bout de papier, Vol. 11, No. 3 (1994) — Fall 1994 // Automne 1994, pp. 42–44
THE DEVELOPMENT OF POSTWAR CANA-
DIAN TRADE POLICY by Bruce Muirhead,
McGill-Queen’s University Press, Montréal,
1992, 230 pages. $39.95.
In the aftermath of the Second World War, Canada became ever more dependent on international trade for prosperity, with more and more of that commerce conducted with the United States. Though Canadian policy-makers wholeheartedly supported efforts to reconstruct international economic relations on a multilateral basis, through instruments such as the International Monetary Fund and the ill-fated International Trade Organization, they were also mindful of the need to deal with Canada’s bilateral difficulties, most conspicuously our exchange problems with the United States and the lingering impact of the war on the United Kingdom. Considerable attention, significant diplomatic resources and vast sums were devoted to the restoration of Canadian trade with Britain and, to a lesser extent, Western Europe, to maximize our exports and to limit our dependence on the American market. For several years after the war, a series of extraordinary financial measures (Canada’s reconstruction loan to Britain and other credits, the Anglo-American loan and the Marshall Plan) underwrote trade between sterling and dollar countries. Even with this exceptional assistance, the prognosis for Canada’s trade with Britain and Europe was not favourable.
As Bruce Muirhead documents in this important study of Canada’s post-war trade, Canada pursued a policy of enlightened self-interest which it hoped would permit a resumption of the commercial relationship with Britain and Western Europe which had been so vital before the war. In effect, post-war policy represented a continuation of the measures adopted during the war to facilitate British purchases from Canada. Circumstances, not policy directives, led to a less satisfactory outcome. Muirhead ably refutes any suggestion that the Liberal governments of King and St. Laurent ’sold out” national interests to continental concerns.
Where he is less sure is in his discussion of the tensions or contradictions between multilateralism and bilateralism in Canada’s external economic policy. To Muirhead, one must subscribe to one or the other of these creeds. This distinction seems artificial or exaggerated. Certainly, some policy-makers were more inclined to see the General Agreement on Tariffs and Trade as the principal salvation for Canada, while others looked towards an accommodation with the United States or bilateral deals with Britain. Most, however, responded to the challenges of opportunities presented in either context. Their approach was more pragmatic than academic or theological. It would be more accurate, but less colourful, to note that policy-makers favoured the maximization of Canada’s exports by whatever means were available, including the overlooked domain of trade promotion. Still, it is hard to quarrel with Muirhead’s fundamental conclusion, that the multilateral alternative failed in this period, leaving acceptance of a continental relationship as the “only real option” (p. 75).
But what about the problems, and solutions, confronted by British policy-makers? In his introduction and elsewhere, Muirhead tends to explain and to excuse Canadian choices or policies by reference to the circumstances, but the same allowance is not made for British options. British policy in relation to Canada is depicted as “almost-punitive” (p. 5), a sentiment Muirhead imputes to British reaction to Canada’s refusal to join to sterling area. Yet a more reasonable explanation would be that each country went its own way, neither prepared to subordinate its overall interests to the bilateral relationship. In contrast to the sympathetic evaluation of Canadian policy, British external economic policy is depicted as monolithic and hostile to dollar countries, with no attention paid to multilateralist sentiments in Britain during or after the war. There is little comparison with other relationships which might help to explain respective policies. For example, though much larger than the rest, the British loan was not the only credit extended by Canada to encourage post-war trade. Was the assistance to France, so large in relation to normal trade with that country, justified? Was it any more productive? Both measures were part of an approach sketched out in the White Paper on Employment and Income published in April 1945, which is treated incidentally and incompletely in this account. American aid to Britain also merits more direct comparison with Canadian assistance. And vast sums were Some of the questions about British external economic policy in the aftermath of the war could have been answered by referring to the fine studies by Sayers (whose phrase ’bilateral imbalance within a balanced North Atlantic triangle’ is mistakenly attributed to Cuff and Granatstein), Pressnell and Cairncross. For his account of British discriminatory policy in the 1950s, Muirhead relies too heavily on The Economist. That contrasts to the earlier part of the story, which is carefully documented from an impressive array of published and unpublished books and papers.
As for the historical literature on Canada’s international economic relations, that is also treated idiosyncratically. Readers of Muirhead’s earlier articles will need no introduction to that familiar straw man, Donald Creighton, in his traditional villainous guise. Surely the time has come to confront the prevailing consensus on this subject, which is represented by scholars such as Granatstein, Cuff, Bothwell and English. Admittedly it is less fun to take issue with them on points of interpretation, but does that justify skipping a generation of scholarship to attack someone who wrote only one significant survey of this era, a book distinguished more by its polemical tone than by its research? The fact that Creighton has been embraced by a few fringe players of more recent vintage does not justify treating him as a predominant scholar in this field
There are also some problems with evaluation of statistics. What constitutes a “trend?” Twice an increase in British exports to the sterling area from 45% in 1946 to 48% in 1950 is depicted as dramatic. But the rise in merchandise exports from Canada to Western Europe from 4% in 1950 to 6% in 1955 does not receive equivalent treatment or explanation. The tables appended to the book deal with 1937, 1949 and every year to 1957, but not 1945 to 1948. In the text and a table, Muirhead compares the first half of 1949 and first half of 1950 to assess the impact of Geneva and Annecy on European imports from Canada. Muirhead himself concedes that other factors such as devaluations undoubtedly played their part, so how valid is the comparison? Similarly, there are frequent references to the proliferation of non-tariff barriers to trade but no specific or effective discussion of these instruments and their impact.
Still, scholars and practitioners are indebted to Muirhead for this fine account of the interplay of Canadian and British policy. Especially for a country as dependent on international trade as Canada, it is important to understand the problems, the questions and the choices which confronted policy-makers and traders in the postwar years. This book makes a vital contribution to that understanding.
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Originally published in bout de papier, Vol. 11, No. 3 (1994) — Fall 1994 // Automne 1994, pp. 42–44. Read the rest of this issue →
