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Canada no longer has a significant advantage in business taxes versus the United States, but we do have François-Philippe Champagne.
Whether by accident or design, the trade minister has emerged as the Trudeau government’s best answer to the charge that it is doing nothing to reverse a slide in foreign-direct investment.
On Monday in Ottawa, Champagne, who often refers to himself as Canada’s “chief marketing officer,” launched Investment in Canada, an agency that will attempt to convince global companies to set up their next office or plant on the cooler side of the imaginary line where the 49th parallel dissects North America.
A new bureaucratic appendage and a couple of dozen additional trade commissioners — at the cost of $218 million over five years — will provide little solace for those seeking 100-per cent deductibility of business spending on machinery and equipment.
Still, there is reason to think that this relatively minor expenditure will more than pay for itself. Canada was one of the few major economies that lacked a one-stop shop for global investors. That probably explains why we are so mediocre at attracting foreign cash, despite consistently ranking as one of the world’s better places to do business. Invest in Canada’s chief executive, Ian McKay, who used to run the Vancouver Economic Commission, said he knows that he has some work to do.
“I don’t think I would be standing here if we were the best in the world at attracting investment,” McKay said.
Champagne’s efforts are the clearest example of the Trudeau government’s efforts to make Canada less dependent on the U.S. The previous prime minister, Stephen Harper, had a similar goal, but he was far too complacent about it. If you want to sell to the world, you have to visit it. Harper and his ministers preferred staying closer to home.
Just a few days ago, Champagne was closer to the 49th parallel south.
On Friday, he was in Asunción, Paraguay, to begin formal talks on a trade agreement with Mercosur, the South American bloc that includes Brazil, Argentina, Uruguay, and Paraguay. A day earlier, he was in Santiago, Chile, to sign up for the Trans-Pacific Partnership, which will give Canada preferential access to markets such as Japan, Vietnam and Australia.
This sort of frantic pace is normal for Champagne, the former corporate lawyer who took over the trade portfolio in January 2017, when Chrystia Freeland was named foreign affairs minister and given the unofficial job of saving the North American Free Trade Agreement. He’s been buzzing the world ever since.
A cynic might say, and I’m sure more than one has, that all Champagne is doing is piling up Aeroplan points at taxpayers’ expense. I have an issue with that particular critique.
Some of those cynics probably lament that their government isn’t run more like a business. Well, Champagne is the first trade minister I’ve observed who puts the potentially demeaning business of selling stuff ahead of the haughtier responsibilities that come with the job. Showing up to Question Period to talk about Canada’s awesomeness as a place to do business isn’t going to create much new business. That takes hustle, and Champagne hustles with the best of them.
That’s good, because it’s going to take some shoe leather to keep Canada in the game. There are signs homegrown companies are spending, but international investors are less keen on Canada than we’ve come to think they should be. Foreign-direct investment was $34 billion in 2017, the lowest since 2010, even as gross domestic product expanded 3 per cent, more than any other Group of Seven nation.
The Bank of Canada repeated last week, twice, that the threat of higher tariffs on U.S. imports has made Canada a less attractive place to invest. For two decades, Champagne’s predecessors have used NAFTA as their main selling point to investors: come to Moncton and sell to New England! That pitch is less convincing when the U.S. president is willing to throw up new tariffs for no good reason. Suddenly, if a company wants to sell to Americans, the safest route is to go straight there: Trump effectively has slammed the back doors shut.
So what does a good salesman do when orders start to dwindle? He works with management on improving the product and hits the road to talk to clients.
Rather than sell Canada as the 51st state, Champagne talks about Canada as a market of hundreds of millions of people thanks to free-trade agreements with the U.S. and Mexico, the European Union, and soon the other members of the TPP. Eventually, he may be able to add Brazil and Argentina to that list, depending on how things go with Mercosur. (Negotiators are set to begin the first round of talks in Ottawa later this month, but there is no deadline for completion.) That would give Canada preferential access to all the world’s major economies, with the notable exceptions of China and India.
“We want to make Canada a global trading powerhouse,” Champagne told me last week during a short phone interview from Paraguay.
It’s gimmicky, but at least Champagne recognizes that global trading powerhouses do more than sell lots of stuff to their next door neighbours, and often on discount thanks to a weaker exchange rate.
Canada struggled after the financial crisis because too little had been done to clear a path for business to high-growth markets in Asia and South America.
You might be asking yourself, why should government lead when it’s companies that actually do the trading?
It’s a good question. The simple answer is that Canada’s risk-averse executives tend to do business only in countries in which the government has opened up, either through a trade agreement or a diplomatic outpost.
That’s why there’s reason to be hopeful that Champagne will make a difference: if the country’s chief marketing officer opens the doors, our executives will be more likely to walk through them.
President Trump has blocked Broadcom’s proposed $117 billion buyout of Qualcomm over security concerns, according to a White House statement. News of the president’s decision was first reported by CNBC. The move could send shockwaves rippling through the broader global economy, as the president continues his push to “put America first” in trade negotiations with… Read More