OTTAWA, April 13, 2017 /CNW/ - The election of Donald Trump has changed the international policy environment, posing a challenge for Canadian policy-makers and business leaders. Canada needs to refocus its international trade and economic priorities in the age of Trump and a protectionist U.S. government mindset, in order to continue supporting strong and sustained Canadian wealth creation and growth, according to a new report from The Conference Board of Canada's Global Commerce Centre.
"Canadian trade with the U.S. has flat-lined over the past decade, and a protectionist Trump agenda gives us a good reason to reconsider what is next for Canada in terms of international trade, investment, and immigration," said Glen Hodgson, Senior Fellow, The Conference Board of Canada. "While the Trump economic agenda keeps changing and is still being fully defined, it is bound to be challenging and Canada needs an activist policy response."
- A protectionist Trump administration is accelerating the emergence of a new trade and economic era for Canada.
- Canada could position itself as an open, integrating hub for global trade and investment, and embrace the opportunity to modernize the North America Free Trade Agreement.
- Canada could also pursue new bilateral and regional free trade deals with a number of priority countries.
The report, Succeeding in the Age of Trump: Refocusing Canada's International Trade and Economic Priorities, examines how the country might refocus its international trade and economic priorities and suggests that Canada should position itself as an open, integrating hub for global trade and investment.
Canada could be a preferred investment destination and trade enabler for global firms, offering tariff-free market access to both the U.S. and the EU. Asian businesses, in particular, could be attracted to invest more in Canada to gain duty-free access to both of these markets. However, Canada would need to do more to increase its attractiveness to foreign investors, such as streamlining the investment review process; clarifying what constitutes a net benefit to Canada, and aligning the investment attraction efforts of different levels of government.
Canada should also embrace the opportunity to modernize North American Free Trade Agreement (NAFTA), seeking to preserve the gains made under the Canada–U.S. free trade agreement and NAFTA and then advance its own agenda. Canada's priorities for an updated version of NAFTA could include reduction of non-tariff barriers; free trade in services; more common regulatory standards, or mutual recognition of different approaches with the same intent; and designation as a preferred energy supplier within an integrated North American energy market.
With Canadian exports, imports and investment flows slowly diversifying away from the U.S., Canada should continue to pursue free trade deals with other regions, notably Pacific Rim nations and fast-growing Asia. Canada could pursue new bilateral and regional deals with a number of priority countries. A TPP without the U.S. is one option, and Canada should be part of any exploratory discussions. Negotiations have begun with India, and other leading candidates might include Japan, Mexico (if NAFTA fails), the United Kingdom once Brexit is fully completed, and China under the right conditions. Trade development could be enhanced with countries where bilateral free trade deals are in place, led by South Korea.
The report is published under The Conference Board of Canada's Global Commerce Centre. The Centre provides evidence-based tools to help companies and governments respond successfully to the trends reshaping the global business environment.
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