Harper’s Trade Performance: Barely Mediocre

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By Ralph Goodale
Member of Parliament for Wascana

About a year ago, with the fallout from Mike Duffy and ethical scandals in the Prime Minister’s Office contaminating just about everything, Stephen Harper launched an elaborate "change the channel" strategy.

He shuffled his Cabinet.  He prorogued Parliament once again to buy some extra time.  He presented the longest and most vacuous Throne Speech that ever opened a new session of the House of Commons.  And the very next day, he jetted off to Brussels, with much fanfare, to sign a long-awaited trade agreement between Canada and the European Union.

It's all done, Mr. Harper said.  Just a few technical points to settle among the lawyers working on the final wording, but we've got a deal, he claimed

Justin Trudeau welcomed what appeared to be the good news.  He reserved final judgment until Canadians could see the legal text, but in principle, Liberals would support a well-negotiated agreement between Canada and vast markets in the EU.  Such a deal would help the Canadian economy to grow.  It would stimulate new middle class jobs.  It would improve living standards and help bolster incomes -- wages in exporting sectors of our economy tend to be 50% higher than in sectors that are not trade intensive.

But now, nearly a year later, it seems that Mr. Harper was just pulling everyone's leg.  There was no reason to rush off to Belgium for a signing ceremony last fall.  It was all just for show, because there is still no final deal between Canada and the EU.  Germany (and possibly other countries) are signalling a veto unless major terms are renegotiated.

This fiasco-in-the-making is another example of Mr. Harper's less-than-stellar record on trade.

He boasts about having brought six -- count them -- six new trade deals into force since 2006.  That's a fine "talking point", but here's the list:  Panama, Jordan, Columbia, Peru, Honduras and the European Free Trade Association.  Taken together, these markets represent just 2% of the world's GDP.  That's not enough volume to make a big difference.

To be fair, another agreement was concluded recently with Korea, but it's a long way from being implemented.  Several others are "in progress", including multilateral talks with potential Trans-Pacific partners, but it's way too soon to predict where these will end up.  Suffice it to say, for now, results over the past eight years have been slow and mediocre.

A critical indicator is Canada's trade balance.  For a very long time, it's been in deficit.  So despite a few new trade agreements and all the spin-doctoring to puff up the government's ego, the country is not gaining the trade traction it needs to drive a decent level of economic growth.  This point has been made repeatedly by the Bank of Canada.

The Canadian Chamber of Commerce agrees.  It says Canada's trade performance is "lagging" and "dismal", and it crunches some numbers to prove the point.  According to the Chamber, after accounting for big price increases in energy products, the volume of merchandise exports shipped by Canada in 2012 was actually 5% lower than in 2000, despite a 57% increase in trade worldwide. 

Quite apart from trade negotiations, Canada needs a sound marketing plan, particularly in new emerging economies.  We need to be present consistently, building government-to-government relationships and paving the way for exports to flow.  And we need to bring coherence and some sizzle into our approach.

Mr. Harper could learn some lessons about salesmanship and effective economic diplomacy from Jean Chretien's "Team Canada" trade missions in the 1990's.  They built a "brand" for Canada in global trade and helped to get business done.

Mr. Harper should also be far more inclusive and transparent in telling Canadians what his government is doing, and asking for their advice, to strengthen Canada's trade performance and increase exports.  Just saying "trust me" doesn't work for a government that is producing such pitiful outcomes.



Vol. 12 - No. 3


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