TORONTO—If Donald Trump is elected president of the United States on Nov. 9, international trade is expected drop and the U.S.’s role as defacto leader on the international stage wane. This would leave Canada in a precarious position as a new world order re-establishes itself.
That’s the view business leaders John Manley, president and CEO of the Business Council of Canada, and Paul Frazer, president of PD Frazer Associates and former ambassador shared at The Economist’s Canada Summit on June 8.
Trump’s strong nationalistic rhetoric has found support as populism rises in the U.S. It’s similar to the situation in Europe, where the population is seeking a return to pre-financial crisis economic growth and more jobs.
One of Trump’s ways to “make America great again” is protectionism—cutting back on international trade by creating tariffs and other barriers to safeguard domestic jobs and companies from foreign competition.
Thus, should Trump be elected, there is little prospect of trade agreements like the Trans-Pacific Partnership (TPP) being ratified, even though the TPP is a very important expression of American interest in Asia under the Obama administration, Manley says.
U.S. intervention worldwide, in some cases altruistic, has created something of a world order, which enables Canada to do business, according to Manley. Businesses need a secure environment to make investments and that could come under jeopardy should the U.S. stop playing its role as global policeman.
Meanwhile, Manley says China has a view of itself being the world’s largest economy, and the country isn’t sitting on its hands, but rather aims to increase its influence globally.
More Trade
Former Bank of Canada governor David Dodge, who also spoke at the summit, stressed the importance of the TPP for Canada. “Protectionist forces are very strong in the world,” Dodge said. “It’s a very worrying thing.”
The big addition to Canada’s trading partners would be Japan, he noted.
As forces of de-globalization mount, some of the other benefits of TPP are at risk such as clarifying and harmonizing business rules across regions.
Prime minister Justin Trudeau, the keynote panelist at the summit, is a big believer in globalization and more trade.
“Trade is extremely important to Canada and to the world, despite the rise in protectionist sentiment, and this closing-in that will leave us all poorer in the long run is something that I’m glad Canada is a strong voice against,” Trudeau says.
Key for Canada will be to establish a good working relationship with whoever is the next U.S. president. Trudeau is confident in Canada’s ability to do that.
“Our citizens expect their leaders to be creating opportunities for them to succeed,” Trudeau said about the leadership in Canada and the U.S. He said that both he and whoever is elected president “will be aligned in that goal.”
On Its Own
Canada has tried to carve out a role for itself that is very close to the U.S., but independent enough so that it has its own position in the world, Manley said.
“That works when the U.S. is really breaking the wind and we kind of bicycle along in their draft,” he said.
“If they’re no longer taking that leadership role, the world lacks a really coherent leader,” Manley noted. “Others will look to fill that void and I think that’s where I would be the most concerned.
“It’s how the global architecture of the economy and security, and global relationships really get reshaped,” Manley said.
Canada could end up doing even more business with the U.S. as globalization of trade diminishes, should proposed trade agreements not be ratified.
“The more unstable the rest of the world is, the more Canadian business is thrust in to the United States,” Frazer said.
“In Canada-U.S. relations, it’s very much about how Canada manages that relationship because the Americans will never manage it the way we need to see it managed,” said Frazer.
“For the U.S. to withdraw and say some of these regional conflicts are not our problem anymore, much as we’ve always complained about the U.S. being too interventionist, I think we’re going to discover that we actually miss them quite a bit when their role disappears,” Manley said.
“The lack of a global policeman could mean a fairly chaotic outcome,” he noted, while suggesting that “We should hug Mexico as tightly as we can.”
“We’re going to need alternatives, we’re going to need friends,” said Manley.
A Trump presidency and follow-through on his rhetoric could make it more important than ever for the Canadian government to provide leadership and have its own strategy on international trade and investment.
Follow Rahul on Twitter @RV_ETBiz
