A new U.S. president requires rethinking Canada’s export and investment policies
It’s clear Hillary Clinton as president would be a better outcome for Canada’s economy, but either way exporters need a clear post-election plan
Historically, U.S. Presidential elections come with so many unexpected twists, turns and surprises. The November 8, 2016 “Clinton vs. Trump” contest is no different—although Donald Trump is in a weight class of his own.
What will happen over the next few months leading up to the election will have far-reaching effects, not just for American public policy but for global leaders, business executives and foreign policy throughout the world. The same is true for Canada and our allies.
I was at the Democratic National Convention (DNC) in Philadelphia last week, and it was very clear from my conversations with former DNC chairs, U.S. politicians, Bernie Sanders supporters, business executives, and even celebrities and athletes: a Clinton presidency will be viewed as positive for Canada-U.S. bilateral relations and a major step in the right direction for trade with Canada.
Many Canadian small- and medium-sized manufacturers and exporters consider the U.S. the gateway to free trade, since $2.4 billion worth of goods and services cross the border every day. Canada-U.S. trade in goods and services reached $880 billion in 2015 and Canadian exports to the U.S. were about $450 billion representing more than 72% of all Canadian exports.
A Trump administration would jeopardize Canadian manufacturers’ and exporters’ access to the U.S. market, potentially reducing revenue and forcing some companies to consider exporting to other markets and relocating their American operations elsewhere. His mixed signals and irrational statements on global trade threaten important agreements like NAFTA and the Trans-Pacific Partnership (TPP).
As for bilateral trade with the U.S., Canadian companies would struggle to pivot towards new international markets outside the U.S. where they continue to face the same fundamental challenges—lack of capital to expand into global markets, a fear of the unknown, lack of contacts and local insights, and finally a lack of coordination, duplication and overlap of trade and investment services. What should be a cause for concern is that Canada’s trade deficit with countries other than the U.S. widened from $4.6 billion to a record $6.0 billion.
On TPP, the U.S. and Canada are two of four countries that haven’t submitted the agreement for ratification, along with Brunei and Chile. Secretary Clinton may try to re-negotiate environmental and labour issues in the treaty, but let’s not typify a knee jerk reaction since she has publicly committed to find common ground and purpose to boost the US economy and promote free trade with like-minded partners.
Paul Wells’ column in the Toronto Star on July 30th about why Canada should prepare for the unthinkable is right on the money. Respectfully, to make Canada competitive, we have to go one step further beyond reactionary statements and speeches.
When it comes to international trade, we need to press forward as a nation to bring the government and industry together to reboot a coordinated Canadian strategy focused on international trade and investment.
We need to ensure Canadian companies can stay one step ahead of their global competitors, rather than always playing catch-up. The new reality is Canadian companies need to expand and invest in markets beyond the United States and Mexico to stay competitive.
Canada needs a strategy that can mitigate political, social and economic risks like the U.S. elections and Brexit, which will ultimately impact us since we are a trading nation. It is also time to start thinking about real incentives and financial instruments that can help Canadian exporters perform better internationally despite all of the uncertainties in the world today.
A successful strategy requires clear priorities, based on understanding the strengths we need to preserve and capitalize on, and the weaknesses that threaten our prosperity. Strategy addresses what to do, but also whatnot to do. It is far from clear that we are taking the right steps to improve investment attraction and global exports.
When it comes to international trade, Canadian industry must lead with strong government support. Smart leaders benchmark successful organizations and countries. It happens in other countries, such as Denmark and South Korea, where both public and private sectors come together to chart a long-term plan.
We have a historic opportunity to develop and implement a new export promotion and investment strategy that will support Canadian trade interests at home and abroad – in a coherent way, and to our best advantage.
Original Article in Canadian Business Magazine can be found here.
Omar Allam is a former diplomat, global entrepreneur, and CEO & Founder of the Allam Advisory Group, a global business, strategy and commercial diplomacy consulting firm that helps clients with international strategy, market entry support, export development and investment attraction worldwide.