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Conservatives have a chance for an easy win — and all of Canada will benefit

Heather Scoffield, Toronto Star
Tues., Jan. 28, 2020

They may be without a permanent leader, and they may still be smarting over the results of the last election, but the federal Conservatives are suddenly in a prime position to make a couple of things right.

For three years now, Canada’s investors have been shaken to the core, as Donald Trump’s unpredictability forced them to reconsider their assumptions about how the world works. Billions of dollars of potential investment in Canada have fled elsewhere or sat idle in the bank, as decision-makers tried to game out the consequences of tariff wars, protectionism and weaponized corporate tax policy in the United States.

Meanwhile, on the domestic politics front, the Conservative Party has faced a separate disarray — straining to define itself after the election exposed internal divisions around social values and how to protect the environment.

Now a partial answer to both of these conundrums has emerged: quick ratification of the new NAFTA, already approved by Mexico and the United States.

The ratification of the deal that will restore at least a bit of the pre-Trump certainty to Canada’s economy is finally in Canada’s hands — if the Conservatives co-operate.

The signs are that they will.

At a time when the race to replace Andrew Scheer as leader is shrouded by questions about who the Conservatives really are and what they stand for, a dose of the economic policy that has tied them together for years could be just the balm they need.

The Conservatives, after all, long defined themselves as the party of free trade and free enterprise in the modern era, driving trade deals in Europe and Asia. They were unanimous in their belief that government could open doors by negotiating fair rules, but that business needs to lead the country in economic growth by walking through those doors.

Still, the Liberals aren’t taking their support for granted — nor should they, given that one of the responsibilities of the Official Opposition is to scrutinize government actions, especially ones of this magnitude.

But their fear is that the Conservatives will use their numbers in the House of Commons to make a point of slow-walking their support, demanding mountains of analysis, long lists of expert witnesses and compensation for all and sundry before they eventually say OK to it all.

Not only would that be bad politics; it would be bad economics.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, has seen the effect of uncertainty from the front lines.

Trump’s vows to rip up the free-trade agreement that underpinned Canada’s role in the North American auto market, followed by his tariffs on steel and aluminum, and then his threat to impose the same treatment on the auto market, rocked the normally stable sector, Volpe says. Investment decisions were cancelled and rearranged. Market valuations deteriorated. Canada paid a steep price, and with one exception (Toyota building a new Lexus in Cambridge, Ont.), new manufacturing commitments largely passed Canada by.

Economy-wide, the trade upheaval is costing the Canadian economy billions every year in business that should have happened but didn’t. Scotiabank figures uncertainty will knock economic growth this year down to 1.8 per cent instead of 2.1 per cent. Most of the pain is concentrated in lost investment, where the Bank of Canada pegs the cost at more than $10 billion in 2021 alone if the uncertainty were to persist.

“Now, that cloud has lifted,” Volpe says. Auto money is moving into the Detroit area, re-establishing the Great Lakes market of cross-border auto manufacturing — mainly because the new NAFTA allows companies to plot the future with some confidence.

There’s a danger in parliamentarians taking their sweet time, the Liberals suggest, because the Canadian business community is at the end of its rope in dealing with uncertainty.

But there’s more to it than that. With Trump facing impeachment hearings, he has ramped up his tariff talk recently, and there’s no guarantee that Canada wouldn’t provoke a nasty response if it drags its heels on a deal that could help Trump regain some credibility at home.

The Conservatives are well aware of the arguments in favour of a speedy approval, says MP Randy Hoback, the Conservatives’ point-person on the NAFTA file, and they don’t intend to play games. Instead, they want to make sure there are no surprises in the deal, and make sure that there’s a plan to mitigate the pain of any sector — aluminum, agriculture — that is inadvertently disadvantaged by the new deal.

Let’s hope they don’t forget that reasonable approach in the heat of partisan politics in the next few weeks.

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