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I was invited to speak at the World Trade Day conference last August in Louisville, Ky., where the opening session was a fireside chat with a deputy undersecretary at the United States Department of Commerce. I was interested in hearing the official narrative he would offer the business audience on the Donald Trump administration’s trade policy.
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Essentially, the administration had reached the conclusion that previous U.S. assumptions regarding trade deals had changed and so the U.S. was now changing these arrangements. “We did not get the deals that we thought we were getting,” he said.
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He offered two examples. China’s entry in the World Trade Organization and the North American Free Trade Agreement (now the Canada-U.S.-Mexico Agreement). In general, he said “the rules-based order that was provided did not work out.”
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The undersecretary made a point of reminding us that the U.S. was engaged in a battle with China to determine who would lead the world on AI.
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On the administration’s approach to negotiating, he also offered that the Art of the Deal is not just a book, but also a way of governing.” A different model where the government of the U.S. will not hesitate in future deals to put its hand on the scale “even if very gently.”
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As I listened to the narrative about the U.S. government arguing unforeseen assumptions about trade and other countries, I asked myself whether this same government asked itself how these new policies would change the assumptions that other countries had about the U.S. and the impact it would have on their economy and their longer-term position in the world.
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How does this affect Canada?
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If we are going to emerge a better and stronger country from this new world of changed assumptions, the place to start is taking a hard look at ourselves.
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Over the past few years, Canada and Canadians have become complacent.
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- Donald Trump raises the stakes of the trade war with Canada
- Trump’s targeted Canada tariffs offer scope and time for a deal
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We live next to the richest and most powerful economy in the world. With unfettered access to the U.S., we neglected to diversify our trading partners. We signed a significant number of trade agreements, but did not follow up by going into these new markets.
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Business investment dropped and Canada became one of the world’s worst performers in terms of productivity.
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Over the past decade, we have earned the reputation of a country that cannot get big projects done. With overlapping federal and provincial policies, laws and regulations, the obstacles in some cases became unsurmountable.
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Interprovincial trade barriers have become entrenched to the detriment of economic growth and our ability to trade among ourselves.
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On defence, Canada was a laggard. We did not live up to our basic responsibility to occupy and defend our territory. On this issue, Trump is right.
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These are some of the issues that we are facing as a country.
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Now comes the good part. Canada has great strengths. We have one of the world’s best-educated populations. We are blessed with extraordinary natural resources in energy, minerals, agri-food, etc. We are also a knowledge-based economy with great capabilities, notably in transport, aerospace, biotech, AI and quantum computing.