Geography may well be our destiny, but it’s time for Canada to chart a bolder, more global vision, one that’s more in tune with the dynamic transformation in the global economy. It will oblige us to rise beyond the desire for a “special relationship” with the United States, in which affection or annoyance can overwhelm reason, and adopt a more confident and more balanced global role, defending our extensive interests with the U.S. while pursuing more promising opportunities in many emerging markets.
The political paralysis in Washington and the seeming inability of Congress and the Obama administration to address the deepening fiscal crisis is sapping prospects for a robust recovery. It’s also constraining America’s will and capacity to lead globally. The November election may ameliorate matters somewhat, but the cure for what ails the U.S. won’t come quickly. As Condoleezza Rice eloquently observed at the Republican convention, “a nation that loses control of its public finances eventually loses control of its destiny.”
The percentage of Canada’s trade with the U.S. has dropped to 74 per cent from 89 per cent in the past decade and is expected to drop another 10 per cent by the end of this decade.
The prospects in Europe are even gloomier. The maxim about nations “living beyond their means” is exacting a stiff price, and Europe’s problems simply compound those of America.
There’ll undoubtedly be more turbulence in the global economy, especially as the emerging markets reorient from export-led growth to domestic consumption. But resources and commodities will be in strong demand as their middle-class populations expand, and that’s good news for Canada.
That’s why we need to turn our attention urgently to burgeoning opportunities in places such as China, Brazil, South Korea, India, Turkey and Indonesia, where Canada’s performance has been lagging, particularly when compared with that of Australia. Our exports to the emerging markets are less than 10 per cent of our total. Australia’s amount to 50 per cent, half of which go to China.
Since 2000, Canada’s export growth has been almost 5 per cent slower than global export growth on average per year, primarily because neither government nor the private sector is looking for advantage where the prospects are brightest. We need to find ways to sell more to those who want to buy what we have.
From government, we need a strategic focus – where to negotiate and why and systematic engagement with all stakeholders. We have, on paper at least, a very active trade agenda, having launched negotiations of one kind or another with more than 80 countries. Less clear, however, is our priorities. We need to determine what we want from these negotiations and what we’re prepared to pay.
We should custom tailor our comparative advantages against our trade objectives, recognizing that, in many of the emerging markets, the “visible” hand of government is often determinant on all economic affairs. Conventional approaches for trade and investment won’t be sufficient. We’ll need hard-nosed negotiators with authority from the cabinet to negotiate in the national interest.
The private sector must move out of the “culture of comfort” – relying on traditional markets – that’s hampering innovation, risk-taking and growth. All the hand-wringing about lagging productivity in Canada can be answered most effectively by a new spirit of determination and entrepreneurship from our business leaders.
The opportunities are there. It’s a matter of will and commitment, taking a strategic view, cultivating relationships that will produce long-term dividends instead of a quick-hit approach in search of announcements for the next quarterly earnings. That’s the message from the few that are succeeding globally and from those in government eager to move forward.
The proposed shift in emphasis will involve risks and challenges, but there’s nothing more unrewarding than efforts to preserve a diminishing status quo.