In the previous post inspired by Bill Graham's memoir The Call of the World, I was contemplating Graham's brief vivid summary (pp 76-77) of the 1980s shift from global tariff reductions (largely completed) to a global campaign against non-tariff barriers to trade.
Did the World Trade Organization's official approval of a war on non-tariff barriers (virtually all of which are governmental or quasi-governmental actions) give cover and impetus to the anti-regulation, anti-government ideological crusade we have all been plagued by in the recent half-century -- with dire consequences for everything from house prices to economic inequality to the survival of democracy.
As an international trade lawyer in the 1980s, Graham was instinctively supportive of free trade. His whole career had concerned smoothing the international business operations of his clients, and any government policy that complicated such operations seemed worth opposing.
But in 1988, Graham was running as a Liberal candidate in that year's federal election, and his party and its leader John Turner were basing the whole Liberal campaign on opposition to Prime Minister Mulroney's free trade agreement with the United States.
Graham's explanation for why he supported the Liberal's anti-free trade campaign is instructive:
If you are going to have economic integration, you'll need an institutional framework to oversee it. The tighter the integration, the more sophisticated that international framework has to be. [at p.105-6]
Graham had spent many years observing the range of trade courts and other impartial arbiters that the European community had established and also the long struggle to make the World Trade Organization into a kind of global trade court -- on the principle that independent tribunals were essential to preventing larger economic powers from bullying smaller ones under the guise of harmonization.
"The Americans would never agree to a similar framework in North America," Graham continues. Canada's 1989 Free Trade Agreement, with only one large economy and one small one participating:
was a North American model with inadequate institutional mechanisms to protect our interests. Given the asymmetry, the most powerful guy usually rules.
When the FTA and then NAFTA came into effect, Graham noted how the American advantage worked out. If the US disregarded its free-trade commitments (e.g., softwood lumber), Canada's only recourse was to impose tariffs as punishment. But the American counter-tariffs would always be more damaging. In practice, there was no recourse.
The looser the rules and the looser the dispute-resolution mechanism to enforce those rules, the more the Americans could get away with." (p.137)
Graham wrote this in 2015 and died in 2019. Trumpian tariffs were not on his horizon. Still, it's a more precise and succinct description of our current relationship with the United States than most of what is being written today.
















