Parliament needs to be recalled immediately because, even though U.S. President Donald Trump’s across-the-board 25 per cent tariffs have been put on pause, the threat remains. Instead, Prime Minister Justin Trudeau hosted a “summit” with business and labour leaders in Toronto on Friday morning.
While Trudeau gave a speech at the summit, the most significant thing he said came after he shooed reporters out of the room so he could speak privately with investors.
When he thought the media was safely out of earshot — they weren’t, a mic had been left on — the prime minister said that he doesn’t think Trump’s comments about annexing Canada are a joke, because of Canada’s vast store of minerals and resources. “They’re very aware of our resources, of what we have and they very much want to be able to benefit from those,” he said, before the sound was finally cut.
It appears the prime minister now wants Canada to “be able to benefit from those” very resources, after he has spent the last decade in office trying to ensure everything stays in the ground. The Liberal government’s anti-energy, and generally anti-business, crusades left Canada particularly vulnerable to a trade war, and we welcome any acknowledgement it’s time to correct course.
By now, the suite of policies needed to raise Canada’s productivity so that the threatened tariffs would be less devastating are well-rehearsed. And so they should be, as it has been clear since at least the industrial revolution what makes nations wealthy and resilient.
First and foremost is security and the rule of law, both of which Canada has been lagging on as of late. As for economics, which Ottawa also routinely undermines, the policies that work are neutral taxation that doesn’t favour one industry or group over another, minimal regulations that, again, don’t favour one segment of the economy over another, and free trade.
The details of how to implement these policies broadly across the country can be debated, but if you look around the world and throughout history, countries with open economies and respect for the rule of law are richer and more capable of weathering economic shocks.
What Canada needs now, specifically, is, for starters, to slash corporate and personal income taxes to reward work and invite investment. The federal government should also remove onerous regulations and unnecessary consultation requirements for infrastructure projects, so that pipelines and export terminals for natural gas can be fast tracked.
Ottawa should review all barriers to trade and foreign investment, not just tariffs, and start dismantling the most economically damaging ones, chief among them being Canada’s supply management system, which unnecessarily raises the price of eggs, poultry and dairy products. Limitations on foreign ownership of telecommunications companies, and even the banking industry, should be reviewed. Foreign airlines should be permitted to fly domestic routes.
Much discussion has been made of removing internal barriers to trade, which, if done successfully, could almost entirely offset the the economic hit taken from more limited access to U.S. markets. While we agree, we caution that this approach is not as straightforward as it sounds because internal barriers to trade are rooted in different regulatory standards in each province.
The simplest solution would be for the provinces to agree to all accept the standards adopted by the other provinces. For example, they could all say that as long as weight limits for trucks meet the standard of their home province, other provinces won’t force truckers to adjust their haul every time they cross a provincial border.
The Ontario-Quebec labour mobility agreement, which ensures qualifications obtained in one province are recognized in the other, is a good example of how to address these barriers.
If that sounds like a tall order, other options would be even harder to accomplish. For example, under the Constitution, the federal government can pass unifying laws in areas of provincial responsibility, but each provincial legislature would have to agree to them individually. Good luck.
As for Trump, whether he is joking or not about annexing Canada, the statements are not funny and are indicative of a fundamental shift in how the U.S. is now choosing to engage with the world.
In the past, Canada and the U.S. would have trade disputes over specific industries, such as lumber or steel, but the Americans could usually be counted on to honour the free-trade agreement between our two countries.
Trump’s threat of 25 per cent tariffs is something entirely new and troubling. Even if one assumes that his reasoning for the tariffs is rooted in valid complaints about fentanyl and migrants crossing the border, using the threat of trade sanctions that would break negotiated treaties to coerce a friendly country to alter domestic policy shows how much American leadership has changed.
This is a reality that Canadian leaders need to recognize immediately. No amount of pleading that Canada is America’s best friend, or pointing out how much they need our oil and other resources is going to change the world we now live in.
Canada should seek to continue trading with our neighbours — geography demands it — but this country can no longer tolerate self-inflicted wounds that leave us vulnerable to growing protectionism.
Again: recall Parliament and let’s get to work.
National Post