– Mark MacDonald is the Publisher of the Business Examiner, and President of Invest Northwest Publishing.
CANADA – The European Union’s ratification of their free trade agreement with Canada is great news for Canadians.
What is called the EU-Canada Comprehensive Economic Trade Agreement (CETA) is a landmark for this country, which will result in much easier access for our companies to the massive European market, and vice versa.
With EU firms enjoying the same removal of prohibitive tariffs, that opens doors for them in Canada, although our market of 35 million people is relatively small, considering the EU’s population of 508 million.
CETA was the crowning achievement of the former Conservative government, with the finishing touches applied just prior to the 2015 federal election. Conservative governments are those that have introduced almost all free trade agreements for this country, including the Canada-US Free Trade Agreement, North American Free Trade Agreement (NAFTA, featuring Canada, the US and Mexico), and the Trans Pacific Partnership with 12 mostly Asian countries.
Federal Liberals have been known to express their dislike for such agreements, much to the delight of a sliver of the electorate, but have never undone one of the deals thus far. Prime Minister Justin Trudeau even hailed the CETA ratification.
Taking potshots at free trade may be effective campaign fodder, but the realities of governance dictates that these deals are good for Canadian business, which means jobs, and, of course, increased government revenue. Once in power, that simply cannot be ignored.
One cannot stress enough how important free trade agreements are with nations other than our current number one trading partner, our closest neighbour, the United States. When any business has one major customer, it is subject to the whims and wants of that client – and if the company changes its buying plans, then it’s certain economic disaster.
Canada has traditionally inhaled the exhale of the American economy, and overall, has certainly benefited. The last economic downturn was a rare exception as Canada skated through very well compared to most nations, and some of that success was due to our country’s diversification in trade.
BC’s forest industry, in particular, would have been completely ravaged if it was solely tied into the US economy as it traditionally has been. However, strong demand from Japan and China produced a spike in exports in that sector, which benefited us immensely.
With American housing starts at record lows and the bulk of building material comprised of Canadian softwood lumber, that industry would have been decimated.
Oil and gas is another issue. Americans have enjoyed a sizeable discount on Canadian petroleum exports. When the price of a barrel of oil was over $100, it ran as much as $35 US per barrel, so it would be safe to say that still runs in the neighbourhood of 30 per cent.
If there is any way Canada can get that most valuable resource out to other markets, it would provide a tremendous boost to employment, as well as government revenues.
Looking at a map showing US pipelines, it looks like a spider web covers their portion of the continent. That American monies are used to bolster Canadian anti-pipeline protesters is hypocritical at best, although some people recognize these funds help protect US interests and the discounts they currently enjoy.
It also protects the railway traffic that carries Canadian oil to southern US refineries.
So, if Canada can get the Energy East pipeline underway, then completed, that would give us access to the vast European market. The twinning of the Kinder Morgan pipeline gives us more potential export potential for Asia, although it would have been more lucrative if the Enbridge proposal was allowed to proceed.
Anything we can do to lessen our reliance on one market – the US – is good for our long-term economic health, and hedges us against the inevitable dips that occur.
To the horror of Trudeau’s green supporters, he approved the twinning of Kinder Morgan, which to some, was another broken campaign promise and betrayal of trust.
But like free trade agreements, the realities of being “the man” overseeing the national budget clearly demonstrates that vague, populist campaign promises can’t be kept once reaching office. There are too many jobs and too much government revenue tied to the oil and gas sector to simply turn it off, as extremists would like.
It is shameful to pander to such interests disingenuously, but that’s what it’s come down to – say whatever you have to in order to gain power, and do what you have to do and what the economy dictates once you’re in.
The numbers show that only provinces with oil and gas economies are showing black on their ledgers. Take that out, and the country’s economy is in tatters. It’s not just the direct jobs and revenues from the oil patch – it’s the ancillary businesses that emerge to service that sector, and everything else that results.
Free trade is good and necessary for Canada, and the federal government is right to applaud Europe’s approval of a document that could go a long ways towards lessening our reliance on the US market.