Commentary from Colin Robertson

Where’s Canada falling short in its plan to be a trade superpower?

by Colin Robertson

The Globe and Mail
April 1, 2014

Headlines over rail and terminal capacity to get western grain to market and the recent shutdown of Port Metro Vancouver are a reminder that trade and transportation go hand in hand. Saskatchewan’s Premier Brad Wall warned that Canada’s reputation as a “reliable supplier” has taken a hit.

We have work to do both in continuing to open markets abroad and in ensuring reliable trade routes within Canada.

We need to finish off negotiations with the European Union. The timing of the deal’s announcement last October now appears to have had more to do with Harper’s domestic political calculus. Fortunately, that same calculus had changed sufficiently – the declining weight of the Big Three automakers versus the national interest – to allow agreement last month with Korea. Now we need to push the economic partnership negotiations with Japan.

With imports accounting for almost 30 per cent of what we produce and exports about the same, we are slightly ahead of the OECD average. Our proximity to the United States, still the world’s biggest market, is a huge advantage, notwithstanding the frustrations of protectionism masquerading under country-of-origin labelling, or the targeting of the Keystone XL pipeline by environmental evangelicals.

Increasingly, our goods are part of global supply chains, especially our manufacturing industries, whether in the assembly of cars or the servicing of aircraft.

Technological innovation, characterized by ‘the fracking revolution’, is making North America energy independent. That, combined with a skilled work force, whether home grown or through smart immigration policy, is setting the stage for a Canadian and North American manufacturing renaissance.

Always a trading nation, we have become a nation of traders. The Harper Government is broadening and updating our web of trade agreements with markets around the world. It is reinforced by a priority markets strategy – still to be delivered – and a commitment to reinvigorate our trade commissioner service.

But getting our goods to market requires efficient transport.

Investment in roads, bridges, subways, commuter rail and other public infrastructure is also essential. Billions have been invested in improving our gateways and trade corridors to the Atlantic, Asia-Pacific and continentally.

The Port Metro Vancouver project exemplifies co-operation between all levels of government and the private sector. What still needs more attention are our inland ports; learn from Manitoba’s CentrePort and Saskatchewan’s Global Transportation Hub Authority We are making progress at the land border gateways.

We need to do more on North American economic integration.

The Government’s new Building Canada program with its 10-year horizon is a step in the right direction as long as funding focuses on trade-related infrastructure. The New West Partnership premiers will host a fall summit on transportation and market access.

In a 2010 study the Conference Board estimated that each dollar invested in infrastructure added $1.11 to Ontario’s GDP.

To help in the strategic planning both the Conference Board and Canada West Foundation (CWF) are looking at the nexus of trade, transportation and infrastructure. In its upcoming report, “Paving the Way to Success,” the CWF will look at our transportation and logistics systems, directionally, modally, and regionally.

A couple of observations going forward:

The first is that public-private partnerships (P3) can work.

Here again the Conference Board has done valuable work pointing out the P3 advantages in time savings, life-cycle spending, innovation and maintenance innovation, and contracting as well as the pitfalls in financing rates, risk premium, transaction costs, and lead times.

The Canadian Council for Public Private Partnerships recently assessed the 206 P3 projects initiated in Canada since 2003. They generated over half a million jobs. Provincial agencies value-for money assessments on 121 of those projects estimate savings of $9.9-billion over public sector contracting Importantly.

The second is that we need to find the capital.

Foreign investors, especially state-owned enterprises, favour resources or manufacturing.

Our pension funds, notably the $130-billion Ontario’s Teachers’ , have big investments in European airports and rail and container terminals in New York and New Jersey. Late last year the $200-billion La Caisse de dépôt et placement du Québec took a stake in Australia’s largest cargo port in Brisbane.

How do we encourage investors, especially our domestic funds, to invest more in Canadian infrastructure?

Building Canada obliges commitments by all levels of government, the private sector and labour. We need the right alignment between transport investment, gateway marketing, and trade facilitation.

We aspire to be an energy and food superpower. A reliable trading partner gets its goods to market on schedule. Opening the doors through trade agreements is just the first step.

A former diplomat, Colin Robertson is vice president of the Canadian Defence and Foreign Affairs Institute and adviser to McKenna, Long and Aldridge LLP.


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