What Canada needs to do as Trump, Clinton talk trade

by Colin Robertson

The Globe and Mail
August 16, 2016

Even when we are not the target, Canada is often collaterally damaged by U.S. trade action. In preparing for the next U.S. administration, our federal and provincial governments should be recalibrating their own economic policies.

The Trudeau government is mapping out the various scenarios depending on the election outcome. We need to closely examine the areas for collaboration and conflict in the policy platforms of Donald Trump and Hillary Clinton. Our place in continental supply chains should benefit from the reinvigoration of U.S. manufacturing promised by both candidates. Adoption of the Trump corporate tax rates would oblige us to re-examine our own regime. There is more opportunity in the Clinton plan for collaboration in green energy, research, and infrastructure projects.

Meanwhile Ambassador David MacNaughton and our U.S. envoys are reaching out to Americans to stress the value of the relationship to Canada, especially in terms of jobs and investment. This exercise should be co-ordinated with the provinces and business.

But we need to do more.

It should start with a doubling-down on trade liberalization at home and abroad.

Our sesquicentennial present to ourselves should be to finally tear down interprovincial trade barriers. The premiers made progress at their recent Whitehorse meeting, but they now need to deliver on their promised Canadian free-trade agreement.

A recent Senate report estimates the annual cost of interprovincial trade barriers is $130-billion. Last month, Quebec, Ontario and British Columbia agreed to co-ordinate online wine sales, but as the Senate report observed, it’s only a modest step. The top 10 barriers cited by the Senate, which include trucking, food (notably cheese, wine and beer) and varying standards, should be the starting point for provincial action.

Internationally, we need to ratify the Canada-Europe trade agreement (CETA) as soon as possible and then launch an ambitious trade promotion exercise, led by the Prime Minister and premiers, to take advantage of the deal. Our European missions should already be identifying the trade opportunities of an agreement and, working with the provinces and business, matching the new opportunities against Canadian products and services.

A Canada-China free-trade agreement is in the cards. We should approach this carefully. What lessons can we learn, for example, from the experience of the New Zealand and Australian free-trade agreements with China?

Better prospects are closer economic ties starting with Japan and Mexico, and they should be top of our list if Ottawa or the U.S. Congress fails to pass the Trans-Pacific Partnership (TPP) trade agreement.

We can resume the economic partnership negotiations with Japan. And we should be working more closely with Mexico in our continuing advocacy efforts, reminding Americans why our continental economic partnership creates jobs and growth for all of us. Mexican ministers are regularly visiting U.S. states to point out the jobs created by trade with Mexico. We should do the same.

Through the TPP we have already effectively negotiated trade agreements with many ASEAN and Pacific Alliance nations. We should quickly turn these into regional agreements. There are continuing economic partnership negotiations with India. While difficult and frustrating, we need to keep plugging away.

Of the Trudeau Government’s many policy reviews, the recommendations of the Barton committee on Economic Growth could potentially shape our economic future in a fashion similar to the Macdonald Commission on Economic Union. Their policy deliberations should include advice on:

  • getting the most out of trade liberalization, especially in ensuring that the negotiated trade policy gains become realizable results for business. Can we do more with the Export Development Corporation and Canadian Commercial Corporation?;
  • managing foreign investment to our advantage, including its place in our planned big infrastructure transportation projects designed to get our goods to market;
  • in developing global champions in our oil and gas, mining and agri-food sectors, what kinds of incentives and performance measures will work?;
  • how to more closely align and co-ordinate government-funded research and its practical application? Genome Canada is an effective model;
  • how higher education can better contribute to skills and training. Shouldn’t we be revaluing our community colleges and putting higher public value on the dignity of our trades?

Both levels of government need to better explain how trade liberalization policies benefit Canadians. They also need to help those affected by change. Governments no longer get a free pass on trust.

The U.S. will always be our main market and our principal trade partner. Our broad economic policy approaches, of necessity, are often complementary, but not the same. And when the U.S. takes a wrong turn, we should not panic, but improve our own game.

A former diplomat, Colin Robertson is vice-president and fellow with the Canadian Global Affairs Institute.


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