the McGill players on the right. They flank the game officials.
Date
Taken on 15 May 1874
Source
From the book “Football – The American Intercollegiate Game”, written by Parke H. Davis in 1911 and no longer in copyright

Under Commissioner Stewart Johnston, a Queen’s University graduate who took office in April 2025, the CFL has proposed and begun to phase in a package of changes that will move aspects of the game toward NFL norms. In 2027, the league will move the goal posts to the end line, shorten the field from 110 to 100 yards, and reducing end zones from 20 to 15 yards. These details were announced by the league and summarized in national coverage.

D’Arcy Norman from Calgary, Canada, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

Fan reaction has been mixed. One organized response is a petition by CFL fans calling for a two-week blackout to delay the implementation of the changes, on the grounds that they erode the distinctive character of Canadian football. The petition and the surrounding discussion make plain that identity and tradition matter in sport, and that any shift toward alignment with the American game will be scrutinized closely by the league’s core audience. Today, the Globe and Mail, Canada’s national paper of record, denounced the pronounced rule changes in nationalistic, quasi-religious terms as breaking a “covenant”. That piece in the Globe prompted me to write this blog post.

I strongly support the proposed convergence of rules. The CFL commissioner is doing the right think.  Harmonization reduces transaction costs for broadcasters, equipment suppliers, analytics firms (think of Moneyball but in age of AI), and sponsors who operate across the Canada–United States market. Players benefit from fewer adjustment frictions when moving between leagues or training environments. On a broader level, harmonization deepens the interconnection between Canadian and United States football economies in such areas as media rights, merchandising, talent mobility, and joint ventures in youth development, and it thereby enhances bilateral returns from cross-border synergies. These are exactly the sorts of effects one expects when regulatory regimes become more compatible.

The economists’ gravity model of trade helps explain why this logic travels beyond sport. The model holds that trade between two economies rises with their economic size and falls with distance, where distance includes not only geography but also regulatory difference. Canada trades far more with the United States than with distant partners because the United States is both very large and very close in every relevant sense, including legal and regulatory familiarity. A contemporary illustration of why gravity models matter in thinking about regulation is the United Kingdom’s experience after Brexit. The Brexiteers wanted UK rules to diverge from European ones because divergence felt good, at least for them. However, they should have looked at a map before deciding whether regulatory divergence from Europe is the right policy– fact is, the UK is in Europe. Even small increases in regulatory distance from the European Union created non-tariff barriers, compliance costs, and uncertainty that weighed on trade, despite the minimal geographic distance. The lesson is straightforward. When regulatory distance grows, exchange tends to fall, even where countries sit side by side. The UK should, almost always, harmonize regulations with the EU, unless there is a really compelling reason for divergence. Similarly, Canada should, almost always, harmonize regulations with the US, unless there is a really compelling reason for divergence.

History offers a practical reminder of what happens when standards diverge from infrastructure. During the CFL’s United States expansion in the mid-1990s, several American venues struggled to accommodate a full Canadian field. In Memphis, for example, attempts to fit the larger geometry into the Liberty Bowl produced irregular, truncated end zones that were reported to be as shallow as seven to nine yards at certain points, an awkward solution that undercut the on-field spectacle. I distinctly recall that being discussed at the time, although until today I had forgotten about the problems involved in squeezing a CFL playing field into a US stadium. Lack of rule harmonization was not the main reason CFL expansion into the US failed, but it was a factor.

None of this is an argument for indiscriminate alignment in every last area of life. There remain moral, cultural, and constitutional domains where distinct Canadian standards are appropriate just as there is a case for the UK retaining Imperial units of measurement in a few spheres of life that aren’t that important to visting Europeans. Nobody wants Canada to start using the electric chair because the US does. I kinda like that my local fruit and veg trader here in England can now sell in pounds of weight as well as pounds of money, although I would trade that for the right to live in the south of France near the Med. Nor would I deny that there is some value in trade diversification efforts: Canada has periodically explored trade diversification strategies, from the Third Option in the 1970s to more recent efforts. However, the structural forces described by the gravity model will keep the United States as Canada’s principal economic partner for the foreseeable future. In that context, targeted harmonization of rules is less a surrender of sovereignty than a way to sustain it.

If you don’t want Canada to become the fifty-first state, you need to make Canada as rich as possible. The best route to preserving meaningful independence is a strong economy, and building such strength involves deeper trade with the United States and regulatory compatibility that enables it. To have a strong country, army, navy and so forth, you need a rich economy to act as its tax base. To get to that rich economy, you sometimes need to adopt rules and institutions from the hegemonic power. Paradoxically, building a richer and more sovereign Canada involves adopting US rules.


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Some Thoughts On Trump, Tariffs, and the Canadian Constitution

4 02 2025

I’m feeling a little bit guilty, albeit only a little bit. Canada is in a really difficult situation right now thanks to Trump’s plan to impose 25% tariffs on its exports to the US. I think that if I had been more proactive back in 2015-2017, Canada might be in slightly stronger bargaining position today. That sounds very arrogant and conceited but please hear me out.

Here’s the background as to why I feel a bit guilty. I’m a dual citizen of Canada and the UK and I feel a strong sense of loyalty to both countries. I feel a greater sense of debt to Canada because that’s where I grew up. My formative experiences there included a tremendous sense of material abundance that just wouldn’t be paralleled here in the UK. I doubt that I would have had the luxury of becoming an academic had I grown up in Britian. Canada invested in me (I’m thinking of various scholarships funded by private donors and taxpayers, research fellowships, nice juicy research contracts, etc) so I feel a sense that I should pay it back.

In 2015, I had the opportunity to do precisely that. I was the star expert witness in a Canadian constitutional court case that had the potential to reverse a historical miscarriage of justice in a way that would resulted in the dismantling of internal trade barriers and a boost to Canada’s economic output. Had my side in the court case prevailed, I think that Canada would today have interprovincial free trade, a higher standard of living, and greater bargaining power in the face of Donald Trump’s threats.  Many observers, including the OECD and the IMF have said that Canada’s internal trade barriers are dragging down productivity and living standards. Getting rid of them could boost GDP per capita by up to 4%.

Here is a summary of the court case and my role in it. R v Comeau was a fascinating case about beer, borders, and the Canadian Constitution. It started when when Gerard Comeau, a New Brunswick resident, was stopped by police immediately after crossing an interprovincial border. He was charged with buying cheap beer and liquor in Quebec and bringing it home, thus violating a New Brunswick statute that severely limits on how much alcohol residents can import from other Canadian provinces. Comeau’s lawyers, who were supported by a non-profit foundation, argued that this violated section 121 of the Constitution Act, 1867, which says that goods should be “admitted free” across provincial lines. I testified about the historical context and motivations for section 121 in the summer of 2015. (You can read my expert witness report here). The case was widely covered in the Canadian media and, because it coincided with a federal general election, was commented on by all but one of the party leaders. (see media coverage here, here, and here). In 2016, a trial judge delivered his verdict and agreed with our side, ruling that provincial trade barriers were unconstitutional. However, the Supreme Court of Canada overturned this decision in April 2018, ruling that provinces have the right to regulate goods crossing their borders, as long as the primary purpose isn’t to block trade.

At the heart of the case were competing views of section 121. Comeau’s legal team, and I, argued for a broad interpretation—that the section bans any provincial law that impedes free trade between provinces. That’s the interpretation of the section that is most consistent with the values of the free trading Victorian lawyers and politicians who created it. (See analysis of my arguments here, here, and here). On the other hand, the New Brunswick government and Canada’s top court leaned on a narrower reading, arguing that section 121 only prohibits outright tariffs on interprovincial trade, not non-tariff trade restrictions, such as sending the police out to arrest people who import beer from the next province.

You can read about my involvement in the case in this academic article and in a McGill-Queen’s University Press book that won a number of awards.

My involvement in the court case was primarily at the initial trial stage, when it was being litigated in New Brunswick. I flew to New Brunswick from Paris where I was then living with my family (LONG STORY), testified for several days, came back to Europe, and was then gratified to read the news that judge had found my interpretation of the Canadian constitution to be persuasive. Having discharged my contractual obligations, I then basically stopped doing any work related to the case, aside from penning a short opinion piece in the Globe and Mail newspaper. Perhaps I should have invested more time in the trying to create awareness in Canada in the constitutional issues at stake, for instance by writing more about it or speaking about in the Canadian media. However, I had other fish to fry. My employer, a UK university, wouldn’t have been that pleased had a spent a significant amount of time on doing media work that wasn’t connected to a REF Impact Case. (For various bureaucratic reasons, my expert witness work couldn’t be classified as Impact work for the purposes of the REF. The REF is the system by which research performance, including societal impact, is measured and incentivized in UK universities). So, I didn’t do much with respect to the Comeau case after the week I spend in New Brunswick. In invested my research time in other projects, including the production of articles to be published in journals in the famous FT50 journal list. Basically I did the rational thing and focused my research time on the activities that are rewarded the most in the UK academic labour market. I said above that I feel only a little bit guilty, not really guilty. That’s because it was necessary for me to focus on my own career. I’m now working on other REF Impact Case projects that are unrelated to Canada and which focus on disseminating knowledge to non-academic research stakeholders here in the UK.

I suspect that if I had done more to educate the Canadian public about the original intent for section 121 of the Canadian constitution, the Canadian Supreme Court might have ruled differently. Judges are socially situated and they can’t ignore the prevailing climate of thought in their society as they interpret the evidence presented in court. Its ruling, which was delivered unanimously and was apparently written by the Chief Justice, quoted extensively from my expert witness report but ultimately sided against my interpretation. Had the Supreme Court sided with me, the interprovincial trade barriers would have been declared unconstitutional—after further litigation and transition costs as inefficient producers went out of business, GDP in per capita would almost certainly have been higher. And Canada would have been in a stronger position to deal with Trump.

The US, Canada’s adversary in the current struggle over tariffs, does not hobble itself with internal trade barriers: over the last two centuries, state politicians have tried to create internally protectionist barriers (it’s a perennial temptation) but because their Supreme Court has consistently upheld the original intent behind the Commerce Clause, the unity of the American internal market has been largely maintained.  In the U.S., free trade between states is guaranteed by the Commerce Clause or Article I, Section 8 of the Constitution. It gives Congress the power “to regulate commerce… among the several States,” which has been interpreted to prevent individual states from restricting trade or discriminating against out-of-state goods and businesses. Over the years, the Supreme Court has reinforced this principle through the “Dormant Commerce Clause” doctrine, which basically means that even when Congress isn’t actively legislating on interstate trade, states still can’t pass laws that unfairly burden commerce between them. This clause has had a huge economic and social impact—it helped create a truly national market, allowing businesses to grow beyond state borders and preventing economic fragmentation like we see in Canada with cases like R v Comeau. So, while provinces in Canada still fight over interprovincial trade barriers, the U.S. system—thanks to the Commerce Clause—has largely prevented that kind of economic balkanization.

In recent weeks, the threat of US tariffs has caused Canadians to discuss the subject of internal free trade with renewed vigour. There has been a lot of talk about eliminating these trade barriers through the expansion of existing interprovincial compacts (see here, here, here, and here), such as the New West Partnership. In my view, these initiatives are nice but their potential benefits are small relative to those that would come from a clear reversal of the position the SCC adopted in interpreting s. 121 in the Gold Seal case.

Don’t get me wrong. There are many other things that Canada had done to put itself in a weak bargaining position. For instance, it failed to follow up the splendid Canada-EU trade agreement it negotiated by building the east-west infrastructure (what I called Laurentian infrastructure in a nod to the Laurentian thesis associated with the late Donald Creighton) that would have allowed it to really take advantage of this paper agreement. I’m thinking in particular of the unbuilt pipelines to bring natural gas to Canada’s Atlantic ports, where it could have been liquified and sent to Europe. However, failure to bring about internal free trade has made a bad situation worse.

Perhaps a future Canadian government will have a policy of only appointing Supreme Court justices who agree with the view that Section 121 should be interpreted broadly rather than narrowly.   


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Some Thoughts On Trump and Annexationism

13 12 2024

In late 2024, President-elect Donald Trump reignited diplomatic tensions with Canada by making provocative remarks about the country’s sovereignty. Trump referred to Canadian Prime Minister Justin Trudeau as the “Governor of the State of Canada,” adding with a smirk that Canada might as well join the United States if it wished to avoid the heavy tariffs on its exports. Trump took to his preferred platform, Truth Social, to repeat these sentiments. Over the following days, Trump’s posts escalated in tone, suggesting that Canada’s economy relied heavily on U.S. trade and that tariffs were inevitable unless it reconsidered its status. By mid-December, Trump’s comments had sparked widespread media attention, with some analysts unsure whether his statements were intended as serious policy proposals or simply political theatre or were simply a joke.

Here is some media coverage from India of the issue.

My educated guess is that they may be serious. There are certainly people around Trump who are concerned about the “browning of America” and who have, in the past, mused that incorporating Canadian provinces as states of the union would raise the Caucasian share of the US population (sorry I can’t find the link but they did say that). The same people seem to be fiercely opposed to Puerto Rican statehood). I don’t think that Trump is a racist ideologue, but I do think that he is interested in building a legacy and there would be no greater legacy than permanently expanding the United States. Changing the map of your country is a way to get your face on Mount Rushmore. That’s even better than being happy about Trump Tower becoming the tallest building in New York.  When I first heard the slogan “Make America Great Again” I noted that it didn’t specify when exactly American greatness had peaked. Like many, I had assumed that the imagined Good Old Days in this slogan were either some nostalgic version of the 1950s or the 1980s, a period when Trump was in his prime. But it could be the vaguely defined period of greatness underpinning the slogan is the nineteenth century, the period of manifest destiny.

Perhaps I am personally biased in thinking that Trump is serious about offering statehood to some or part of Canada because my PhD thesis looked at the 1860s, a period when that option was very much on the table. Maybe my background is skewing my analysis of what is going on right now.

In any event, Canadian popular reaction to Trump’s remarks was swift and defiant. Prominent politicians across the Canadian political spectrum rejected any notion of annexation, although I did notice the Premier of Ontario took the precaution of placing a US flag next to a Canadian and provincial one during a press conference. Polling data showed that Canadians overwhelmingly opposed closer political integration with the United States, with support for national sovereignty apparently at record highs. Only 1 in 8 Canadians are open to the idea of Canada, or their Canadian province, joining the United States. Even in the more politically conservative Prairie provinces, that number isn’t much higher than 20%.

Trump’s 2024 comments about Canada echoed his earlier proposal in 2019 that the United States should acquire Greenland, then an autonomous territory of Denmark. In August 2019, news broke that Trump had floated the idea during meetings with aides, reportedly framing the acquisition as a strategic move to gain access to Greenland’s natural resources and enhance the U.S. military presence in the Arctic. Trump later confirmed the proposal on Twitter, which is now called X. The proposal drew immediate backlash from Denmark, with Prime Minister Mette Frederiksen describing it as “absurd” and anachronistic. Her view was that while Tsarist Russia might once have been able to sell Alaska to the US, this isn’t 1867 anymore and we don’t do things that way. Trump retaliated by cancelling a state visit to Denmark, claiming Frederiksen’s response was disrespectful.

The idea of the United States annexing Canada has deep roots. During the early 1800s, tensions between the United States and British North America culminated in the War of 1812, during which some American leaders saw the conflict as an opportunity to annex Canadian territories and to liberate their inhabitants, many of whom were Anglo-Saxons culturally indistinguishable from people in neighbouring states, from British misrule. While the war failed to achieve this goal, the idea persisted among American expansionists. The Annexation Movement gained momentum in the 1840s, spurred by Manifest Destiny and economic pressures. In 1849, a group of Montreal merchants published the “Annexation Manifesto,” calling for Canada to join the United States to escape economic stagnation and benefit from free trade.

William Henry Seward, U.S. Secretary of State during the 1860s, was a vocal proponent of territorial expansion and believed that Canada would eventually be absorbed by the United States. In the 1850s Seward, who was an ardent abolitionist from New York State, said it was more logical for Canada to be part of the United States than it was for the slave states.  Seward was confident that economic integration and demographic trends would lead to Canadian annexation without military force. However, these ambitions, along with garden variety interest group politics in the US congress, resulted in the cancellation of the Reciprocity Agreement in 1866, which had established free trade between the U.S. and British North America since 1854. This Free Trade agreement’s termination was partly driven by American resentment toward British support for the Confederacy during the Civil War, as well as lingering annexationist sentiment. The cancellation intensified Canadian fears of U.S. expansionism and reinforced support for Confederation as a means of unifying and protecting Canada against American ambitions.

A paper I wrote long ago, “Confederation as a Hemispheric Anomaly: Why Canada Chose a Unique Model of Sovereignty in the 1860s,” sheds light on why Canada ultimately resisted annexationist pressures. I wrote this paper because in part because I was sympathetic to the 1860s Canadians who favoured Annexationism, some of whom had arguments that were based on economic logic. (Annexationism was very strong in communities in which the border was an annoyance that complicated everyday life.) Once the US passed a constitutional amendment ending slavery, many Canadians, particularly farmers in the area west of Toronto, concluded that they could now safely join the Union. The paper argues that, unlike the United States and many Latin American nations, Canada adopted a model of sovereignty that preserved close ties to the British Empire while granting autonomy through Confederation. I argued that Canadian Confederation as a deliberate rejection of U.S.-style republicanism, emphasizing the desire to strengthen ties with the British Empire. Another reason the Annexation movement of the 1860s failed was the fact that Anglo-Saxon Americans were aware that Canada was home to a very large number of non-Protestants). Whether those ties were ultimately good for subsequent Canadian living standards is something we can discuss—as I argued in the final chapter of book published in 2008, post-Confederation Canada’s economy really fell behind the US. I speculated that the Canadian constitution designed in London in 1866-1867, which provided for an excessively centralized and not very democratic political system, had something to do with it. In the generation after 1867, vast numbers of Canadians voted with their feet in favour of the US and moved there, settling in places such as Ontario California.

My own personal view is that while I don’t like Trump, I think there is a strong logic in favour of continent-sized economic units, particularly those that resist the tendency to become protectionist blocks. I was totally opposed to Brexit and think that Britain would have been better off had it remained in the EU. (I’m agnostic about whether the UK should have adopted the Euro as its currency, as was once proposed by Tony Blair). By the same token, I think that Canadians and Americans would be better off if they combined their two countries at least in the form of an EU-style customs union with a common currency. The devil is obviously in the details. However, I think that we need to be able to separate the issue of which constitutional arrangement is economically superior from the political personalities of the day. When Clinton and Obama were presidents, support for greater integration in Canada was higher than it currently is. Whenever some particularly objectionable Republican gets in the White House, be it Richard Nixon or the like, we tend to see a nationalist reaction in Canada.  I bet that if the annexation of Canada were proposed by the likes of a Clinton or an Obama, the Canadian reaction would be different. I also bet that if the prospect of Canada’s ten provinces getting votes in the electoral college became a realistic one, many Republicans would become strongly opposed to the concept because at least nine of those provinces would be staunchly blue states.

While Trump’s recent statements may have been made in jest, they reflect a pattern of American leaders revisiting old territorial dreams to achieve economic or political goals. Canada’s current response is consistent with a historical commitment to maintain sovereignty in the face of external pressures.


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Canada, the United States, and the European Union: Neglected Lessons in Building a Currency Zone out of Separate States

25 08 2013

AS: This paper was presented at the EBHA.  You can read the full paper here. I’m going to publish a lengthy blog post with some thoughts on this paper in the next few days.

Christopher Kobrak, ESCP Europe/Rotman School of Management, University of Toronto
cpkobrak@aol.com (Contact author)

Joe Martin, Rotman School of Management, University of Toronto

Donald S. Brean, Rotman School of Management, University of Toronto

Abstract:
Recent tensions in the Eurozone have elicited relatively little public discussions of how large  federal systems grappled over time with forging a common financial and monetary system.  This paper draws on the disparate experiences of two North American countries from similar  traditions – Canada and the United States, with a view to putting that process in historical  context. Despite advantages which Europe does not enjoy, these countries’ efforts to build  their national banking systems and common currency as well as unify their national debt  followed a long and varied path. The paper argues that Europeans would profit from the  lesson that the process required many difficult political steps in order to build the necessary  consensus for these systems to function, with all their flaws, as a binding rather than divisive force. We contend that those who supported and implemented the introduction of the Euro  ignored much of the institutional and organizational infrastructure required to successfully run  an “optimal currency area.”


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Canada’s Accomplishments At the Olympics: Even Greater Than the Numbers Would Suggest at First Glance

28 02 2010

Canada’s Accomplishments At the Olympics Are Even Greater Than the Numbers Would Suggest at First Glance

Earlier this week, there was a lot of hand-wringing in the media about Canada’s alleged underperformance in the Olympics. I would imagine that the two gold medals in hockey will have dissipated this negativity, so perhaps posting these stats is now a moot point. However, one thing that bugged me about the complaints that Canada was third or fourth in the medal rankings is that so many of the complainers have overlooked an incredibly obvious fact, namely, that Canada’s population is rather small. In terms of medals per capita, Canada’s performance has been quite respectable. I was left wondering whether the give gold medals out to countries for having statistically illiterate populations.

Here are the medal ranking at 18:00 ET Sunday, 28 February.

Country Gold Silver Bronze Total
United States 9 15 13 37
Germany 10 13 7 30
Canada 14 7 5 26
Norway 9 8 6 23
Austria 4 6 6 16
Russia 3 5 7 15
South Korea 6 6 2 14
China 5 2 4 11
France 5 2 4 11

Here are the populations of these countries, courtesy of the CIA Factbook.

Country Population
United States 308,772,000
Germany 81,757,600
Canada 34,017,000
Norway 4,860,500
Austria 8,372,930
Russia 141,927,297
South Korea 49,773,145
China 1,336,090,000
France 65,447,374

It seems to me that the following are the stats we should really be paying attention to:

Country Medals Per Million Inhabitants
Norway 4.732023454
Austria 1.910920072
Canada 0.76432372
Germany 0.366938364
South Korea 0.281276178
France 0.16807397
United States 0.119829518
Russia 0.105687914
China 0.008232978

Or, if you prefer to focus on gold medals

Country Gold Medals Per Million Inhabitants
Norway 1.851661352
Austria 0.477730018
Canada 0.411558926
Germany 0.122312788
South Korea 0.120546933
France 0.076397259
United States 0.029147721
Russia 0.021137583
China 0.003742263

What does doing well in the Winter Olympics say about a country aside from suggesting that it has lots of snow? Canadians now need to have a debate about how what the most successful Winter Olympic countries have in common and what Canadians can do better in the future. My concern is that the excellent performance of a few dozen Canadian athletes at the Olympics will cause Canada to rest on its laurels. We really need to address the problem of our sedentary population.In 1973, Canadian TV stations carried a very controversial ad showing that the average 30-year old Canadian was about as fit as the average 60-year old Swede. The ad was soon pulled because it was deemed to be offensive to Canada. Since 1973, the problem of couch potatoism in Canada has only become worse. So what are the Norwegians doing right? What are the Americans, who have 300 million people, doing so wrong?


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Flawed Globe and Mail article on the far right in Europe

9 06 2009

Doug Saunders has published a deeply flawed article on the alleged rise of the far-right in Europe. The danger is that the Globe’s Canadian readers  will accept Saunder’s flawed interpretation as accurate.

I normally like Doug Saunders’s work, but his article on the recent EU elections is a travesty of the facts. I will speak about the UK situation, which I know best.
First point: the BNP, which is clearly a racist and fascist party, saw its share of the popular vote fall in this election from the 2004 election.  Saunders wrongly suggests that the BNP is rising in popularity. Moreover, the BNP’s share of the vote is small.

Second point:  Saunders suggests that UKIP is, like the BNP, a racist party and that the jump in support for UKIP shows that Britons are becoming more racist. This is not the case. UKIP is a hard-right party like the old Canadian Reform Party. It believes in tax cuts, deregulation, is against the minimum wage, and it wants to pull out of the EU. UKIP admires the free market economy of the USA. It is not, however, a racist party, although it is opposed to the open immigration policies that have allowed many Polish and other Eastern European workers to come into the UK.

Third: European countries can’t really be compared to Canada, which is very much an immigration country. Britain is a densely populated island that has been inhabited by the same ethnic groups for many centuries. It isn’t Canada, which is sparsely populated and proud of its cultural diversity. One of the things I like the most about Canada is the sheer tolerance of Canadians. Canadian multiculturalism is a great success, something of which I am very proud.


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The New GM and the Redefinition of Nafta

1 06 2009

We now know who will control the equity of the new General Motors. Ownership will be divided as follows.

60 per cent U.S. government.

12.5 per cent The Canadian and Ontario governments.

17.5 per cent United Auto Workers.

10 per cent Unsecured bondholders.

0 per cent Existing GM shareholders.

0 per cent– government of Mexico.

I’m wondering what the implications of this arrangement for Nafta are. During the 1990s, Canadians got used to the idea that North America consists of three countries, not just Canada and the United States. These three countries shared an integrated automotive market. (The three amigos summit, an annual meeting of the leaders of the three nations, was premised on the  idea that North America really was part of North America). Mexico lacks even a token stake in the new, reorganized GM. The symbolism is striking. Moreover, because the Mexican government hasn’t a seat at the table, it will be powerless to prevent manufacturing jobs from being repatriated back to the USA by the new, more politicized management of GM. (Canadian governments acquired an equity stake largely to avoid such job losses– I don’t know if it will work. Americans are, sadly very nationalistic. When push comes to shove, they may well prefer to save jobs in Michigan at the expense of non-Americans in Ontario).


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