Slow economic growth bad for Canada’s foreign policy goals: experts

OTTAWA — Canada’s slow economic growth and poor competitiveness are undercutting its global interests, experts say, as the post-“sunny ways” version of the Trudeau government’s foreign policy emerges Wednesday with the announcement of a new cabinet.

The key moving parts include a replacement for Foreign Affairs Minister Chrystia Freeland, who might be given a new domestic portfolio — perhaps deputy prime minister — and the fact that International Trade Minister Jim Carr is fighting a form of blood cancer that makes him an unlikely candidate for a heavy travel schedule.

While managing Canada relations with the United States and China remain the paramount priorities, Canada’s low-growth economy is eroding its broader standing on the world stage, said Trevin Stratton, the chief economist of the Canadian Chamber of Commerce.

Canada’s international ranking in a series of global surveys has continued to decline in recent months, including during the federal election campaign, he said.

That includes a drop in the World Economic Forum’s ranking of the productivity of G20 countries that saw Canada drop two positions to 14th place among 20 large advanced economies.

Stratton said it is also significant that Canada has also fallen to 23rd place among countries in the World Bank’s “ease of doing business” ranking and fell in another index that ranks the soft power of 30 leading countries.

“It’s important to keep in mind that when it comes to our place in the world and our reputation in the world this also has to do with our economy and also has to do with our competitiveness because if our economy is healthy then it communicates the opportunities that are available here,” said Stratton.

“The idea that soft power and competitiveness aren’t linked, I don’t believe in that.”

In a speech Tuesday, the senior deputy governor of the Bank of Canada offered a grim prediction on the global economic situation. Carolyn Wilkins said the global picture has worsened, which has increased the risks that could spill over into Canada.

Cyndee Todgham Cherniak, a Toronto-based international trade lawyer, said the government needs to give Global Affairs Canada more money to help small- and medium-sized businesses in Canada expand their reach into foreign countries. She said they lack important information on how to navigate export controls and economic sanctions.

“It absolutely would help our competitiveness,” she said.

“There’s so many things Canadian companies won’t sell overseas where Americans can get this guidance and beat us to the opportunities because no one wants to be offside Canadian law. So, there’s a chill effect on Canadians exporting some of our high-tech goods just due to the total lack of guidance as to what’s expected and how the legislation is to be interpreted.”

Carr’s successor will have to continue his efforts to find new export markets for Canadian goods. Those have been to make up for China’s decision to block some agricultural products because of the political dispute that erupted over the RCMP’s arrest almost one year ago of Huawei executive Meng Wanzhou on a U.S. extradition warrant to face fraud changes.

China has imprisoned two Canadian men, Michael Kovrig and Michael Spavor, on allegations of spying in what is widely viewed as retaliation. China recently lifted a months-long ban on Canadian pork and beef but it is still blocking canola imports.

Sarah Goldfeder, an Ottawa-based consultant who formerly advised two U.S. ambassadors, said Canada’s relations with China will take years to repair and China will largely dictate the pace, as it did when it allowed Canadian beef and pork back into the country. In the meantime, she said, Canada should turn its attention to increasing exports to other Asian countries, such as South Korea and Japan.

There is also no need for strong political oversight to oversee the ratification of the new North American trade deal, she added, because its fate is now firmly in the hands of legislators in both countries.

“They need to work hard on stuff that is not China or the U.S.,” said Goldfeder.

This report by The Canadian Press was first published Nov. 19, 2019.

Mike Blanchfield, The Canadian Press

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