Uncertainty keeps economy stuck in neutral
Dennis Darby & Andrew Wynn-Williams
“Do no harm” is the single most important request manufacturers have made to Canada’s NAFTA negotiators as they undertake their work.
More collaboration, a focus on new technology and reduced red tape are the others. These are the very foundations of a productive trade deal; the Canadian Manufacturers and Exporters sees as core values by which we can all work together here in B.C. to solve the current climate of uncertainty that threatens to slow our common progress and prosperity.
B.C.’s sophisticated sea and airports open an exclusive window on Asia and major population centres of the U.S. West Coast can be accessed by rail and interstate. From NAFTA to an eventual Pacific Rim trade reboot, its manufacturing sector is at the nexus of Canada’s quickly expanding and multi-dimensional trade interests. But beyond the region’s geographic advantage, it is B.C.’s position as both a destination and launching point for new ideas, skills and innovation that is moving it forward as a world-class manufacturing hub.
Focused around agri-food, forest products, high-tech, marine-manufacturing and natural resource transformation, the size of the manufacturing industry in B.C. is often underestimated. We employ 170,000 British Columbians and created $45.8 billion in products last year.
There are, however, obstacles that businesses must collectively navigate to avoid limiting this region’s manufacturing growth potential at the very moment it is poised to expand. Chief among those challenges is the current climate of uncertainty. Driven by political change and evolving international trade agreements, uncertainty significantly impacts on decision making, particularly around investment and expansion. Manufacturers need to understand and overcome this uncertainty, so this sector can continue to grow and build tomorrow’s B.C.
Political change often means political uncertainty. This is not a criticism of the new government; after 16 consecutive years of governments with one political stripe, any change from the status quo will raise new questions and inevitable concerns. This uncertainty is compounded by the minority status of the new government which always creates greater instability. Manufacturers and their workers are eager for opportunities to work with the new government to ensure the business climate in B.C. remains a stable platform for growth and to see the relationship flourish.
The potential for cancellation of major projects, from Site C to pipeline and transportation infrastructure projects, is another driver of uncertainty for manufacturers who must manage everything from cancelled work orders on a practical level to the macro-economic impacts on matters such as lending rates, investor confidence and tax regimes. A new study from the Fraser Institute identifies energy and pipeline policy, taxation and the economy as particularly marked by the uncertainty. According to our internal polling, our members echo those concerns and they see clear and deliberate government policy as an antidote.
And while B.C. remains home to the best and brightest workers, from technology professionals to engineers and skilled tradespeople, there simply are not enough of them to feed the economic engine and many of those working today are on the verge of retirement. Skyrocketing housing costs exacerbate this problem, especially on the Lower Mainland and South Island. While Canadian Manufacturers and Exporters are hoping to work with the federal government’s Global Skills Strategy to find practical solutions that fit B.C.’s unique circumstances, we are also working with both provincial and local governments, school districts and post-secondary institutions. These are deep-rooted problems that cannot be solved by one level of government.
This brings us back to international trade agreements, the other driver of uncertainty in B.C. The modernization and renegotiation of NAFTA is the most prominent. But there is also the question of whether something will come along to replace the stalled Trans-Pacific Partnership free-trade deal, which provides a bold blueprint for trade in the Pacific Rim.
Generating 70 per cent of this country’s total exports and worth an all-time high of $355 billion in 2016, the manufacturing sector is Canada’s top player in NAFTA or any other trade agreement. A full 66 per cent of B.C. exports are manufactured goods and this economic activity represents more than 10 per cent of the province’s GDP.
British Columbian businesses and workers are in a unique position to benefit from these and other trade deals if economic uncertainty is not allowed to stifle this historic opportunity.
Our members at CME believe NAFTA can and should be modernized to not only incorporate change that has occurred over the past 25 years, but also to lay a foundation for growth and innovation over the next several decades that will benefit B.C. This is the right time for Canada to work with its NAFTA and Pacific Rim partners to identify and eliminate non-tariff barriers and protectionist policies and stimulate job creation through the flow of skilled labour.