A new government and international trade
With a majority government and a stronger, left-leaning official opposition, international trade policy, practices and negotiations are unlikely to have a higher priority on the Canadian policy agenda than they have in recent years. If anything, to minimize cross-party bickering, a cautious, incremental approach to international trade and related matters will likely prevail over the next several years.
Rhetoric about Canada leading the way, creating or protecting jobs through international involvement, and being the investors' location of choice will be used where appropriate and as circumstances demand; the reality will be a slow, steady progress with respect both to trade and to broader international economic relations with the US, with the European Union, with Latin America and the Caribbean, with Asia and, concerning investment, Africa.
The tone, and even the emphasis, of trade might, however, change slightly given the new political alignment—human rights, national security, even climate change (as the European Union moves to a cap-and-trade system)—reflected in statements by Canadian ministers and their trade officials.
Drawing more on the provinces, co-operating with them, advancing their interests as negotiations increasingly involve their jurisdictions, will be evident, particularly as the federal government shrinks in size through attrition or by other means.
Intensified negotiations with the EU will resume right after the Ontario election in early October and before the French presidential elections next spring; the window to complete this negotiation is very small.
Serious steps to engage India will soon begin but move ahead very slowly—rising energy and thus transportation costs, regulatory issues, and immigration matters will ensure that. Relations with China will need further refurbishing—perhaps with an overall economic co-operation agreement rather than a free trade arrangement being the preferred option for both sides.
Trade deals with smaller partners will be completed given time and resources, most resources over the coming year or so being devoted to a security/trade agreement with Canada's still pre-eminent trading partner, the USA.
Yet amid this "steady-as-she-goes" activity in place for the past five years—if not longer—will be other, more significant, questions to be addressed by the newly-elected government, including:
- Should trade, investment, innovation, etc. be part of a new, cross-governmental ministry entitled The Ministry of Economic Development and Prosperity?
- Should Canada up its game on the global economic front by showing more leadership in the G-20 and other international economic fora by, for example, helping to break the deadlock in the 10-year long Doha global trade talks or helping develop a future-looking trade agenda for trade ministers around the world to consider at their planned meeting in December in Geneva?
- What priority should be given to an all-encompassing agreement with the US involving not only security but also infrastructure, skill development, regulatory alignment, trade facilitation, etc?
- How can the "net benefit" test concerning foreign investment coming into Canada be better set out for more predictability, transparency, and more investment particularly in areas of high tech, ideas, creativity, etc?
- How can Canada's monetary and fiscal policy needs, such as fighting inflation, be reconciled with the needs of Canada's economic structure as we look ahead, particularly to avoid the so-called Dutch disease where a high exchange rate could eviscerate the manufacturing and parts of the business services sector over time?
These are large questions, larger than any free trade negotiation, and will need to be considered and acted upon, in some cases as part of a jobs and economic development strategy by the newly-elected Canadian government.
Canada has all sorts of opportunity given its resources and people to capitalize on what we have and where we live in this globalized economy.
Former DFAIT chief economist John M. Curtis is now a distinguished fellow at the Centre for International Governance Innovation (CIGI).
The opinions expressed in this article/comments are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors and/or International Board of Governors.