Canada needs to move quickly on trade deals to help counteract shocks to economy: study

OTTAWA – With the federal budget only weeks away, a new study is urging the government to quickly ratify trade agreements with Europe and Pacific nations and refocus efforts to grow so-called knowledge-based services.    

“Going forward, trade can be a powerful antidote towards the effects of the oil price shock and other domestic vulnerabilities, such as high personal debt, by supporting growth in incomes,” said Daniel Schwanen, inside a study released Thursday through the C.D. Howe Institute.

“Canada is really a nation of traders and Canadians realize that more open trade improves their standards of living,” he said. “With expanded market access come increased opportunities for growth, as well as more competition, which benefits Canadians as consumers and taxpayers.”

The study, titled “At the worldwide Crossroads: Canada’s Trade Priorities for 2016,” argues the federal government must sign off on the Comprehensive Economic and Trade Agreement using the Eu – scheduled to come into effect sometime next year – and the Trans-Pacific Partnership, an agreement between Canada and 11 other Pacific Rim countries.

“These two agreements represent the most important means available to expand Canadian business into foreign markets,” Schwanen wrote.

“Canada currently ranks 18th on the planet in terms of the total size of the markets our businesses get access to through high-quality agreements, beyond the basic access supplied by WTO membership,” he said.

“If the CETA and TPP arrived to force, Canada would move into fourth place, catching up with countries for example Australia that are currently well ahead of us in expanding their trade links.”

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While Schwanen, the Toronto-based think-tank’s vice-president accountable for research, points out that Canada’s “recent international performance helped cushion the blow to the economy from lower commodity prices and capital spending,” more must be done.

In particular, he’s urging Pm Justin Trudeau to make use of his official visit in a few days to Washington to push for more bilateral trade with america – already Canada’s largest trading partner.     

“Small regulatory differences between Canada and also the U.S. are costly for consumers and businesses, yet aren’t essential to make sure the safety, environmental or any other standards required by each country,” Schwanen said. “Canada should still develop existing regulatory co-operation efforts between Canada and the United States.”

Trudeau will table the Liberal government’s first budget on March 22, a document likely to show coming back to spending deficits – perhaps as huge as $30 billion for fiscal 2016-17 alone – targeted at buffering Canada against recessionary pressures to come the collapse of worldwide energy prices.

Along with tax breaks for middle-class Canadians, the budget will earmark billions of dollars to fund infrastructure projects across the nation.   

In addition to shovels-in-ground priorities, the C.D. Howe study suggests the necessity focus more about other parts of trade – such as knowledge-based engineering and financial services.

“Canada is a nation of traders and Canadians realize that more open trade improves their standards of just living. With expanded market access come increased opportunities for growth, and also more competition, which benefits Canadians as consumers and taxpayers.”

Financial Post

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