Time for Canada to tackle trade and productivity issues, says C.D. Howe

Canada needs to focus its limited resources where they are likely to make a difference, argues Michael Hart in a new C.D. Howe commentary entitled Breaking Free: A post-mercantilist trade and productivity agenda for Canada. That makes East Asia a priority, he contends, although Canada should not forget its long-time trading party, the United States.

"The rapidly expanding markets of China, India and other Asian countries are well worth the pursuit,î Hart writes, "but the U.S. market will remain the bread and butter of the Canadian economy for the foreseeable future.î

Hart, who is the Simon Reisman Chair in Trade Policy at the Norman Paterson School of International Affairs at Carleton University in Ottawa, says Canada needs to adapt to a world of "value chains, evolving trade and investment patterns, and deepening global integration.î That means getting rid of "home-grown impedimentsî such as anti-dumping and countervailing duty regimes, ineffective subsidies and procurement preferences, tariff restrictions in supply-managed sectors, overabundant regulations and restrictions on foreign ownership.

Since the late 1990s, Canada's trade performance has stagnated. Canada's share of the world export market has dropped to 2.5% from 4.5% in 2000. Going hand in hand with Canada's lagging trade performance is productivity.

"To revitalize Canadian trade and improve Canada's productivity performance,î Hart writes, "Canadians will have to be prepared to address remaining barriers to greater global engagement.