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The economically turbulent era of the 1970s marked a shift in bilateral relations between Canada and its primary trading partner, the United States. By the early seventies, escalating concerns regarding Canadian economic dependence became the forefront theme of Canada’s foreign policy agenda. Attempts to bolster and diversify Canada’s domestic economy were actualized through the implementation of the Foreign Investment Review Agency (FIRA) and the National Energy Program (NEP) during the Trudeau era. Despite these regulative measures, the triumph of the conservative party of Canada – under Prime Minister Brian Mulroney – in the 1984 election altered the trajectory of Canadian economic policy. Mulroney’s political agenda was characterized by an inclination to mend relations with the U.S. through economic deregulation and the revision of preceding policies, which had posed as a consistent source of tension. Shortly after his election, Mulroney staunchly declared “Canada is open for business”. This momentous statement – although frivolous at the time – became a guiding maxim for consequent economic measures. Through analysis of Canada’s foreign policy during Mulroney’s reign, this paper uncovers the stark shift in Canadian approaches to foreign investment and trade. I begin by laying the economic and political climate of the 1970s, characterized by the establishment of regulatory measures. Comparison of Trudeau’s restrictive economic policy and Mulroney’s counter regulation illustrates Canada’s shift in foreign investment attitudes. Furthermore, I uncover how Mulroney’s strategies propelled Canada towards free trade and deregulation; leaving behind a lasting legacy on Canada’s economy.

 

In order to fully grasp the significance of Mulroney’s victory and subsequent policies, it is vital to understand the increasingly complex bilateral relationship between Canada and the United States during the 1970s. The stage is best set by Peter Dobell, who highlights the United States’ growing concentration on domestic issues combined with “a disenchantment with foreign involvement” during the 1970s. In Canada, Dobell emphasizes the growing issue of economic independence and the growing desire for distinction from the United States. The establishment of a new economic policy under Richard Nixon – also known as the “Nixon shocks” – proved to be a catalyst in exacerbating already severed ties (Dobell). The Nixon measures were designed to revive the national economy, and tackle their “balance of payment” issues. More importantly, Canada was not exempt from Nixon’s proposed import surcharge. This violated the Canadian perception that “a special relationship existed between the two countries” and after Ottawa’s failed attempts at renegotiation, the new American doctrine propelled Canada to re-assess its relations with the US. As part of this reassessment the minister of national revenue, Mr. Gray, tabled a task force report called Foreign Direct Investment in Canada. At the time, Gray’s report appealed to the radical factions of the Canadian government, namely the “Waffle faction” of the NDP. In short, the report outlined a significant and rapid growth in the degree of foreign ownership within Canadian industries, especially in the area of manufacturing and natural resources (Dobell, 252). More critically, it called for a cohesive industrial strategy for Canada to control foreign capital. Lastly, it proposed a review agency which could screen foreign takeovers and new foreign direct investment in Canada, in an effort to “obtain the maximum benefits possible for Canada from FDI” (Ibid., 253).

 

Gray’s latter proposition marked the birth of the Foreign Investment Review Act (or ‘FIRA’) in 1974. In sum, the act prohibited foreign takeover of Canadian companies without the direct approval of the Canadian government. FIRA screened each corporation by analyzing their product, the Canadian market, their source of income, and domestic job opportunities. The most important factor, however, was whether the foreign investment provided substantial contribution to Canada. As a result, a centralized investment screening mechanism was created; limiting the degree of foreign investment and ensuring Canadian economic protection. The coordination of a unified mechanism complemented the centralized aspirations of then-PM Pierre Trudeau. The fear, however, was the potential decline in inward foreign investment due to the restrictive nature of FIRA. In retrospect, FIRA did not mark a drastic reduction of FDI within Canada. Instead, it served as a symbolic display of Canadian nationalism and foreign investment strategy. Ironically, it also served as a source of tension with the United States.

 

Similar to FIRA, the National Energy Program (or ‘NEP’) became another major source of friction between Canada and the U.S. in the late seventies. According to Leyton-Brown, the NEP was designed to achieve domestic security of supply, increase Canadian participation in the petroleum sect, and alter revenue sharing among governments (19). Like FIRA, the NEP was also signed into power by the Liberal Trudeau government, in response to the fluctuating conditions of the global oil market. The goal for revenue sharing deeply angered the oil-producing province of Alberta, who was already in political deadlock due to provincial-federal clashes. The controversy surrounding the NEP triggered bitter protests from the U.S., involving their appeal to the GATT (General Agreement on Tariffs and Trade) shortly after NEP’s implementation. By 1981, global oil prices had fallen and the initial motives for the NEP slowly evaporated. However, it was not until the election Brian Mulroney where the final remnants of the NEP were symbolically shattered.

 

As demonstrated in the preceding paragraphs, the period prior to Mulroney leadership presented serious challenges in mending Canada-US ties. While components of government regulation, such as the NEP and FIRA, were motivated by mere Canadian domestic interest, they proved to further injure economic diplomacy with the United States. Mulroney’s famous statement, that Canada is “open again”, indirectly points to the barriers posed by previous regulative economic policies. In keeping to his campaign promises, Mulroney announced a series of new initiatives for economic reform grounded in market liberalization. His determination was reaffirmed, when FIRA was terminated and replaced with Investment Canada in 1984. This new agency aimed to encourage FDI within Canada, rather than regulate and restrict it.  Additionally, the National Energy Program was formally terminated by Mulroney during the same time. Thus, Mulroney’s statement that “Canada is open for business” was subsequently backed by these immediate actions.

 

In the following decade, Canada was surely “open for business”. The Mulroney government’s foreign policy focused on enhancing multilateral initiatives, especially with the United States. In 1989, Mulroney launched a “going global” initiative by increasing investments within Europe and Asia. The Pacific 2000 Plan targeted Japan as a main country to strengthen FDI relations with; resulting in a dramatic increase in Japanese investment. During this time, the growing integration between Japan and the US increased Canadian incentives to trade globally. Mulroney’s de-regulatory economic strategy manifested during free trade talks with the U.S. in 1989, which marked the birth of the Canada-US Free Trade Agreement. It is critical to note that while Mulroney’s pro-US & pro-free trade attitudes accelerated market liberalization in Canada; the global super powers – Britain under Thatcher and US under Reagan – were also heading in this direction.  The global progression towards market liberalization and decentralization demonstrated that states were finally willing to “hold hands with the devil” (Churchill).  This age of ‘new pragmatism’ countered the confrontational period of the 1970s with a deeper recognition of the value of multinational corporations. The mentality of this new era is best captured by Susan Strange in the late 90s, who famously quotes: “the one thing worse than being exploited by multinational corporations is not getting exploited by multinational corporations.”

 

 

In the end, however, the global influences of market liberalization combined with Mulroney’s foreign policy altered Canadian economics for the decades to follow. Likewise, it shaped bilateral relations with Canada’s most critical trading partner: The United States. While Canada today does not possess a formal industrial policy on inward or outward FDI, a constant trend seen in every era is the increase in U.S. FDI.  The regressive economic policies of the Liberal government during the seventies immensely hindered Canada-US bilateral relations. Mulroney’s landslide victory and “open for business” attitude fostered the foundation for the Canadian market today. The overarching global direction towards market liberalization also played a critical role in altering Canada’s economic trajectory. This paper juxtaposed the restrictive era of the 1970s with Mulroney’s economic pragmatism. Quite literally, Mulroney “opened” Canada for business. He halted the National Energy Program, and encouraged FDI through the re-establishment of Investment Canada. His personal ties with U.S. president Ronald Reagan helped to secure Canada’s first comprehensive free trade agreement with the US.  More prominently, Mulroney’s famous statement ‘Canada is open for business again’ proved to be convincing and substantial by the end of his leadership.

 

Reference:

Susan Strange (1991) “Big Business and the State,” Millennium, 20, 2 (1991)

David Leyton-Brown, “Canadianizing Oil and Gas: The National Energy Program, 1980-83,”

Peter Dobell, “Reducing Vulnerability: The ‘Third Option,’” from Don Munton & John Kirton.eds., Canadian Foreign Policy: Selected Cases.

Kenichi Miyashita and David Russell (1994) chapters 1 and 2, from Keiretsu: Inside the
Hidden Japanese Conglomerates, New York: McGraw Hill.

Upon witnessing detonation of the first nuclear bomb on July 6, 1945, Robert J. Oppenheimer uttered the famous words: “Now I am become death, the destroyer of worlds.”^[1] The development of nuclear weapons capability ushered the end of World War II and propelled history towards a nuclear era characterized by fear and multipolarity. Since the bombing of Nagasaki in August of 1945, however, nuclear weapons have not been officially utilized in combat. Despite the challenges of modern nuclear proliferation, the non-use of such weapons remains a central phenomena on the international stage.

Rationale for the non-use of nuclear weapons capabilities are greatly debated among international relations theorists, and require thorough analysis of the complex roots of the state system. On one side of the debate, structural realists (or “neorealists”) would explain this non-use as natural to the study of “power politics.” Driven by an innate fear of death, they argue states seek nuclear weapons technology in order to promote security through active means of deterrence. In contrast, liberalism theory places significance on the international treaties, diplomacy and transparency among states. Through contending mechanisms of realist vs. idealist theory on nuclear non-use, I argue for the prominence and relevance of realism in the contemporary nuclear epoch. I begin by providing discourse on the neorealist account for the non-use of nuclear weapons, while examining the complex origins of realist methods of thought through Thomas Hobbes and Kenneth Waltz. Secondly, I offer the contending idealist critique of realist theory, and sketch the idealist theory of nuclear weapon non-use which renders illusions of peace. Discourse will be provided on the Nuclear Non-Proliferation Treaty, the Joint Comprehensive Plan of Action (JCPOA), and anti-nuclear peace movements following the bombing of Hiroshima and Nagasaki. I conclude, ultimately, that nuclear attainment is in the interest of modern nation-states given the Hobbesian political climate of the twenty-first century.

Realism and the Deterrence of Nuclear Weapons

 For realists, the basic logic follows as such: if a state possesses a large nuclear arsenal, the adversary is less likely to attack due to fear of massive retaliatory action. By making the cost of war “frighteningly high”, states are discouraged from making the first strike against nuclear armed states.^[2] Deterrence theory can be used to explain why the United States built approximately 70,000 nuclear warheads, more than all other nuclear-weapon states combined, during the Cold War. This sent a message to the adversary, in this case the Soviet Union, that attacking the US would undoubtedly result in mass destruction. During this era, the nuclear arms race between the US and USSR is said to have induced instability and eliminated the possibility for a nuclear war to break out due to second strike retaliation capability. Kenneth Waltz champions the idea of nuclear peace and concludes “more may be better.”^[3]  For realists, it is not the particular difficulty of launching an attack, or normative philosophies that prevent nuclear war but rather the expected counter reaction that will result in “one’s own severe punishment.”

Historical roots of realist way of thought are deduced from prominent thinkers Thucydides, Machiavelli and Hobbes. In particular, deterrence theory  occurs from the act of balancing power capability. Pursuit of self interest within the Hobbesian state of anarchy is analogous to to the current nature of state interaction. Written in 1651, Thomas Hobbes asserted that the lack of international authority fabricates a “state of nature” where the life of man is “solitary, poore, nasty, bruttish, and short.”^[4] The continual fear and the looming danger of violent death pushes man to constantly seek self-interest, such as material gain, self security, and ultimately, survival. Given the lack of global governance today, I infer that nuclear weapon attainment increases security for a state by inciting fear in opposing nations.

For realists, the anarchic nature of humans (and thus the international system) is presented as the foundation affecting all behaviour and thus largely accounts for the structural logic of state interactions. Hobbes’ creation of Leviathan, a sovereign power possessing ultimate control, offers an escape from the state of nature. The lack of such a sovereign in the international realm today forces states to pursue security through material capability, such as the possession of nuclear weapons. The disproportionately immense levels of funding invested in military and weapons capability among great nation-states is attributed in their strive for security and survival. Adoption of the realist viewpoint, in sum, inexorably leads to the conclusion that all states that can go nuclear, should go nuclear – and the sooner the better.^[5] Nuclear proliferation, through the lens of realism, is thus inevitable.

It is for similar reasons Kenneth Waltz argues Iran should be allowed to possess nuclear weapons capability. For realists, states are analogous to billiard balls interacting with one another. What occurs within the billiard balls themselves (domestic or internal politics) are of little concern to realists. The reasoning follows: If states such as Israel, US, and France can possess nuclear weapons, why shouldn’t Iran? With nuclear weapon attainment, Waltz argues Iran can effectively put an end to Israel’s regional monopoly and achieve stability in the Middle East.^[6] Neorealist theory rests primarily on three assumptions: all states are rational actors, states operate in a state of anarchy, and the international arrangement begets a self-help system.^[7]

Although intuitive and forthright, the realist perspective runs into trouble as they are often accused of offering nothing “but a naked struggle for power.” ^[8] They also fail to account for the numerous states that have the ability to go nuclear, but still have not made the transition. It is estimated that only one-fifth of the states with the capacity for building nuclear weapons have done so.^[9] Moreover, the pace of nuclear proliferation has been essentially unaltered since the 1950s, begging the question of the deterrence rationale behind nuclear non-use.

Liberalism and Nuclear Weapon Non-Use

In this regard, liberalism in International relations offers an optimistic account of the international system by emphasizing the significance of joint cooperation and non-state actors.  Thus, liberals (or “idealists”) do not see it as a given that states will significantly benefit from nuclear weapon attainment. ^[10]On the international stage, idealists stress the importance of international norms of nuclear nonproliferation while grappling with the concomitant difficulties of dealing with norm rejecting rogue regimes.^[11] Liberalism understands that human beings may act in self interest, however, they place emphasis on cooperation between non-state actors through reasoning. Similar to how neorealists turn to Thucydides, Machiavelli, and Hobbes to explain the nature of the state, liberals utilize thinkers such as John Locke and Immanuel Kant.

Immanuel Kant particularly focused on the rational qualities of individuals, as he possessed an undeniable faith in human progress. Kant argued human reason can transpose into the international sphere, eventually overcoming war and conflict through vigorous changes in the domestic and international structures of governance.^[12] Thus, idealists are primarily concerned with normative philosophies on how the world ought to be, and ways in which cooperation can devise such a world. Similar to Kant, John Locke offers a state of nature where humans are born with a natural right to life, liberty and property. In contrast to Hobbes’ Leviathan that uptakes our rights (except our inalienable right to life), Locke contends that government must not violate these rights based on a social contract. Moreover, Locke argues for the intrinsic virtue of human being, drawing attention to our duty to take care and respect the rights, property, and well-being of others.^[13] Through propitious thinkers such as Locke and Kant, liberal international relations theory refute the idea that nuclear capabilities render long term peace, but rather the establishment of norms ensure international lawfulness.

While the realist camps attribute nuclear non-use to theories of deterrence and mutually assured destructive capabilities, idealists would emphasize the role of international organizations in their efforts to stop nuclear proliferation and use. States are part of a “community” where common norms, and values are shared, leading to stability and peace through ongoing negotiations. This fosters a reduction of uncertainty by providing information and generating narratives of mutual identification.^[14] The nuclear counter culture that followed in the 1950s, resulted in procession of anti-nuclear weapon treaties suggesting success of idealist theories of cooperation.

After the Cuban Missile Crisis of 1962, America saw an upsurge in protests against nuclear weapons testing. The looming fear of the outbreak of a nuclear war persisted and ushered the beginning of a counterculture era. It wasn’t long before the Bulletin of the Atomic Scientists created the Doomsday Clock in 1947, which illustrated that the “closer to midnight” we were, the higher the risk of a nuclear war breakout. The Campaign for Nuclear Disarmament, Nuclear Freeze Movement, the Nevada Desert Experience and Russell-Einstein Manifesto were all parts of a colossal effort to eliminate nuclear weapons.

In particular, the Nuclear Non-Proliferation Treaty (NPT) gave social movements a platform to operate upon. Established in the 1970s, the NPT aims to control nuclear proliferation through active verification, transparency, and irreversibility.^[15] In efforts to promote disarmament, international relations theorists suggest the NPT has successfully established the non-use of nuclear weapon as a norm. While realists and idealists alike recognize the harsh realities of the anarchical world, liberals place emphasis on treaties like the NPT, contending that states are able to cooperate and reach mutual gains. Through the obedience of norms and institutions that promote collective security, the NPT aims to stabilise the relationship between nuclear and non-nuclear states.

Liberals also turn to other nuclear weapons treaties to verify the utility of cooperation and peace. As addressed previously, Iranian nuclear attainment was extensively promoted by Waltz, championing the idea of “peace through strength.” The Joint Comprehensive Plan of Action (JCPOA or “Iran Deal’), however, offered an alternative to nuclear proliferation, and devised a multilateral treaty between Iran, the five permanent members of United Nations, and Germany.^[16] Still seen to this day as one of the greatest triumphs of international peace talks, The Joint Comprehensive Plan of Action ended a deeply complex stalemate between United States and Iran, whom have not had “formal relations” since 1979. Prior to the Iran deal, a political unrest loomed within the international community, and it was deemed highly unlikely that Iran would cease its enrichment programme altogether. Thus, the JCPOA created a framework where the International Atomic Energy Agency (IAEA) routinely ensured Iran was in compliance, while the international community successfully contained an international nuclear arms race. Liberal theorists may point to instances such as the JCPOA, and conclude it offered a fruitful and unprecedented opportunity for healing and mutual peace.

Upon surveying the success of such international peace talks, one may be inclined to lean towards an optimistic idealist vision, such as seen in Norman Angell’s The Great Illusion, endorsing the notion that it is an “economic impossibility for one nation to destroy or seize the wealth of another [state].”^[17]. For Angell’s and idealists alike, the rise of globalization and interdependence contends that war possesses no commercial advantage. While this manner of thought is regarded as optimistic and progressive in contemporary society, there are potential dangers of idealist thinking.

The Realities of Liberalism

At first glance, nuclear weapon treaties such as the Nuclear non-proliferation treaty and Iran Deal may appear pioneering and fruitful. However, upon deeper analysis, the NPT only binds its signatories, therefore, non-signatories such as India, Pakistan, North Korea, and South Sudan are not bound by the treaties provisions.  Additionally, since coming into force in 1970, the NPT has been unable to restrain non-nuclear weapons states from developing nuclear weapon capability. A prime example is North Korea, Iraq, and Iran prior to the JCPOA. Article six of the NPT states “all states party to pursue negotiations in good faith toward three specified ends: (1) ending the nuclear arms race at an early date; (2) achieving nuclear disarmament; and (3) achieving a treaty on general and complete disarmament.”^[18] However, the reality of the nuclear stalemate persists: no nuclear armed states have fulfilled their commitment to disarmament. To date, the nuclear weaponized states that signed the NPT still possess the same amount of nuclear weapon arsenals, if not more. Although the IAEA has a legal right to inspect suspicious countries, subsequent UN action is uncertain. In conjunction with weak enforcement mechanisms and little change in current arsenals, the regressive realities of the NPT only become clear upon consideration of the minimal effects it has on nuclear proliferation in the long term.

While idealists sought solace in the success of the 2015 Iran deal, the withdrawal from the JCPOA by the Trump administration in May 2018 shattered hopes for a non-nuclear Iran.^[19] Trump adopted Gunboat diplomacy involving threats of military action, compelling unilateral concessions from Iran and muscling Iran to win the “survival of the fittest” game. International theorists attribute Trump’s withdrawal to fulfillment of his campaign rhetoric, ongoing pressures from Middle Eastern allies and active demolition of previous administration successes. This suggests Washington is less concerned with specific terms of the JCPOA, but rather the possibility of regime change within Iran.  Despite efforts from previous administrations to contain Iranian nuclear attainment, the Trump administration’s adoption of Machiavellian Realpolitik has left looming uncertainty within the international realm.

Conclusion

 Through investigation of the idealist and realist camp, I concur that realism is still of great prominence today. While I accept the notion that norms rendered a role during the counterculture era of the 1960s, I assert that the Hobbesian state of nature requires states to primarily seek their own security. Moreover, nuclear weapon attainment increases security for a state by establishing legitimacy in bureaucratic power relations. Recent action of the Trump administration reflects realist modes of thought, most notably, the significance of national sovereignty and security. The lack of global governance, therefore, renders a political climate where utopian ideals of peace fail to endure. I buttress these claims with the failures of the NPT and JCPOA as aforementioned. I conclude, therefore, that it is no longer a battle between contesting theories, but the realism of an atomic twenty first century.

 

 

 

Bibliography:

Angell, N. (1911). The Great Illusion: A study of the relation of military power in nations to   their economic and social advantage. Toronto: McClelland and Goodchild.

Carr, E. H. (1930). The Twenty Years’ Crisis, 1919-1939: An introduction to the study of   international relations. London: Macmillan and Co., Limited.

Dunne, Tim, Kurki, Milja, and Steve Smith (2013). International Relations Theories: Discipline    and diversity. Oxford: Oxford University Press.

Freed, Fred, and Len Giovannitti. (1965) The Decision to drop the bomb. Wilmette, Ill: Films Inc.

Hobbes, Thomas. (1969) Leviathan, 1651. Menston: Scholar P.

IAEA. “Treaty on the Non-Proliferation of Nuclear Weapons.” April 21, 1970. https://www.iaea.org/publications/documents/infcircs/treaty-non-proliferation-nuclear-weapons.

Locke, John. 1823. The works of John Locke. London: Printed for Thomas Tegg.

Meyer, Stephe. The Dynamics of Nuclear Proliferation (Chicago, IL: University of Chicago Press, 1984).

Nasr, Vali. “Iran among the Ruins: Tehran’s Advantage in a Turbulent Middle East,” Foreign Affairs 97, no. 2 (March/April 2018): 108-118.

Schelling, Thomas. ‘‘An Astonishing Sixty Years: The Legacy of Hiroshima’’ (Nobel

Prize Lecture), Proceedings of the National Academy of Sciences 103 (April 18, 2006) 608993; Miroslav Nincic, Renegade Regimes: Confronting Deviant Behavior in World

Politics (New York: Columbia University Press, 2005).

US Department State. (2015)  Joint Comprehensive Plan of Action. Washington: U.S. Department of State, Bureau of Economic and Business Affairs. http://www.state.gov/e/eb/tfs/spi/iran/jcpoa/.

Waltz, Kenneth N. (1981)The spread of nuclear weapons: more may be better. London:     International Institute for Strategic Studies.

Waltz, Kenneth. (2012) “Why Iran Should Get the Bomb.” Foreign Affairs 91, no. 4 : 2. https://www.foreignaffairs.com/articles/iran/2012-06-15/why-iran-should-get-bomb.

 

^[1] Freed, Fred, and Len Giovannitti. 1965. The Decision to drop the bomb. Wilmette, Ill: Films Inc.

^[2] Kenneth Waltz. 1981. The spread of nuclear weapons: more may be better. London: International Institute for Strategic Studies.

^[3] Kenneth Waltz. 2012. Why Iran Should Get the Bomb.

^[4]Hobbes, Thomas. 1969. Leviathan, 1651. Menston: Scholar P.

^[5]Jacques E. C. Hymans. 2006. THEORIES OF NUCLEAR PROLIFERATION, Nonproliferation Review.

^[6] Ibid.

^[7] Kenneth Waltz. 1979. Theory of International Politics.

^[8]  E.H. Carr, The Twenty Years’ Crisis. 1919 to 1939: An Introduction to the Study of International Relation

^[9] Stephen M. Meyer, The Dynamics of Nuclear Proliferation. University of Chicago Press. 1984.

^[10] Note: I utilize liberalism and idealism interchangeably. It is critical to note that liberalism is an international relations theory that is widely influenced by idealist ways of thought and theory.

^[11] Thomas Schelling, ‘‘An Astonishing Sixty Years: The Legacy of Hiroshima’’ 2006.

^[12] Dunne, Tim, Kurki, Milja, and Steve Smith. 2013. International Relations Theories: Discipline and diversity. P. 95.

^[13] Locke, John. 1823. The works of John Locke. London: Printed for Thomas Tegg. pp. 106-107.

^[14] Dunne, Tim, Kurki, Milja, and Steve Smith. 2013. International Relations Theories: Discipline and diversity.

^[15]IAEA. “Treaty on the Non-Proliferation of Nuclear Weapons.” 1970.

^[16] US Department State. Joint Comprehensive Plan of Action. Washington: U.S. Department of State, Bureau of Economic and Business Affairs, 2015.

^[17] Angell, N. The Great Illusion: A study of the relation of military power in nations to their economic and social advantage. 1911.

^[18] IAEA. “Treaty on the Non-Proliferation of Nuclear Weapons.” 1970.

^[19] Vali Nasr, Iran among the Ruins: Tehran’s Advantage in a Turbulent Middle East. 2018.