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As published in The Globe and Mail.
With many around the globe questioning the benefits of trade, immigration and globalization, Canada is uniquely positioned to prove them wrong and rebuild our growth in a sustainable, inclusive way. We have many advantages – a highly educated population, strong research clusters, world-class post-secondary institutions, an open economy and society, stable government.
More broadly and throughout the world, Canadians are seen as inclusive, welcoming and engaged in a world that is becoming insular. We can seize upon these advantages by expanding free-trade agreements and investing in trade-enabling infrastructure to ensure our long-term economic growth.
For decades, Canada has relied on trade with the United States. The two countries had the foresight to create a free-trade zone, later expanded to include Mexico. This continental approach has served Canada well and will continue to do so. But we live in an interconnected world, and need to be open to global trade.
Last weekend’s signing of the Comprehensive Economic and Trade Agreement between Canada and the European Union, while still subject to final ratification, is a welcome development. At the same time, we also need to increase our focus on the massive emerging markets of Asia. This should begin by having Canada conclude a free-trade agreement with China – something that would put us in an enviable position among G7 countries and would strengthen our position as a leading gateway between Asia and the Americas.
For decades, Canada has been highly respected by China, the world’s second-largest economy and Canada’s second-largest trading partner. Both Canada and China need to diversify their trade markets. Clearly, we have a clear mutuality of interests when it comes to increasing bilateral trade and investment.
Port Metro Vancouver and the Port of Prince Rupert are both in the process of expanding to meet the demands of growing trade between the Americas and Asia. These ports are closer to Asian markets than Los Angeles and Long Beach, and are less congested. Together, our Pacific and Atlantic gateways and trade corridors provide Canada with a key competitive advantage.
At the same time, we have another opportunity to accelerate economic growth: Canada’s substantial infrastructure deficit. While one can debate its size, there is no question that one exists. It has an impact on our economy and our daily lives.
While federal and provincial governments will continue to play an important role investing in infrastructure, they simply do not have the resources to meet the demand – pegged at somewhere in the neighbourhood of $500-billion – without a large increase in tax revenues or drastic cuts to social programs.
Moreover, thinking around infrastructure needs to evolve from short-term, shovel-ready stimulus to more strategic infrastructure that increases public productivity and rebuilds our growth potential. Indeed, that is the goal of the new infrastructure bank announced Tuesday.
With rule of law and stability, Canada should be a magnet for capital. We have strong pools of capital here at home between the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec, the Ontario Teachers’ Pension Plan and others. Beyond capital, these institutions can bring managerial expertise to assets and projects.
With negative interest rates in other parts of the world, Canada is becoming an increasingly attractive option for foreign investors. To attract patient, long-term capital from global investors, we need a supportive, predictable regulatory framework that encourages innovation and efficiency, and promotes adequate returns on investment in strategic trade and supply-chain infrastructure.
If Canada is to win the global competition for ideas, talent and capital, we need to expand free-trade agreements and open ourselves up to more long-term infrastructure investment. Doing so will help create a stronger and more prosperous middle class – the very basis for smart growth.