The recent diplomatic spat between India and Canada that has also enmeshed Five Eye partner countries is the canary in the coal mine for friend-shoring.

While a noble sentiment, many others have already pointed this out, but I will join the chorus from an industrial policy angle – “who is a friend?”

To quote Lord Palmerston, “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual.” The situation with India and Canada seems to illustrate this point.

On the face of it, seems like there’s a lot in common:

• Democracies;
• Commonwealth countries;
• Westminster Parliaments;
• etc.

And yet, in recent months, the potential for an Indian-Canadian FTA has collapsed. Bilateral relations are downright frosty. Even the burgeoning immigration from India to Canada could be threatened.

Luckily, Indo-Canadian bilateral trade has never been substantive. Canada’s inability to trade with anyone than the US has always gotten in the way, while India has a lot of dancing partners to choose from in Asia.

Looking beyond these two countries, however, this situation acts a case study of why the neoliberal industrial policy tactic of friend-shoring is bound to fail. How often do friendly countries fall into trade spats? Well, quite often when you think of it. The ongoing frictions between Canada and the US on softwood lumber ring a bell. The “Cod Wars” between the UK and Iceland are a European example. Even right now, in the middle of a war, Poland and the Ukraine are engaged in a spat on agricultural products. A friend in need is apparently not a friend in deed here…

While the logic of trade diversification has merit, the assumption that moving trade dependency from China to democracies = no future problems is flawed. Instead, even with friendly countries, economies will have to plan for contingencies, which requires industrial policies to create a domestic supply of core essential products.

Sorry folks; no easy way out from being an adult.