It’s a no-brainer that Canada would and should be the top priority right now for Canada’s elected leaders. As such, there is likely plenty of fertile ground for a “Canada First” message.
Newly minted Conservative leader Erin O’Toole is clearly attuned to this. With the possibility of a fall election looming, O’Toole has been emphasizing his plans for a “Canada First” economic strategy.
O’Toole took to Twitter on Labour Day to make his case for an economic policy that “puts Canadian workers first.” An accompanying video elaborated on this idea, taking aim specifically at “corporate and financial power brokers” who “care more about their shareholders than their employees” and “love trade deals with China that allow them to access cheap labour.”
It’s unclear exactly what this all means in terms of actual economic policy. Certainly the point about getting Canadians back to work is an important one. The pandemic caused unemployment to skyrocket and the recent job gains we’ve recorded still leave us well short of where we were back in March.
Furthermore, there’s good reason to be frustrated with the Chinese government at the moment, and the fact that we’ve had to rely on China for so much of our personal protective equipment (PPE) has been a source of frustration for many Canadians.
But while the idea of having Canadians manufacture that PPE might have seemed like a win-win early on in the pandemic (addressing our supply issues and putting people to work), it’s not a long-term economic strategy nor is it a solution to those supply issues.
Prior to the pandemic, low-cost PPE was widely available. Had we had the foresight to stockpile for a possible pandemic, we could have done so easily and cheaply. Insisting that such PPE be manufactured in Canada would have simply driven up the costs. And with unemployment having previously been at 40-year lows, there was not exactly a pressing need for those sorts of low-skill jobs.
There are other, more strategic reasons why we might want to re-think our trading relationship with China. Our involvement in the Trans Pacific Partnership (TPP) opens up other Asian markets, like Vietnam, that might be much better places to do business.
O’Toole’s impulse here seems to be more along the lines of the sort of protectionism and nationalism we’ve seen south of the border, the idea that we need to “fight” to “keep jobs here.” If so, we would do well to note the many ways in which that approach has been a failure. Conservatives have long understood the importance of free trade and open markets and hopefully they don’t lose sight of that in pursuit of political points.
For one thing, access to other markets is a huge boon for Canadian exporters and the Canadians they employ. Yes, there is “cheap labour” that can be found in other countries, and by extension, lower-cost goods. That, however, has the effect of improving the purchasing power of Canadians and the resulting additional disposable income supports all kinds of other Canadian businesses and jobs.
But if Canadian companies also have opportunities to lower their input costs, that improves profitability, which in turn can lead to more jobs and to higher-paying jobs.
U.S. President Donald Trump once remarked that trade wars are “good” and “easy to win.” As we’ve seen, neither is true. A study released earlier this year by the Federal Reserve Bank of New York finds the cost of Trump’s trade war with China has been immense.
It found that American companies were the ones who bore almost all the cost of Trump’s tariffs and China’s tariffs meant lower profits for those companies that export to China. All told, the trade war meant a drop of $1.7 trillion in the market value of listed U.S. companies. A study released last fall by Moody’s found that the trade war had meant a loss of some 300,000 jobs on top of a 0.3 per cent drop in real GDP.
Tariffs are taxes, ultimately, and they mean higher costs for businesses and consumers. This kind of an approach will do very little to actually help Canadian families or Canadian businesses.
Conservatives deserve a lot of credit for their role in establishing Canada’s global trade opportunities, including the Trans Pacific Partnership and the Canada-European Union Trade Agreement. If we want to reduce our reliance on China — and build international coalitions to counter China — then we have a lot of potential partners to work with.
We can even call it a “Canada First” strategy if that will make everyone happy.
Rob Breakenridge is host of “Afternoons with Rob Breakenridge” on Global News Radio 770 Calgary and a commentator for Global News.