“Friendshoring”: Just What the Doctrine Ordered

5 minute read

Last week, Deputy Prime Minister Chrystia Freeland delivered remarks to an audience of economic heavyweights at the Brookings Institution in Washington, DC, in an address entitled How democracies can shape a changed global economy.’ 

The speech wasn’t meant for the average Canadian, who remains frustrated with rising price tags at the grocery store and at the pump, and isn’t consoled when told for the umpteenth time that inflation is a global phenomenon brought on by Russia’s invasion of Ukraine. 

Still, it’s worth a listen if only because it might hint at what the next chapter of the government’s plans to tackle inflation, among other things, could include. The speech has garnered significant attention for many reasons, the most compelling of which might simply be that she defined the problem and presented a solution, a through-line the Liberals can’t seem to thread very well lately.

The Problem(s)

Today marks 235 days since Russia first invaded Ukraine. Even the best efforts to tune out the news cannot provide a reprieve from its impact on our everyday lives: 

Ukraine is responsible for a large portion of global crop exports, including staple ingredients like corn and wheat found in most pantries across the country. Decimating Ukraine’s ability to export grain indirectly pressures Canadian capacity, and due to the increasing frequency of severe weather events, record-high temperatures, and intense droughts, Canadian capacity is less predictable than before. Challenges with transportation, input costs, storage, labour shortages, and other whiplash effects from supply chain issues further complicate matters and ultimately result in surging costs. 

Closer to home, Farmers for Climate Solutions has been calling on the federal government to catch up with its counterparts and seriously center climate action as part of its agricultural strategy. For what it’s worth, our agricultural sector is responsible for approximately 10% of all Canadian greenhouse gas emissions (GHGs). In comparison, the oil and gas sector is responsible for almost three times that, at approximately 27%. 

Canada, and many other signatories of the Paris Agreement, find themselves in between yet another rock and hard place. Varying degrees of global reliance on Russia’s oil and gas make turning the taps off all but impossible: the price of oil would only increase if Canada refused its supplemental energy imports from Russia, and most of Europe simply couldn’t operate without it. Thus, Putin continues to literally and figuratively fuel war efforts without much fear of being sanctioned in this regard. 

Food costs more. Gas prices keep climbing. The war wages on. And on average, Canadians aren’t seeing their wages keep up

Squaring these circles presents a daunting and seemingly impossible task. From across the aisle and across the country, conservative leaders believe the answer to kneecapping Russia is uncapping our own wells to ramp production. The Official Opposition has ramped up its calls for the end of federal carbon pricing measures, even if doing so wouldn’t materially impact the root cause of increasing costs. 

The federal government recently approved changes to the carbon tax rebate schedule so Canadians receive payments every quarter instead of once a year. The first of these payments were deposited last week, deflating some of the Conservative critique that the governing Liberals haven’t taken action to cushion the impact of inflation for Canadians. 

Would ‘friendshoring’ do more of the same?

The Solution(s)

Repetition is annoying, and Canadians grow weary of it, regardless of which side of the aisle it comes from. The Middle Class And Those Working Hard To Join It are probably tired of hearing about our great nation’s GDP, the Canada Child Benefit, or passport offices, particularly if they don’t have young kids and can’t afford to travel internationally right now. 

Freeland’s remarks offered welcome relief from the usual spin. In her speech, she provided potential insight into what a long-term plan to address the war might look like for the Liberals.  Initially referenced during a joint press conference with U.S. Treasury Secretary Janet Yellen earlier in the year, ‘friendshoring’ appears to be set to take a more central role in foreign policy. 

It’s a term Yellen has popularized to describe the deepening of trade ties and supply chain links with allies. Freeland imagines it as a values-based, NATO-esque arrangement. To some it sounds eerily similar to what the Conservatives have been calling for with respect to energy exports: a domestic increase in production to support international relations. 

The President and CEO of the Business Council of Canada Goldy Hyder was quick to define it as the ‘Freeland Doctrine’ and called it “a serious speech for a serious time.” 

The Proofpoint(s)? 

With the IMF’s Annual Meetings now behind us and the 2022 G20 Leaders’ Summit and COP27 approaching soon, the timing of such a speech implies a stronger likelihood it is less of an inspiring daydream and more of a trial balloon to see what the global appetite for Canadian friendshoring might be. 

Freeland believes friendshoring could “help preserve the planet” and “speed up the green transition,” referencing the recent agreement to establish a “transatlantic Canada-Germany supply corridor” as one example. 

Additionally, Natural Resources Minister Jonathan Wilkinson said Ottawa doesn’t expect to see significant declines in the use of oil before 2030. He may have said this to quell fears from industry, but it is also true that Canada does not produce enough to cover its domestic needs and will need time to scale alternative transportation options like electric vehicles. 

While Freeland emphasized the urgent need for democratic countries to band together to starve the “world’s tyrants” of any inspiration,  what happens once we check that off the list? Could friendshoring truly mitigate the impacts of climate change? Will it truly take a fresh, new bite out of climate change if American-manufactured electric vehicles are all powered by critical minerals mined in Canada? 

Freeland also contends that wealthier industrialized countries would open their arms and welcome less-resourced nations into this friendship club as long as they played by the rules. How we agree upon the rulebook is yet to be determined and poses a complicated doing (and undoing) of existing agreements that might not privilege all players equally. A recent example of this challenge is the stalled negotiations about reopening Canadian NEXUS centres. Despite growing backlogs, Canada’s Ambassador to the U.S., Kirsten Hillman, expressed frustrations with how unfriendly the U.S.’ “hardball approach” has been. 

Friendshoring: To some, it sounds too good to be true and too simple a solution to growing international conflict upheld by an intricate web of multilateral trade agreements. Still, Freeland romanced the idea with conviction. She’ll need that resolve; she has her work cut out for her.

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