Changing the Way Canada Does Business

Firstly, I would like to thank Castanet for giving me this opportunity to better connect with the constituents of Kelowna-Lake Country. I'm hoping to use this column as a way of keeping you informed with my opinion on what's happening in Ottawa. Also (Warning: shameless plug) please feel free to visit my constituency office in Capri Mall or log onto my website to let me know how I can serve you better. Anyways, onto the column...

At a time where the economy is robust, the value of the loonie is perpetually surging upwards, and a tentative agreement to the longstanding Canada-US Softwood Lumber Dispute has been reached, it might seem like hyperbole to suggest that Canada needs to partially alter the way that it conducts its international trade policy. But that is exactly what Minister of International Trade David Emerson said to the Standing Committee on International Trade (of which I am a member) earlier this week.

Minister Emerson told the Committee that Canada exists within a series of Global Supply Chains. Within these chains exists the transfer of a massive amount of investment between multiple countries. Canada, being extremely sensitive to international trade markets, needs to refrain from putting too much emphasis on having an inward flow of investment. Instead Canada needs to simultaneously build up its outward flow of investment. To accomplish this, I believe that Canada needs to increase the frequency that it enters into bilateral (or trilateral) trade agreements.

Canada has only entered into one bilateral trade agreement in the past five years. By comparison the US has 12 free trade agreements with 18 countries and Mexico has 13 free trade agreements with 43 countries. For Canada, a country whose economy is so dependant on structured trade rules and regulations, this number is actually kind of shocking.

NAFTA is seen as controversial to a good number of Canadians. While 98% of our trade under NAFTA is positive, the negatives have been devastating to our lumber industry and crippling to its workers. Cynically then, why would Canada want to enter into other agreements that seemingly promise free and fair trade but occasionally fail to deliver either?

To solve this conundrum, we must examine the framework of our international trade agreements and alter their architecture. Canada must enter into agreements guided by multilateral rules-based trade. While NAFTA does offer a dispute settlement resolution mechanism in the form of the often much maligned Chapter 19, NAFTA disputes are adjudicated under domestic law. So that means that no matter how many times Canada beats US trade/lobby interests in the courts, Congress can simply make adjustments to their own laws and circumvent Canada’s ability to fair trade representation. Adjudication under domestic law makes it much more difficult to win any dispute resolution cases.

Make no mistake, from a purely economic standpoint NAFTA has been a Canadian triumph. And yet, its potential seems to constantly be hampered by high-profile and industry crippling trade disputes. So again I ask why would Canada want to enter into trade agreements that might provide economic stimulus but fail to provide adequate industry protection?

Canadian economic interests thrive in a rules based economy. By entering into a greater number of trade agreements and reworking the way that we implement dispute resolution mechanisms Canada can better insure its future economic prosperity.

Simply put, Canada cannot afford to be on the outside looking in while the rest of the world is making deals with one another. Canada does not exist in a bubble and is highly dependent on foreign markets. Our economy is strong but its size is not nearly as great as economic superpowers like the US, China, and Europe. If Canada wants to continue to compete on the global stage it needs to follow the world’s lead and begin to aggressively seek out bilateral trade agreements.

Even if NAFTA has made many people sour, I believe that for Canada, implementing an increasingly aggressive trade policy is ultimately a pretty sweet idea.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.