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Let’s not kill itThe Churchill-Roosevelt 1941 charter created the global free-trade boom that still existsLast updated 26 minutes ago You can save this article by registering for free here. Or sign-in if you have an account.American president Franklin Delano Roosevelt (1882 - 1945) meets British prime minister Winston Churchill (1874 - 1965) for a church service on board the HMS Prince of Wales in Placentia Bay, Newfoundland, August 1941. Photo by Print Collector/Getty ImagesExactly 85 years ago this coming weekend, on Aug. 9, 1941 — in the thick of World War Two — British prime minister Winston Churchill and U.S. president Franklin Roosevelt met secretly for three days on a U.S. navy cruiser in Placentia Bay, Nfld. The meeting ultimately changed the course of economic history by leading the world into decades of free trade and dynamic economic growth.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorChurchill had crossed the North Atlantic on a British battleship, dodging German U-boats, before arriving at Ship Harbour. The U.S. had not entered the war at that time, and so Roosevelt, pretending to be on a fishing trip in New England, sailed up to Placentia Bay on a U.S. navy cruiser.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe story goes that Churchill ferried over to Roosevelt’s navy cruiser, where they met with military officials and others to draft what became known as the Atlantic Charter, a 600-word note endorsed by the two leaders that included a brief summary of six “common principles” that should guide the world at the end of the war.The fourth principle would transform the international economy. Once peace is established, the nations of the world “will endeavour … to further the enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity.”It’s an agreement economic historians agree launched the momentum for the founding in 1947 of the General Agreement on Tariffs and Trade (GATT) and its successor World Trade Organization (WTO) — institutions that would replace a global system of trade wars and tariff battles with a free-trade regime that still survives today, but under a growing threat.As the graph below illustrates, the opening of the global economy under the GATT/WTO rules unleashed a spectacular rise in trade. Tariffs fell from an average of 40 per cent to about 4.5 per cent, a rate that still prevails today globally but is now under threat from the Trump trade policies and the emerging willingness of other nations to turn away from the principles of free trade in favour of protective economic nationalism.Constantly under attack is the most favoured nation (MFN) principle, a keystone of the WTO system. Under MFN rules, countries can’t play favourites (except when they make comprehensive free-trade agreements with chosen partners). Each nation should treat other nations equally without favouring one over another.Under Donald Trump, MFN principles are ridiculed as policies that must be scrapped to set the stage for “the end of free trade,” a theme that seems to dominate academia and the media. Infamous Trump trade whisperer, former U.S. trade rep Robert Lighthizer, appeared last week in Foreign Affairs magazine to repeat his call for a new world trade order. Favoured nation should be scrapped, and the world should turn to balanced trade (an impossible and irrational objective) accompanied by increasing economic nationalism and constant trade manipulation by governments.Which is what Trump seems intent on doing under the guidance of Lighthizer and others whose objective is to demolish the global free-trade model established under GATT 80 years ago.In mid-July, using a 1930 law, Trump threatened the maximum possible tariff of 50 per cent on Canadian cars, alcohol and dairy products. American trade lawyers were quick to dismiss the tariff as did Canadian law firm Borden Ladner Gervais (BLG), which described Trump’s tactic as a revival of the 1930 U.S. Smoot-Hawley trade war policy that deepened the impact of the 1929 Great Depression and led to a 60 per cent crash in U.S. imports and exports.“Litigation is certain,” said BLG’s legal team — acknowledging Trump is effectively making a claim that by tariffing imports of alcohol, dairy and auto products Canada is in breach of MFN.Strictly speaking, Trump has a point. Current provincial impositions of a ban on alcohol imports is a breach of trade rules. However, as Mark Carney noted in April, Trump has set the stage for war: “You know what’s an irritant? A 50 per cent tariff on steel and aluminum, 25 per cent on automobiles, all of the tariffs on forest products. Those are more than irritants,” Carney said. “Those are violations of our trade deal, OK?”Carney is right, although it does not sit well with his long-standing disdain for free market economics and his belief that trade policy should be used as a foundation for national economic management.Free trade and free markets are not on Carney’s agenda. As he put it in his 2021 book, Value(s): Building a Better World For All, the old world order is based on the false “belief that free markets, free trade, floating exchange rates and liberalized capital flows would promote global prosperity.”What the world needs now is another Churchill and another Roosevelt to revive the fundamentals of free trade and markets to make sure the trade statistics hold steady and don’t shift in reaction to Trump’s direction. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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