De­fend free trade: Poloz to pol­icy-mak­ers

Winnipeg Free Press - SundayXtra - - FRONT PAGE - By Alexander Panetta

The gov­er­nor of Canada’s cen­tral bank says pol­icy-mak­ers have a duty to ex­plain the mer­its of free trade at a mo­ment marked by antiglob­al­iza­tion sen­ti­ment lap­ping across dif­fer­ent con­ti­nents.

Stephen Poloz will de­liver a speech in two weeks in New York on strength­en­ing global trade, its growth ren­dered slug­gish by a va­ri­ety of fac­tors in­clud­ing low com­mod­ity prices and a multi-country eco­nomic slump.

The Bank of Canada gov­er­nor said pro­tec­tion­ism is also a con­cern, in an ex­change with re­porters at the global fi­nan­cial meet­ings Satur­day. He didn’t cite any ex­am­ples. Eng­land is vot­ing on whether to leave the Euro­pean Union; con­ti­nen­tal Europe is de­bat­ing the mer­its of its open borders, amid ter­ror­ist at­tacks and an in­flux of mi­grants; and in the U.S. elec­tion, trade is a four-let­ter word.

Ev­ery ma­jor pres­i­den­tial can­di­date pro­fesses op­po­si­tion to the Trans-Pa­cific Part­ner­ship — with Don­ald Trump and Bernie San­ders go­ing one step fur­ther: they also pro­pose rip­ping up ex­ist­ing deals such as NAFTA.

“It’s a risk for the eco­nomic out­look — that trade be­comes un­pop­u­lar, or less pop­u­lar,” Poloz said, when asked about global trends.

Pol­icy-mak­ers have a re­spon­si­bil­ity to speak up about the ben­e­fi­cial ef­fects of trade, he said — about how it cre­ates gains and losses, but the pos­i­tives out­weigh the neg­a­tives.

He said an econ­o­mist might take that prin­ci­ple for granted but needs to com­mu­ni­cate it clearly, to counter the voices of peo­ple who don’t un­der­stand eco­nom­ics and might oth­er­wise dom­i­nate the de­bate.

“That just puts the onus back on the pol­icy-maker to be very trans­par­ent, very open about how trade re­ally works. How the ben­e­fits ac­crue, to demon­strate what life would have looked like with­out for­mer trade agree­ments,” he said.

“That’s not be­yond us, to ex­plain that to peo­ple.”

That in­cludes be­ing hon­est about the risks of trade lib­er­al­iza­tion, such as job losses in cer­tain sec­tors: “It’s real peo­ple that are ad­just­ing. It’s not with­out costs. And you can’t be cal­lous about those costs, be­cause they mat­ter. But the point of it is there’s more in­come for the country as a re­sult. That’s the essence of a trade agree­ment.”

Poloz also ad­dressed the ques­tion of whether he’d waded too deeply into an­other po­lit­i­cal is­sue: the Lib­er­als’ deficit spend­ing.

The non-par­ti­san gov­er­nor drew some eye­brow-raises last week for cred­it­ing the fed­eral bud­get as his in­sti­tu­tion im­proved the country’s eco­nomic fore­cast.

He said it’s his job to ex­plain how he ar­rives at his pro­jec­tions. Last week, the bank re­vised its fore­cast to 1.7 per cent eco­nomic growth for the year, up 0.3 per cent from the Jan­uary ex­pec­ta­tion.

“It comes with the ter­ri­tory,” Poloz told re­porters. “We’ll al­ways give an ac­count­ing of where the re­vi­sion to our out­look is com­ing from.”

Poloz made the re­marks at an in­ter­na­tional con­fer­ence where the big-spend­ing bud­get ap­peared to have friends in high places. The man­ag­ing di­rec­tor of the In­ter­na­tional Mon­e­tary Fund lauded it in pub­lic and pri­vate.

Chris­tine La­garde said stim­u­la­tive mea­sures ob­vi­ously won’t work every­where — but places with­out heavy debt bur­dens could af­ford to pur­sue growth-friendly mea­sures. She sin­gled out one ex­am­ple. “Canada stands out as one such country mak­ing the most of this space,” she said in a speech be­fore the spring meet­ings, and ap­par­ently echoed those re­marks be­hind closed doors.

This an­noyed the of­fi­cial Op­po­si­tion back home. The Con­ser­va­tives said peo­ple were be­ing misled as the bud­get’s nearly $30-bil­lion an­nual deficit was be­ing im­prop­erly branded as pro-growth. They said the govern­ment had been overly gen­er­ous in its def­i­ni­tion of in­fras­truc­ture by lump­ing green pro­grams and so­cial spend­ing into the cat­e­gory of in­fras­truc­ture in­vest­ment touted by the IMF.

“The Lib­er­als’ in­fras­truc­ture plan will not cre­ate the kind of eco­nomic growth and in­creased pro­duc­tiv­ity that Canada needs,” said Op­po­si­tion critic Dianne Watts.

“In­stead of in­vest­ing in roads, bridges and high­ways, the Lib­er­als are play­ing a game of bait and switch and spend­ing on projects that ex­perts don’t think of as eco­nomic in­fras­truc­ture.”

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