Juno News - Carney pushes Canada closer to European Union

00:00:00.000 Well, after initially denying it, Prime Minister Kearney now says Canada is, in fact, moving

00:00:10.540 towards associate member status with the EU. Our guest today is Professor Ian Lee at the Sprott

00:00:18.060 School for Business at Carleton University. Welcome, sir.

00:00:22.880 Thank you for inviting me, Mark.

00:00:24.720 Okay, so do you have any idea what this means, what it means for Canada, what it means for

00:00:29.620 Canadians, especially on the economic front. I think that's probably the biggest concern and

00:00:34.660 the sovereignty front. Right. You're absolutely right. I think this is still very, very pie in

00:00:43.580 the sky. It hasn't been fleshed out. I certainly know what the full status membership means in the

00:00:50.520 european union um it's a pretty uh pretty uh rigid structure um it's uh compared to other systems

00:01:00.280 point one uh point two there the and more to your point of the economics i've been studying the

00:01:07.480 european union for years and years i in fact had a european union passport courtesy of my late

00:01:12.860 father who was a brit um and i was automatically entitled and obtained a british slash uk passport

00:01:19.060 which I had for many years is a sort of a curiosity piece not that I ever used it

00:01:23.480 and then of course until UK pulled out and then it no longer was valid in the EU

00:01:28.580 I've also traveled by my own calculation over the last 40 years to Europe

00:01:33.960 over 80 times teaching in Central East Europe after the wall came down in 1991

00:01:38.620 that's a third of a century ago now so I'm very familiar with Europe and I'm

00:01:42.220 certainly not I want to make it clear to listeners I am not anti Europe I love

00:01:45.400 Europe I love the old castles and the cathedrals and the cobblestone streets

00:01:48.800 That's not what we're talking about

00:01:50.700 And many Canadians have very warm, friendly feelings

00:01:53.640 Towards the European Union

00:01:55.140 Because many of them have parents or grandparents 0.94

00:01:57.260 That came from there, as I did

00:01:58.840 The issue is the economic decline of the European Union

00:02:04.440 And right away, somebody listening may say

00:02:06.440 Well, that's not fair, that's not true

00:02:08.380 Then they should immediately go to Mario Draghi's report

00:02:11.080 At the European Commission

00:02:12.780 Mario Draghi is the former governor of the European Central Bank

00:02:16.880 And then the Premier of Italy

00:02:18.100 a PhD in economics, who wrote a devastating critique of the decline of European competitiveness.

00:02:24.180 He documented it, very high levels of regulation, declining innovativeness, high levels of taxation.

00:02:33.480 They've got many, many problems. And the one that wasn't mentioned yesterday or today,

00:02:41.300 my Mr. Carney, is, I think, the biggest crisis of all facing Europe. And it's what is called

00:02:46.320 China Shock 2.0. Anybody listening or watching this, you and I talk, can Google that phrase

00:02:53.900 because in the last 12 months, there have been some excellent papers and op-eds written by

00:02:59.620 very serious people, including the Federal Reserve Bank and the United States published a paper on

00:03:04.560 it. Some of the European think tanks have published on it. And I'll just be right to the

00:03:09.380 point. China Shock 2.0 is China very publicly deciding that they're going to go way up the 0.72

00:03:16.100 the value-added chain into advanced manufacturing. They already are the largest single manufacturer in

00:03:21.460 the world. They have 35% of the world market share in manufacturing. They are a powerhouse

00:03:27.860 like no other. And there is grave fear in Europe that they are going to hollow out German and 0.99

00:03:36.220 French and Italian manufacturing. That's the core of the European economy. I mean, the German

00:03:42.520 automotive industry is world famous and the fear is they're going to get hollowed out and they're

00:03:48.780 going to lose millions of jobs if hundreds of thousands or millions of jobs and and china shock

00:03:54.240 1.0 we knew about that took place in the early part of the uh century of this century when it

00:04:00.000 hollowed out the rut and created the rust belt of the united states you know ohio and and and those

00:04:05.720 states that led to guess what the election of donald trump so where i'm going with this and

00:04:12.300 And I mean, I hope they can turn it around, but they have a large number of serious problems.

00:04:17.440 Productivity is going down.

00:04:19.800 The OECD says that their social programs are unsustainable. 1.00

00:04:24.100 They have very serious problems with illegal immigration.

00:04:27.940 And on the legal immigration side, and I'm being, this is not in Mario Draghi's book.

00:04:32.820 I'm just saying it from my own experience, going to Europe many, many times.

00:04:35.880 They have done a very poor job of integrating legal immigration, not to pat Canada on the

00:04:41.580 or the U.S., but U.S. and Canada has done a much, much, much better job of integrating 0.98

00:04:48.440 immigrants, whereas in Europe, they have put them into these immigrant ghettos, the

00:04:52.400 banlieue, as the French call them, and they're not integrated as they are in North America. 0.88

00:04:58.640 So they've got taxation that's very high. They have regulatory barriers that are getting

00:05:03.320 worse and worse. Innovation is declining. Productivity is declining. Mario Draghi showed

00:05:09.260 that Europe, the European economies, have lost 50% of their exports in the world. In the last 30

00:05:18.600 years, their share of world exports has declined by 50%. The Chinese are eating their lunch. 1.00

00:05:27.040 And so they've got an incredible number of problems. Let's be real. Crime is up. Repeat 1.00

00:05:33.060 offenders are released on bail. Police responses are slower than ever. And in many places,

00:05:38.760 law abiding citizens are expected to just hope nothing bad happens. That's not good enough. And

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00:06:34.540 special offers. Make sure that you're prepared. It's better to be safe than sorry. Yeah, I want

00:06:40.260 to ask you further to what you just said, having referenced the Mario Draghi report, and it's clear

00:06:47.680 by the numbers, which you've just stated, that Europe is in a state of decline and has been for

00:06:52.000 decades, perhaps. Given all that, and also given Carney's long-standing ties to the European elites,

00:06:58.300 is this move intended to inject new life in the alliance

00:07:02.480 more so than it is in helping Canada?

00:07:04.400 In other words, does Carney have divided loyalties

00:07:07.520 or even loyalties that really are directed more

00:07:11.140 at saving the EU than it is at saving Canada?

00:07:13.900 What do you think?

00:07:15.120 I'll be honest, I don't know what goes on in his mind

00:07:18.400 or I'm not a psychologist,

00:07:20.180 but I can say it slightly differently

00:07:22.800 to address your question in a different way.

00:07:24.600 I think that, and this is just my view, studying all these numbers for years and years and reading

00:07:30.840 incredible numbers of studies, including the Draghi report, I think that Europe needs Canada

00:07:36.220 a lot more than Canada needs Europe. Now, having said that, yes, of course, we want to diversify.

00:07:42.280 We want to become less dependent, not eliminate our relationship with the states, in my judgment,

00:07:47.420 but we want to diversify by exporting resources to Asia Pacific and, of course, to Europe,

00:07:53.640 because they do need our resources.

00:07:55.640 Even if they're in decline, they have no natural gas.

00:07:58.720 You know, Putin, they cut off Putin understandably improperly because of his invasion.

00:08:03.780 They don't have natural resources of any of any major magnitude.

00:08:08.320 So they need us.

00:08:10.720 The benefits that Mr. Carney spelled out this morning in his speech, which I did watch,

00:08:17.060 I thought I was sitting here watching that saying, well, we can get those benefits now

00:08:22.440 through the free trade agreement where's the value added the incremental advantage by this

00:08:29.340 unstated unclear ambiguous uh associate member status and uh what cost do we have to give up

00:08:39.120 do we have to give up and give them some form of taxation some revenue share uh sharing some of

00:08:45.580 their costs i mean this is why we need a lot more information i think we can achieve what we want

00:08:52.420 through straight old-fashioned trade agreements,

00:08:55.620 you know, such as the CETA,

00:08:57.760 the Canada-European Trade Agreement.

00:09:00.200 I've supported every free trade agreement

00:09:02.000 Canada has negotiated since 1988.

00:09:04.760 Free trade removes tariffs.

00:09:06.160 They don't put them on.

00:09:07.420 They facilitate and enhance trade.

00:09:09.500 And so the list he gave of industries

00:09:11.860 that can benefit from this new proposal

00:09:15.840 can be benefited,

00:09:18.000 can achieve advantages through the CETA

00:09:21.320 if europe good this is a very good point for everyone 10 of the 28 countries of europe have

00:09:28.120 not even signed off on the existing european canadian trade agreement which was negotiated

00:09:34.920 roughly 10 years ago and that is less controversial than associate member status so i'm not sure i

00:09:42.280 mean this is fraught with economic issues it's brought with methodological issues sovereignty

00:09:47.720 issues are we going to have to give up any sovereignty to achieve this so there's he's

00:09:52.680 going to the prime minister is going to have to come up with a lot more information for the

00:09:56.840 canadian people before anybody can say oh yeah this is this is going to be a great deal i am

00:10:01.880 skeptical a couple of questions before we wrap things up in light of this sudden pivot towards

00:10:08.360 europe it doesn't lend credence to the idea that americans have put out about what happened to the

00:10:13.880 trade deal. Did Canada intentionally blow that agreement up at the last minute, as has been

00:10:19.720 suggested by people like Scott Besson, for instance, and Jameson Greer, using that as a pretext for

00:10:25.320 delivering Canada to the EU? Was that the intention all along? And I take your point

00:10:31.160 about not being able to read Carney's mind, but would that make sense to you?

00:10:36.200 Well, my interpretation was similar, but not the same. It wasn't completely contradictory,

00:10:41.240 but it wasn't that different i i think what happened and again analyzing the data that is on

00:10:47.160 the record three i believe three premiers came out in the five days before the uh the agreement was

00:10:53.480 before canada walked away and said premier manitoba i really don't like this deal at all

00:10:58.840 premier quebec said that and then how many of the other seven premiers privately communicated that

00:11:03.800 to mr carney we don't know nobody said behind publicly what they did i think what happened was

00:11:11.240 that as the Prime Minister briefed the premiers, debriefed the premiers on the contents of that

00:11:17.180 agreement that they had that morning, on that Friday morning, enough premiers said to him,

00:11:22.140 you know, we're not going to support you on this. And so I think Mr. Carney realized he didn't have

00:11:27.060 enough political support in his mind to take it to the game people. And so he walked away. And so

00:11:33.760 instead of saying, well, I walked away because I have a deal that my own premiers don't agree with,

00:11:39.280 he instead blamed it on the americans uh for the reasons that he provided so i'm not sure it was

00:11:46.840 connected it was related to the european his plan for europe because i think he's too he has too

00:11:53.000 much experience and knowledge as an economist he's very aware of the deep problems of europe

00:11:58.180 mario draghi if i'm not mistaken is a is a friend of mark carney and mario draghi is a very

00:12:03.880 distinguished economist and he just laid it out in that report you just you can't argue with the

00:12:09.180 is empirical, massive analysis of the deep structural problems in Europe. And I'm certain

00:12:15.220 that the Prime Minister of Canada knows that. So I think that today, this is more political optics

00:12:20.320 to say to the Canadian people, look, I'm fighting for you, I'm working on behalf of you to find

00:12:25.000 alternatives to the US. So I think it's much more of a symbolic and political document than it is

00:12:32.420 an economic document that can become a reality. That being the case, though, Professor,

00:12:38.240 we're already seeing some backlash from the americans from the trump administration i mean

00:12:43.000 overall what would this do what would entering into this into a formal agreement with the eu

00:12:50.320 as associate member even though we don't really know what that means what would that do to our

00:12:54.760 relationship our trade relationship um and otherwise with the united states i'm gonna

00:13:00.260 again i don't i don't agree with anything mr trump does i don't agree with tariffs i'm not

00:13:05.780 here to defend trump whatsoever at all but i can study the data on the record uh trump already said

00:13:11.740 that this could be lead to very serious blowback uh with increased terrorists okay we know his

00:13:17.460 position already i found it very instructive that the republican senator from from maine

00:13:23.100 who is a very mainstream republican she's been the senator there for i think 30 odd years

00:13:29.640 and i watched senator collins and i watched her on cnn and she said i am completely against the

00:13:37.380 trump tariffs he's a republican i'm against the trump tariffs i'm against what's how canada is

00:13:41.780 being treated but this is not helpful she said last night the the the uh outreach to by canada

00:13:50.240 to europe and and senator collins is a mainstream reasonable a thoughtful republican she's not a

00:13:58.940 a flamethrower an extremist and so when the mainstream are saying that this is not helpful

00:14:05.820 and that you know in the in terms of the relationship of the united states i'm going

00:14:09.580 to listen to her because i think she has a lot of uh credibility and and so that's what really got

00:14:15.580 my attention when senator collins is talking like that there's going to be other senators in the u.s

00:14:20.940 senate who are thinking what she is saying out loud there she's gone her own way on on other

00:14:26.620 issues as well. She's known as a not, well, I wouldn't say an anti-Trump entirely, but this is

00:14:34.200 a person who is very independent in her thinking, and she's trying to win in the midterms. But

00:14:39.540 would this be the end of our ongoing friendship and relationship with the United States,

00:14:44.960 or maybe the start of something new? How is this going to play out with the Americans?

00:14:49.040 well you've asked i think the the 66 billion dollar question what will this do a to the

00:14:56.660 negotiations which are not occurring right now mexico's at the table we're not and secondly

00:15:01.680 even more more catastrophic or potentially catastrophic what's this going to do with

00:15:07.320 kuzma is this going to be the next step to the we're going to see a tweet one morning or an

00:15:12.300 announcement one morning from the trump white house that they have decided to exercise the

00:15:17.000 uh the uh the six month um trigger clause and abrogate cancel uh kuzma i mean this could be

00:15:24.020 dead this would be devastating to us i believe it would see we'd see it crash the canadian dollar

00:15:28.340 um and you would see capital flight to the states as i've said before so um i don't i can't see us

00:15:34.980 returning to the table in the final two years of the trump administration if we did proceed given

00:15:40.800 what he has said and what some other senators have said some senators have said in the u.s senate so

00:15:46.560 it looks like the next two years are going to be very tough times for canada but if i hear you

00:15:52.280 correctly this could be the final nail in the coffin for kuzma if we do this with the eu is

00:15:58.600 that right could it could i'm not predicting it but he is uh he was so forceful in his opposition

00:16:04.700 to this agreement and we know that we are not at the table mexico is and we know that kuzma has to

00:16:12.320 we have to address it. And so this is introducing greater risk surrounding that, and it's going to 0.87

00:16:21.960 make it much more difficult to go forward in terms of negotiations on trade with this

00:16:27.960 administration in the next two years. Professor Lee, thank you so much for coming on the show.

00:16:32.200 We appreciate it as always. Thanks very much, Mayor. Thank you.

00:16:36.340 If you enjoyed the show and appreciate independent journalism, please consider becoming a premier

00:16:41.220 member of Juno News by going to junonews.com backslash straight up. It helps us do what we

00:16:46.740 do here. Thank you so much for tuning in. We'll see you next time.

Juno News - September 20, 2026

Carney pushes Canada closer to European Union

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