Colin Robertson, Vice-president and Fellow, Canadian Global Affairs Institute
Hold the cheers for the trade agreements, whether CETA, CPTPP or USMCA. There is still work to be done before Canada’s governmentcan claim victory for the acronyms we now associate with our new trans-Atlantic, trans-Pacific and North American trade pacts.
All three are important, but with three-quarters of our trade being within North America, the United States-Mexico-Canada Agreement (USMCA) is critical. Tuesday’s U.S. midterm elections will tell us whether the Republicans retain their majorities in both the House of Representatives and the Senate, but it will be January before we know the make-up of the key committees – House Ways and Means and Senate Finance.
We will likely see cherry blossoms in Washington next spring before U.S. President Donald Trump tables the USMCA implementing legislation for committee consideration and then up-or-down approval by Congress. Will Democrats, who consistently opposed trade agreements including the original North American free-trade agreement (NAFTA) back the Trump deal?
In tandem with Mexico, we need to continue the intense retail campaign, targeting states and districts, to remind legislators and their constituents that our trade creates jobs and growth. Our efforts, combined with our American allies, have had an impact. Despite Mr. Trump’s anti-trade rhetoric, recent surveys by Pew and the Chicago Council on Global Affairs show a majority of Americans appreciate the value of free-trade agreements.
Meantime, the legal scrub of USMCA continues. This wrangling over differing interpretations of what each party thought was agreed is critical. The fine print will matter when, inevitably, we call on dispute-settlement processes.
A year after it took effect, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is working, with the EU already expanding its trade with Canada. But the deal is still provisional. While it passed the EU parliament in February, 2017, every EU country must also pass it. Most, including our Group of Seven partners France, Germany and Italy, have yet to do so. Prime Minister Justin Trudeau needs to nudge his counterparts to get on with it.
The Trudeau government moved smartly this fall in implementing legislation for the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP). Now that six of the 11 member countries have completed ratification, the agreement takes effect on Dec. 30. As Trade Diversification Minister Jim Carr noted, Canada is the only G7 country with free-trade agreements with all other G7 members.
But now, as with our EU deal, we need to realize its potential.
We are a trading country, but we still rely mostly on our biggest enterprises when it comes to trade and investment. Governments strive to make it easier for small and medium-sized business to widen their customer base, but it is a slog. Financing, forms and apprehension about “foreign” ways are still barriers to taking the leap into global markets. Do we need to integrate the trade commissioner service more closely with our export financing agencies?
Asian markets, in particular, also want to see an official face – prime minister, premiers and ministers – on trade delegations. Can we not better co-ordinate these visits into a systematic Canada Inc. effort?
In Asia, sales also depend on relationships. This means developing a regular schedule to cultivate customers. Can we do more to utilize the deep ties created by immigration, tourism and study?
Canada still depends on foreign investment. Regulations on state-owned enterprise investment are sensible, but we need to revisit them if we are to achieve closer economic relations with China.
We loudly proclaim that we are open for business, but are we? Actions by Ontario’s new Ford government are baffling. Cancelling a German-managed wind turbine project earned a rebuke from the German ambassador. Snubbing a visiting delegation from Baden-Wurttemberg was petty.
Beyond the international trade pacts there is our domestic homework.
The barriers – trade and regulatory – between provinces are the unfinished business of Confederation. Successive national governments promise to fix it but, after 151 years of tilting at this windmill, the differences remain. A Senate study, Tear Down these Walls, describes the problem. If nothing else comes out of the First Ministers’ meeting on trade that Mr. Trudeau promised to hold this fall, it should be to move on our internal trade barriers.
We need to act. According to the World Bank, exports of goods and services as a percentage of Canada’s GDP slipped from more than 44 per cent in 2000 to less than 31 per cent in 2017. By harnessing our new trade deals and fixing things on the home front, we will expand our economy and make Canada more competitive.