Introduction

The geopolitical power of the United States has indeed increased since 1945, particularly after the Cold War in the 1990s, in which the U.S survived as the only remaining superpower. However, since geopolitics encompasses a broad spectrum of political, economic, and cultural perspectives, this essay narrows down the Americans' expanding geopolitical powers through an in-depth, critical analysis of the geopolitical "invasion" of Canada due to free trade, and in particular, this analysis highlights the hegemonic capacity the U.S plays in the North American Free Trade Agreement. Because trade has always been of "geopolitical significance " in American foreign policy, particularly concerning diplomatic and commercial expansion, it is not surprising to see that free trade with the U.S. hegemon has resulted in the expansion of American influence into Canada at the expense of erosion of Canadian political, economic, and cultural sovereignty (Carr: 1992, 206). This paper examines the U.S-Canada free trade partnership between the period 1988 and 1994, and in particular emphasizes how within such a short span of time the U.S was able to weaken Canadian sovereignty, while at the same time, augmenting its geopolitical influence in the North American hemisphere.

The American's economic hegemony over Canada was most prominent in the manufacturing industries. However, the expansion of American influence into Canada was a concerted effort supported by 530 U.S. firms (including the major corporations - AT&T, General Electric, as well as General Motors) in order to "open up" the Canadian market during the NAFTA negotiations in 1987 (Mahant: 1993, 71). Contrary to the initial American promise, including President Ronald Reagan, that lessened U.S and Canadian protectionism and lower tariffs would benefit Canadian firms through greater access to the huge U.S marketplace, quite the opposite effect occurred. As political economist Duncan Cameron asserts, the NAFTA clearly benefitted the Americans' manufacturing sector as the regulations were designed to favour higher levels of U.S. content entering Canada (Cameron: 1992, xxiii).

Prior to the implementation of NAFTA, Canada experienced an industrial boom, as real manufacturing output grew by 4.0% in 1987 and 4.8% in 1988; however, by the spring of 1990, just one year after the NAFTA, Canada fell into an economy-wide downturn due to the American economic invasion. (Jackson: 1992, 106). As Table 1 reveals, the number of job losses to the U.S. in manufacturing were quite significant; but what is more startling is that fact that such a dramatic change occurred within a two year span.

Table 1- Job Losses in Canadian Manufacturing Industries to the U.S. (June 1989 to March 1991)

Change in Employment

Industry Numbers employed (June 1989) Percent Change (Job Loss, 1991)

food and beverages 58,000 -22.6%

rubber 4,200 -16.6%

plastic 10,600 -17.7%

leather 6,700 -37.2%

textiles 17,800 -27.1%

clothing 21,000 -22.9%

wood 41,000 -33.3%

furniture 19,500 -29.4%

paper 17,000 -13.0%

aircraft equipment 700 +1.6%

printing & publishing 28,400 -19.3%

primary metal 22,500 -21.5%

fabricated metal prod. 44,900 -27.5%

machinery 24,700 -23.2%

auto parts 15,600 -21.0%

electrical 29,200 -22.5%

nonmetal mineral prod. 17,800 -30.6%

petroleum & coal prod. 2,500 -12.2%

chemicals 13,700 -13.3%

total manufacturing 435,000 -21.7%

(McGaughey: 1992, 70)

Since the manufacturing sector was the most heavily exposed to direct U.S competition, it was the first to fall to the Americans. From 1989 to 1992, the manufacturing sector lost 361,000 jobs, or 17% of the sector's employment, to the U.S.; consequently, manufacturing output fell by 11% (Jackson: 1992, 109). As a result, Canada immediately experienced trade deficits, in which U.S merchandise exports to Canada increased faster than Canadian exports to the U.S. Historically, Canada used the trade balance to pay for its deficit in trade in services with the U.S; however, NAFTA effectively disabled this strategy. In contrast, the U.S. benefitted from free trade, for its trade surpluses with Canada nearly tripled from $4.6 billion in 1988 to $13 billion in 1992 (Jackson: 1992, 111). As Table 2 illustrates, the trade deficits experienced by Canada reveal how NAFTA worked in advantage for the U.S whose immense market power overwhelmingly crippled the Canadian manufacturing sector while strengthening the Americans'. In addition, Canada experienced trade deficits, and also encountered decreased exports and imports to the U.S (Jackson: 1992, 111).

Table 2 - Selected Canada-U.S. Commodity Trade Balances ($ Millions Cdn.)

Trade Balance Trade Balance Exports/Imports Exports/Imports

(Jan-Sept. 1988) (Jan-Sept. 1992) (Jan-Sept. 1988) (Jan-Sept. 1992)

Chemicals 529 259 1.4 1.2

Plastics -834 -981 0.6 0.6

Rubber -154 -13 0.8 1.0

Newspaper -606 -1070 0.4 0.2

Glassware -283 -406 0.5 0.5

Iron & Steel 650 288 1.3 1.1

Furniture 240 49 1.5 1.0

Clothing 12 6 1.1 0.8

Footwear 6 -13 1.1 0.8

(Jackson: 1992, 118).

In particular, two detrimental effects occurred as a result of NAFTA. With the termination of Canadian protectionism, many Canadian plants simply moved to the U.S. because of its production advantages, particularly the weaker unions, lower minimum wages, lower taxes, as well as regulatory burdens on businesses. Secondly, American-owned multinational corporations transferred production from the Canadian market to their U.S. plants to cut production costs (McGaughey: 1992, 68). The weakening of the manufacturing sector consequently resulted in a surge in the number of U.S. takeovers of Canadian companies. In 1989, 460 Canadian-controlled companies with combined assets of $24 billion were taken over by U.S investors, comparted with the $136 U.S-owned companies with combined assets of $3 billion that were acquired by Canadian investors (McGaughey: 1992, 69). Almost 75% of the closures were in Ontario, the "industrial heartland," while 20% were in Quebec (McGaughey: 1992, 69). The following data reveals the migration of many Canadian companies from the industrial heartland to the to the U.S. following free trade, and the many jobs that had been lost as a result.

Table 3 - Selected Plant Closures and Production Relocations to the U.S: January 1989 to June 1992, Ontario

Company/Ownership Community Products Relocation Job Losses Date

Allied-Signal Canada Mississauga brake plants Charlotte, NC 670 February 1992

Bendix Corp. Collingwood seatbelts Alabama 459 April 1990

Burlington Carpets Brampton carpets Georgia 450 May 1990

Caterpillar Ltd. Brampton tractors Raleigh, NC 430 April 1991

Croydon Cambridge furniture Chicago, IL 360 October 1991

General Tire Barrie auto parts Mayfield, KY 950 July 1991

General Motors Scarborough vans Flint, MI 2,700 May 1993

Harding Carpets Brantford carpets Tennessee 470 October 1990

Inglis Toronto appliances Clyde, OH 650 April 1991

Tridon Ltd. Oakville auto parts Smyma, TN 632 September, 1990

T.A.G. Inc. London clothing U.S. 1,250 December, 1990

(Healy: 1992, 287)

However, the Americans' geopolitical influence did not just stop at economics; it also expanded into the political arena. Under NAFTA, the sovereignty of the Canadian provinces were compromised, for the federal government was the only party responsible to NAFTA regulations. With the federal government tied to NAFTA, the provinces were powerless against the U.S. in international matters (Sinclair: 1992, 229).

Consequently, provinces' agricultural sector was the hardest hit in the disputes, particularly its supply management system, which comprised of dairy, egg, and poultry products (Sinclair: 1992, 229). Because the U.S. wanted to break up the " provincial cartels," and flood the Canadian market with lower-prices American products, the U.S. lobbied arduously in removing the provincial tariffs during the NAFTA negotiations (Ritchie:1997, 113).

Prior to the NAFTA the supply management system stabilized the Canadian agricultural domestic market, and protected it from the global market. Farmers produced under a quota system, sold their products through local marketing boards, and then received prices based on the cost of production, which were administered by provincial boards (Sinclair: 1992, 235). Hence, to the provinces, the agricultural supply-managed industries and systems were important economically as they were politically.

However, with the NAFTA's decimating the tariff barriers, the Canadian agricultural sector simply could not compete with the Americans' cheaper prices. Many Canadian producers and companies thus threatened with relocation to the U.S. in order to force the provincial boards to lower their prices as well as dismantling the supply management system (Sinclair: 1992, 235).

The second significant example of erosion of Canadian sovereignty was the issue of natural resources. Because the NAFTA undermined the Canadian constitution's Section 924, which gave the provinces jurisdiction over their own development, conservation, and management of natural resources, the Americans took advantage of the clause, and tested the limits of the provinces' powers. Since the NAFTA limited the ability of the provinces to reserve domestic production of energy goods for their own consumption purposes, the American government incapacitated the provinces' sovereignty by charging that the provinces could not restrict their energy exports to the U.S. for conservation purposes. The provinces were helpless, for if they wanted to conserve energy, they had to first guarantee the U.S. the same proportion of the total conserved supply. As a result, the provinces were not allowed to cut back their exports to the U.S; in fact, their only other choice was to increase their own energy production in order to meet their domestic demands as well as the Americans' (Sinclair: 1992, 236).

The issue of drug patents was another example which revealed the political dominance that the Americans had over Canada. The U.S. pharmaceutical industry, one of the richest and most powerful sectors in America, had been fighting to change Canada's drug legislation since 1969. Hence, when negotiations for NAFTA were initiated, it lobbied the loudest for amendments (Diebel: 1992, 93). They argued that is was unfair that these "no-name" generic drugs were cheaper to prescribe since they faced lower development costs than the large U.S. pharmaceutical companies (Diebel: 1992, 94). Thus, with the implementation of NAFTA's new C-91 drug bill, the Canadian parliament lost the power to allow generic drug companies to provide cheaper copies of brand-name drugs to consumers.

However, the issue of drug patents was intended to set a precedent for future disputes (Diebel: 1992, 94). Prominent American business corporations banded conjointly participated in the shaping of the NAFTA regulations, for these MNCs, including IBM, Hewlett-Packard, Procter & Gamble, Johnson & Johnson, and Time Warner Inc. wanted not only to establish patent, copyright, and trademark laws for drug patents in Canada, but also other products in the global market (Diebel: 1992, 95).

In theory, all pharmaceutical MNCs were protected under NAFTA, but in reality, only the large American pharmaceuticals benefitted from free trade. Contrary to the Americans' promise of transferring significant biomedical research to Canada in exchange for amendments to Canada's drug bill, it never did so after the implementation of NAFTA (Diebel: 1992, 94). When faced with criticism of its broken promise, the drug companies argued that Canada did not have to worry about having its own biomedical research industry, for as Gail Wilensky, a special assistant to President George Bush remarked, the "Canadians can make use of ours" (Diebel: 1992, 94).

Free trade with the U.S. did not just end with the cultural invasion of political and economic sovereignty, for it also affected Canadian culture. Both countries had distinct views on this topic, but ultimately the Americans won the argument simply because of its political and economic power over Canada. In particular, Canadians viewed culture and cultural industries as a social good essential to its sovereignty, and to Canada's capacity to preserve national values and identity, and since U.S. cultural products were its second largest export to Canada, many Canadians feared for the erosion of Canadian culture (Zemans: 1994, 509). In contrast, Americans viewed culture on an economic basis (Zemans: 1994, 510). For example, in a startling maneuver in 1994, the Motion Picture Association of America requested U.S. film directors to replace Japanese cars with U.S. ones in order to "sell American culture" (Zemans: 1994, 510).

Because Canadian policy in the past has been not to confront the Americans for fear of trade retaliations, the U.S. has taken advantage of Canada's passivity, while actively protecting its own culture. The U.S. federal government's role as a "cultural regulator" has expanded since 1969. Not only does the U.S. restrict foreign ownership in radio and television, its Federal Communications Commission screens the broadcast content (Zemans: 1994, 514). In 1985, the U.S. federal cultural budget was $1.6 billion.

Hence, the U.S. domination of Canadian cultural industries is primary evidence of the Americans' increasing geopolitical influence. Political economist Graham Carr contends that the end of the Cold War has resulted in the U.S. shifting its focus from military to cultural domination, and the expansion of cultural exports is the proven instrument of perpetuating its hegemonic stance (Carr: 1992, 207).

NAFTA's obliteration of Canadian protectionism resulted in a massive "Americanization" of Canadian cultural industries, particularly theatrical films, recorded music, and the broadcasting industry (Carr: 1992, 206). By 1994, the U.S. amassed a $2 billion surplus in cultural services and products to Canada (Zemans: 1994, 515). In the Canadian entertainment industry, U.S. films accounted for over 95 percent of distributors' revenue from Canadian movie theatres and virtually all distribution of sound recording in Canada was controlled by American companies (Zemans: 1994, 515). Not only did 82 percent of all newsstand periodicals sold in Canada originate from the U.S, but American publishers accounted for approximately 75 percent of the English-language textbook market in Canada (Zemans: 1994, 515).

Conclusion

Indeed, the geopolitical power of the United States has not decreased since 1945. Rather, its geopolitical potency has expanded, and in the case of its hegemonic stranglehold over Canada, the evidence is compelling. Economically, because of Canada's free trade with a large American market, the result was an undoing of the Canada's manufacturing sector. In particular, the employment migration to the U.S. devastated the economy, as within a short two year span, more than 435,000 jobs eradicated, competition with the more formidable U.S. industries forced Canadian factories to either go out of business or move down to a more business-friendly environment of lower taxes and cheaper input costs.

The corrosion of political sovereignty was also quite apparent, as the free trade allowed the U.S. to dismantle the provincial agricultural supply systems and also prohibited them from conserving energy exports for domestic use, as well as the prohibiting of Canada; in both cases, the federal government were helpless against the more powerful southern neighbour. Moreover, the American corporations and government worked together to disable the Canadian drug bill so that generic drugs could not be produced in Canada; the maneuver displayed the enormous political stranglehold that the U.S. had over Canada. However, what was most striking in the free trade between 1988 and 1994, was the cultural impact it produced, particularly the "Americanization" of Canada's cultural industries. Thus, in examining the U.S-Canada free trade partnership between the period 1988 and 1996, this essay examined the Americans' proliferation of its geopolitical influence in the North American hemisphere.