Remember the “worthwhile Canadian initiative” joke?
The New York Times coined the phrase in a 1986 headline to mock “how marginal and, frankly, beside the point Canada and the Canadian economic, social and political experience are,” making fun of our attempts to create a free-trade zone between Canada and the United States.
It turned out that our efforts were eventually worthwhile, arguably, but it took years for the results to materialize.
Here we are again, but this time the challenge is an urgent need to smooth out supply chains. Ports are overflowing with empty containers, goods are stuck on the coasts, grocery shopping has become unreliable and prices have been rising for months.
It’s not a purely Canadian phenomenon by any means, and countries have been throwing money and measures at the problem in the hopes of working out the kinks.
It was Ottawa’s turn this week, and after convening 80 business leaders and industry associations as well as six cabinet ministers at a national supply chain summit, we have the result: another worthwhile Canadian initiative.
In the face of widespread and disruptive supply-chain issues hitting every household in the country, Ottawa will: launch a web portal, set up a task force, offer $50 million for good ideas and continue the conversation.
It’s an assortment of practical actions that may, over time, remove some of the obstacles between Canadian shoppers and the stuff they want to buy.
And it’s a vital discussion to have, because if inflation is too hot due to inefficient supply chains, then the traditional policy response to surging prices - central banks raising interest rates - isn’t going to be of much use here.
But it’s underwhelming as an immediate fix for the bottlenecks that are driving prices higher, hampering auto production, delaying deliveries for manufacturers and holding Canada’s economy back from a full-fledged recovery from the pandemic.
In the United States, on the other hand, President Joe Biden has been personally driving a supply-chain agenda for months now - spending billions to upgrade ports, convening international meetings, personally summoning key economic and industry players to hash out solutions, and measuring the results.
Canadian officials argue that the problems here aren’t as severe as those in the United States. We already had our ports operating on a 24/7 basis. Inflation isn’t as high. Labour shortages aren’t as bad. Even with some furious truckers clogging up Ottawa with their rigs instead of driving goods back and forth from the United States, Transport Minister Omar Alghabra has emphasized that the volume of trucks crossing the Canada-U.S. border is same as it ever was.
In other words, even as the federal government points to supply chain bottlenecks as the cause of inflation, its answer, in the short term, is to say we can roll with this.
But both countries are facing some massive challenges that have been revealed and then exacerbated by the pandemic, to the point where we need some hard thinking and deliberate action.
Labour shortages, for instance, were a concern before the pandemic. But now, as the economy recovers in fits and starts, and as large chunks of the workforce are continually sidelined by COVID-19 or caregiving responsibilities, employers are repeatedly hamstrung by worker shortages. They’re ramping up the pressure on Ottawa to increase temporary foreign workers, speed up immigration, cut red tape and invest in training and apprenticeships to bolster the pool of available labour.
But are temporary foreign workers the right fix? Can we house them properly, pay them properly and treat them with respect? Policy-makers haven’t confronted those questions yet.
Infrastructure is another question. Ottawa has heard for years that the trade routes paving the way to quick and efficient delivery are crumbling. Now, with repeated climate disasters and civil unrest at key choke points, the imperative to repair and invest is upon us.
But the trickiest supply-chain issue revealed by the pandemic is the global just-in-time delivery systems that so many producers, suppliers and customers took for granted. Pre-pandemic, those systems were already vulnerable because of the intensifying trade war between the United States and China. Now, there’s a push to shorten supply chains, cut Asia out of the loop, and “on-shore” production so that we don’t have to depend on unreliable countries for the essentials.
This week’s supply chain summit touched on this subject frequently, and Alghabra and his cabinet colleagues spoke loudly of the need to build resilience and redundancy into regional supply chains.
But is Ottawa ready with the strategic thinking, the billions of dollars in subsidies and the inherent risk-taking that attracting multinationals to Canada would require? We have started down that path with huge government spending to lure vaccine production here, but that only scratches the surface of the cost of on-shoring.
We have long been a trading nation that has been prosperous precisely because of our successful integration with the rest of the world. If persistent inflation, fragile supply chains and geo-political risk require us to shake up that model, we’re going to need a lot more than another worthwhile Canadian initiative.
Heather Scoffield is a National Affairs writer.