The breakdown of trade discussions between the U.S. and Canada has resulted in Prime Minister Carney turning to expanded trade with Europe. That decision raises two fundamental questions:

First, Canada already has a free trade agreement with the EU: the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). Canada also has the Trade Continuity Agreement (TCA) with Britain, and an agreement with the European Free Trade Association (EFTA), whose members include Iceland, Liechtenstein, Norway and Switzerland. Given that we have these agreements with virtually all of Europe, what does “turning to Europe” mean exactly?

If it means becoming an EU member, it’s important to understand that membership involves much more than trade. The EU is a political confederation in which the European Parliament has powers superior to the governments of member countries. That’s what drove Britain to exit the EU via “Brexit” in 2016.

The second fundamental question is why Canada would want closer relations with Europe. It is, in the words of former European Central Bank president Mario Draghi, “a society facing a slow agony of decline… (I)f the stagnation continues, the continent will progressively lose the ability to fund the core functions of a modern state.”

Given this dire description from one of the EU’s most experienced officials, it’s understandable that European Commission president Ursula von der Leyen wants to regain some semblance of credibility by having Canada become an “Associate Member.” But signing on with the dysfunctional, collapsing EU would be like boarding a cruise ship that’s already sinking.

Not surprisingly, the president of the country whose trade with Canada dwarfs Europe’s reacted strongly to reports that Canada was considering EU membership. Donald Trump said: “If they do that and if I think it’s a hostile act, I will put very serious tariffs or stop trading with Europe on many things.”

The irony is that becoming an associate EU member would be largely ceremonial and likely have little to do with trade. No doubt Canadian officials will have explained that to their American counterparts, but it’s difficult to change Trump’s mind about almost anything.

Back in Canada, the Carney government is focused on attracting investment needed to revive a stagnant economy. At the recent Canada Investment Summit in Toronto, international investors were given a deal book describing 167 projects available for investment.

Attendees ranged from local money managers, such as the $303-billion Ontario Teachers’ Pension Plan, to the APG Groep NV of the Netherlands, which manages assets of $1.1 trillion. Some delegates said Ottawa’s new structure for regulatory approval of projects compared favourably with more difficult procedures elsewhere.

But it’s not just international investment that’s needed. Before the election of the Trudeau government in 2015, Canadian investment abroad was about equal to incoming investment. Since 2015, $828 billion more in investment capital has left the country than has entered. Reversing that economically disastrous trend is vital to arresting the collapse of the Canadian dollar and attracting the new investment needed to reverse our industrial decline, no matter what Donald Trump does next.

If anything, Canada’s domestic picture is even worse than the disarray on our trade and investment files. Ottawa’s 2026-27 budget projects a staggering $78.3-billion deficit. No prudent national leader would put forth such a budget in these escalating inflationary times. To see a much-lauded former central banker do so is perplexing.

The only way to keep our country from falling into a debt abyss is by increasing revenue or cutting spending. But there’s little room for more taxation. Fraser Institute data show that in 2024, the average Canadian family already paid 42.3 per cent of its income in taxes, compared with 35.5 per cent spent on housing, food and clothing combined.

Making matters worse is a virtually unrestrained immigration policy adding large numbers of unskilled people requiring taxpayer financial support. Rejecting the points system that has functioned well since Lester Pearson introduced it in Centennial Year, Justin Trudeau’s approach saw a flood of people without needed skills or social compatibility pour into the country.

Perhaps the most troubling of the Liberals’ nation-destroying moves has been their policy on information. They brought in Bill C-9, the “Combatting Hate Act,” which amended the Criminal Code hate propaganda provisions, as well as Bill C-34, which establishes a new “Digital Safety Commission” to regulate online content.

Frontier Centre for Public Policy senior fellow Pierre Gilbert says, “This increasing control over what Canadians can say and read is deeply troubling… If success is measured by whether Canada is becoming more prosperous, whether immigration is sustainable and whether Canadians remain free to speak their minds, this government is failing.”

The Carney Liberal government would like us to believe that our problems are caused by Donald Trump. The reality is that Canada was in self-inflicted decline well before he became U.S. president.

Gwyn Morgan is a retired business leader and former director of five global corporations. He brings decades of executive experience to his analysis of the Canadian economy, energy policy and federal governance.