Gordon had been right to express his anxieties. For the guidelines had involved a principle—the principle that the American government had the right to dictate the investment and reinvestment policies, the purchasing practices, and the financial operations of Canadian companies in which Americans had more than a 10 per cent interest. What price Canadian sovereignty and jurisdiction in such a state of affairs? Canada was later granted an exemption from these particular directives by a foreign government, but this is beside the point. The brutal fact of Canada’s vulnerability to a neighbour’s economic and political pressures had been bared for all to see. Henceforth the issue became—“Is Canada sovereign or is it not?” When David Ricardo formulated his doctrine of comparative advantage, he was writing about trade between sovereign and independent nations, each choosing its own areas of specialization. He was not talking about trade between a motherland and its colonies where the size of the home markets and the direction of investment made the colony a supplier to the needs of the heartland.
