Canada is cosying up to Europe

What can they give each other?

On Saturday, Paul Krugman published a conversation with Abe and myself. We discussed our ideas about weaponized interdependence, and our book, Underground Empire (while I don’t allow people to pay for this Substack, I do encourage them to buy the book if they want to read it and/or support me - Amazon, Bookshop.org, Kennys.ie as your predilections and geography dictate).

One of the things that we talked about was the proposal for a much closer relationship between Canada and the European Union. Apparently, we will hear more on Thursday: various newspaper reports talk about Canada becoming an associate member of the EU, or forging a “new, all-encompassing relationship that will range from trade to security.”

I have no direct knowledge about what is likely to emerge. Before the flurry of media discussion, my sole source of information was a speech I heard Alex Stubb, the president of Finland, give in Helsinki in June, suggesting that he’d like to see Canada becoming a full member of a greatly expanded EU. But I have spent a lot of my career studying the EU, and Abe and I did interviews with Canadian policy people when we were writing for WIRED on how other countries were responding to the “enshittification of American power.” This certainly doesn’t count as expert knowledge on the specifics, but it does provide some loose license for pontification (which knowledgeable readers should feel free to correct as appropriate).

So here is the short version. The rapprochement could turn out to be very interesting; indeed it could be the beginning of a substantial shift in how the EU and Canada work. Equally, it could not, and it is going to be really hard to tell right away whether this is a sea-change or a nothingburger. The EU and Canada have an enormous amount to gain from each other, but face great difficulties in getting to the place where these gains will be delivered.

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The European Union and Canada are both in serious trouble right now, but their dilemmas are different. The European Union is big - the third largest economy in the world, but it has great difficulty in transforming economic strength into geopolitical clout. Canada, in contrast cannot aspire to be a global economic power. It has a much smaller economy (its GDP is lower than each of the three biggest EU member states) and an increasingly large problem in the United States. Canadian resentment of the uncaring behemoth to its south is nothing new - it was an endless topic of conversation when I taught at the University of Toronto - but it used at least be tolerable. It is becoming increasingly less so, as the second Trump administration fantasizes about annexation, and does everything it can to humiliate Canadians and force them to accept one sided deals.

Europe’s problem, then, is that it is disunited. Its Single Market spans twenty seven different nation states, and is not nearly as Single in practice as it is in principle. More to the point, as Abe and I discussed in our conversation with Paul, its market making and trade powers reside at the level of the European Union, while its national security arrangements are dominated by its member states. That makes it incredibly difficult for the EU to operate effectively in a world where market politics and national security problems are completely intertwined.

Canada’s problem is that it is penetrated. Not just its economy, but its policy space are based on its relationship with its southern neighbor. For example, the Canadian and US military are hardwired together, making it incredibly difficult for Canada to take independent decisions on procurement. This one-sided relationship worked only up to the point that the one side decided to start using it to comprehensively exploit the other. There are very many important areas of national decision making where Canada’s choices are fundamentally constrained so long as the US is willing to throw its weight around.

A lot of attention on EU-US and Canada-US relations focuses, unsurprisingly on trade, given Trump’s efforts to remake the global trade system in his favor. There isn’t a trade deal between the EU and Canada in the offing (or more precisely: one is in the offing, but it has remained there for years, and is unlikely to budge soon). But their more fundamental problems are problems of governance. So long as the EU is disunited, it will be incapable of pulling its weight. So long as Canada is irrevocably plugged into the US economy, military and other arrangements, it’s liable to get stuck with choices that run counter to its national interests.

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So the interesting question for me, then, is whether any new EU-Canada arrangement might help each party escape the trap that it finds itself in. It might! But if it does, it will almost certainly not be because the arrangement looks like a binding trade deal or market access agreement, based on some combination of legally enforceable provisions and political guarantees. It will be because it reshapes the relationship between domestic and international politics so as to allow new relationships that otherwise might be unlikely or impossible.

This idea follows from earlier work that Abe and I did on interdependence, before we got interested in its weaponization. We asked instead whether global interdependence might rewire domestic politics in unexpected ways, for example allowing new coalitions to come together across national boundaries. In the high era of globalization, if you found yourself blocked from getting rules changed in your own parliament, you might instead build connections with allies in some other country to get them to exercise pressure through the back door. This, for example, was how privacy activists tried to get stronger privacy rules adopted in the US than would have been possible had the US been isolated from Europe.

You might imagine how a set of arrangements that brought the EU and Canada together without making Canada a full member of the EU could change the politics of economic security in the EU. At the moment, decisions that involve national security typically require the agreement of all 27 member states, which is remarkably hard to achieve. While member states can work together in smaller coalitions on national security, that is politically messy given existing institutions, and liable to spark blowback from those who aren’t included.

If, however, you have some venue for informal security cooperation that involves the EU member states together with Canada, things may open up. There will be space for conversation and collective action that are at least partly detached from requirement for voting and unanimity, by virtue of the fact that they necessarily involve a non-voting actor (they still need agreement, but it can be working agreements that are more open-ended). If stuff starts to get done in that space, then it may rapidly come to supplement, and even partly supplant, the more traditional venues where the EU makes foreign policy.

Similarly, Canada might gain from consistent engagement with the EU in the space where national security interests and national economic interests meet. The US has assiduously put itself at the center of relations with allies; as Peter Katzenstein has noted, its whole system is structured around two distinct partnership arrangements, NATO for Europe and Canada, and bilateral arrangements for Asia. By design, accident, or both, that makes the US the primary interlocutor, more or less all the time. If the EU and Canada begin to build up their own relationship, and to deepen cooperative arrangements, that weakens the ability of the US to dominate relations and play the one off against each other. It builds space for Canada to gradually supplement, and maybe even supplant US-centric economic and political relations with European ones that are less likely to be exploited against them.

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In short then, both the EU and Canada have a lot that to gain from each other in principle. It is still an open question as to whether they will gain it. Their worries and their interests are different, which means they will have different priorities and may not trust each other enough for deep cooperation. Does Canada really want a deep relationship with Europe, or does it just want to build some bargaining leverage with the US by being able to wave towards outside options?

So too, internal changes might lead to ideological realignments. If Germany and France elect far right governments, will Canada want to stay the course? Again, it’s an interesting question: I have no clue what the answer is. The Trump administration, naturally enough, is likely to view any close alignment between Canada and Europe as a threat to its interests, and to use whatever threats and promises it can muster to make sure that things don’t work. Finally, the more that new arrangements promise to circumvent existing power arrangements and vetos, the more that those who benefit from these arrangements are likely to push back. There is likely to be a whole lot of bureaucratic knife-fighting, no matter what.

And the most frustrating element is that it will likely be impossible to assess out the chances of success at the outset. Unlike trade deals and the like, the potential of such arrangements is not in what is agreed and binding, but in what is opened up for the future, and how actors build on it. This means that highly transformative institutions will often look identical to ineffectual talking shops and indeed be identical to ineffectual talking shops. More or less by definition, the action in such institutions is what comes later rather than what is baked in at the start.

I’m really interested to see what is on the table on Thursday, but I’m more interested to see what the different actors do with it. Assessing the latter, obviously, is going to take time.