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Question 7: ProsperityHow should Canada take advantage of its location in North America to increase
prosperity while promoting our distinctive identity? |
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| Contributor: | russilwvong |
| Date: |
2003-05-01 01:29:04 |
| Answer: |
Current trade policy seems to be working reasonably well -- unemployment has been stable and gradually declining, Canada's running a trade surplus and current-account surplus. But of course Canada's one-way dependence on trade with the United States makes us vulnerable to disruptions in trade, whether because of domestic political reasons or security reasons.
Not sure I know how best to deal with this issue. We can't end our dependence on the US by fiat, so we have to live with it. Adopting the US dollar without cross-border labour mobility seems like a bad idea: if the Federal Reserve has to raise interest rates to choke off inflation in the US, while Canada's economy is already in recession, Canada's unemployment rate will go through the roof. (I was in Britain in 1992 when this exact scenario happened. Britain was forced to break the "crawling peg" which linked the British pound to the Deutschmark.)
I'd support the idea of a common North American security perimeter if it turned out to be necessary to protect our trade with the US, but it'd tie us even more closely to the US, so it's not a step to be taken lightly. |
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