John Baird: Canada's freedom agenda - Diplomat Magazine

DIPLOMATICA|Foreign AffairsThe high price of global retrenchmentfen Osler hAmpsonOur globalized world is unraveling.This is not the end of globalization,but it is something we haveseen before. It is called retrenchment.It is a phenomenon characterized bydeclining levels of interdependence inglobal trade and investment, beggar-thyneighbourpolicies as states (especiallynew entrants in the global economy) lookout for their own interests and don’t playby the rules, a corresponding weakenedcapacity for collective action among theworld’s leading nations, and the progressiveweakening of international institutionsthat are the bedrock of a soundglobal order.The first great era of globalization unfoldedin the second half of the 19th Century.It was an era marked by a dramaticincrease in worldwide trade, investment,labour mobility and prosperity. But itwas followed in the 1920s and 1930s bydeclining interdependence as countriesintroduced a wide range of protectionistmeasures to shield jobs and local industry.Great Britain introduced the CommonwealthImperial system, which grantedfavourable access and free trade on reciprocalterms to its Dominions (Canadaamong them) and colonial territories.In 1926, Britain introduced the EmpireMarketing Board to encourage Britons tobuy goods from their current and formercolonies.The United States wanted it both ways.Although the U.S. pressured Canada toabandon the Imperial preference system,it still wanted to keep its own tariffs andrestrictive policies in place. The Smoot-Hawley Tariff Act (1930) smacked America’strading partners, including Canada,hard. By some estimates, worldwide tradein the 1930s shrank by almost a third ascountries retaliated against each other.16U.S. President Barack Obama and Prime Minister Stephen Harper converse at the G20 Summitin Cannes, France, in November.The retrenchment phenomenon of theinter-war years also had an ugly politicalside as countries struggled with massiveunemployment, inflation and the broaderconsequences of economic depression intheir societies. In Weimar Germany andItaly, national socialism reared its uglyhead as Hitler and Mussolini rode topower on a xenophobic wave of popularprotest, replacing democracy with brutaldictatorship.The leaders of the Anglo-Saxon world(Britain, the U.S., Canada, Australia)wrestled with a different kind of problem— isolationism — as their societiesturned inward and refused to deal, at leastinitially, with the dark storm clouds thatwere gathering over Europe.The League of Nations, an instrumentfor collective global security which hadbeen crafted out of the Paris peace settlementsfollowing the end of the First GreatWar, also proved incapable of dealingwith a series of aggressive acts by the AxisPowers in the 1930s.History does not repeat itself. But today,in the second decade of the 21st Century,we too are grappling with a renewedbout of retrenchment and the attendantpolitical risks that come with a downturnin global economic fortunes and a weakeningof international institutions.The causes of the current crisis are complex,but they are rooted in a variety of ills.The world continues to struggle with thefallout of the 2008-09 financial crisis, andnow a second one with the impending collapseof the Eurozone monetary regime.The deep bonds of European integrationhave been weakened by Italy, Greece,Portugal and Spain who are wrestlingwith unsustainable levels of public debtand are struggling to cut public expendituresat a time when their own economiesare contracting and many people — especiallythe young — are out of work. If theEurozone collapses, the ambitious enterprisethat was launched by Jean Monnetand the other founders of the EuropeanUnion will be seriously compromised.Democracy, too, is paying a price asunelected technocrats are catapulted intopositions of power in countries such asGreece and Italy to fix fiscal problems thatthe politicians can’t, or won’t.If Europe is not able to manage theWINTER 2012 | JAN-FEB-MARF. de La Mure/MAEE