BNN - Friday, May 24, 2024 - 06:00 p.m. (ET) - Segment #1

IT'S TEAM LISA VS TEAM GORDON She can Vanderpump off. We're done ON CTV (Taking Stock theme) >> Welcome to Taking Stock, I'm Amanda Lang. Coming up, a look at trade in Canada, including the confidence level of business relationships with key trading partners, and the dirty secret in Canada that internal trade is still far from free. That's all ahead. First, Canada's trading relationships are vital to our economic wellbeing. Here's what you need to know. Trade matters, it drives two thirds of Canada's GDP with one in six jobs linked to exports. Economists estimate that incomes are 15% to 40% higher than they would otherwise be thanks to trade. Canada has 15 free trade agreements that cover 51 countries, representing 1.5 Billion consumers. Our relationship with the U.S. is of course the most important-- The Canada-U.S.-Mexico agreement which replaced NAFTA was worth $1.8 Trillion in 2022. In 2022, Canadian exports and goods and services rose 21.2%, to $940.4 Billion, driven by price increases, especially in commodities. Meanwhile, goods and services imports also rose 20.5% to $936.2 Billion. 2022 wasn't as good for foreign investment. With new incentives for investment in the U.S., Canada saw foreign investment contract 21.5%. And Canadian investment abroad also fell by 15.8%, though both were above the long-term pre-pandemic average. Exporters in Canada are feeling good these days. Export Development Canada reports confidence is up 5 points to 70.1, though that is still below the historical average of 72.7. One big reason could be uncertainty about the U.S. trade deal. It's up for review in two years time, and a Trump Presidency could spell trouble; he's promised tariffs on imports of 10%. Given how much is at stake, maintaining confidence in our trade deals and in our partners is obviously important, and are we feeling confident? Ross Prusakowski is Deputy Chief Economist at Export Development Canada. Thanks for being with us. >> Thanks for having me. >> And of course, at EDC you keep tabs on how people are feeling, exporters. Uh, the numbers I would say are pretty good, Ross, but below historical average. So what do we make of that? >> I think what we're making out of it is that consumers-- Or sorry, businesses are feeling more confident after last couple of years of COVID disruption, but we're still not all the way back to where we were pre-COVID. I think interest rates and the uncertainty around the global environment, and especially some of the trade disruptions with 90% of exporters flagging that this is a key issue for them, that is what's keeping confidence from getting back above historical levels. >> And of course, we just recently saw tariffs increase by U.S. President Biden on Chinese goods. It'll be phased in over time, but it is an era where tariffs are alive and well in the world, even among trading partners, Ross. So what do you think that does to confidence for exporting businesses? >> I think it's just a continuation of what we've seen since the Pandemic where we had supply chain shocks, where we had tariffs coming from even before the Pandemic with the Trump administration; this is just another iteration of it. I think what it means for businesses is that, you know, the era where you could have a supply chain and not have to mind it too much? That's ended. So now, companies have to be more mindful of global developments, and also pay attention to how the geopolitics are evolving, and they might get caught if they're not. >> Because we know that, uh, you know, on the geopolitical front, free trade is less-- I don't wanna say it's less in vogue, but it certainly seems to have less support around the world, even among former allies than we have seen. Former trading allies, I should say. And I'd put the U.S. on that list, right? We had to renegotiate our biggest trade deal, it's up for another review in two years. It just feels a little bit less like a given. Does that, from where you sit, has that changed the tone for businesses that are considering trying to do trade in another country? >> I don't think so at all. I think it's something to be mindful of and I think it's for companies to pay attention to, but the benefits of international trade are pretty extensive. It provides diversification, and especially given the slow growth environment that we have in Canada and a little bit in North America, given high interest rates, given our slow growth in Canada because we are so indebted-- It provides an avenue for businesses to continue to grow revenue, to grow employment, and to, you know, challenge other competitors and make sure that they're not getting boxed out by international competitors themselves. So though it's an extra layer of challenge, I think it's actually one that companies can deal with, and if they manage it correctly, can really help supercharge their businesses. >> And to your point, uh, the economy benefits from more open trading, from businesses that are looking at the globe

as their competition. So therefore I guess, it stands to reason that we should look at policies that are supportive of trade. Do we have the right mix in place, could we do better in this country of supporting businesses that do wanna trade? >> I think there's always opportunities for improvement, especially given, you know, we have a diverse and, uh, a diverse country with a lot of different governments, and a very large country geographically, so there's always opportunities to improve infrastructure, to improve coordination between levels of government, but I'd say that broadly what we've seen in Canada is a pretty supportive policy mix. We have CTPPP with the Indo-Pacific, which is supportive of trade. We have CETA. You mentioned the renegotiation of the Canada-U.S.-Mexico agreement-- All these put pretty significant platforms in place for Canadian companies, I think now is just enabling them to use them more, and for companies to start looking outside our borders a bit more. >> You know, the old saw is that Canada's a trading nation but not necessarily a nation of traders; how are we doing on a cultural front? Are we thinking entrepreneurially, are we thinking like traders? >> Yes, with our trade confidence index, you can see that, you know, roughly 20% of companies are already doing business internationally and looking to expand their investments, and you've got another, about a fifth, 20% of companies, that are looking to actually start exporting even more. So I think, you know, there is always this Canadian trope that we are conservative, we are a little bit reticent to go out into global markets. But what we are seeing is that companies see that as a key source of growth, especially given the current domestic environment. So that's a space that we actually expect that we will see as we go forward more demand, and in our end of year survey we are expecting probably even more interest in exporting. >> Amanda: Ross, it's so good to have you for this. Appreciate your time. >> Thank you very much for having me. >> Amanda: Ross Prusakowski is deputy chief economist at Export Development Canada. Still ahead, Canada's good standing in the world is important when it comes to our trade relationships. So, are we losing influence? Stay with us. Taking Stock is brought to you by Enterprise Mobility. We Find Roads that take your business new places (Traffic noises) ( ) The road to opportunity. Is often the road overlooked. ( ) At Enterprise Mobility, we guide companies to unique solutions, from our team of mobility experts. Because we believe the more ways we all have to move forward. The further we'll all go. ( )( ) ( ) ( ) ( ) ( ) ( ) The INFINITI QX60 exemplifies modern luxury. With powerful SUV performance, three rows of comfort, and a sleek-yet-daring design. ( ) Lease a 2024 QX60 from 0.99% APR for up to 24 months. Visit INFINITI.ca. ( ) ( )( ) ( ) ( ) ( ) Closed captioning of this BNN Bloomberg program is brought to you by Avenue Living Asset Management. Investing in the Everyday. >> Well, Canada has typically traded on its good name to build economic value, but are we in danger of losing clout in the world, and with it, the potential of some of that economic value? Janice Stein is a professor at the Munk School of Global Affairs and Public Policy and she is with us now. Janice, thanks for being here. >> Pleasure, Amanda. >> So there is a relationship of course between our reputation and how we are viewed and the ties we make with other nations and I'm curious to start with you on where we stand. Have we seen a degradation of our relationship with other countries? >> I don't think it is a general degradation, but there is a question whether we are providing value, especially

on defence, when we step up to the big tables, Amanda. I don't think there's much debate about that. >> And we did of course see the government recently raise the amount we will spend on defence. Do things like that help to put us in a different position at some of those tables? >> It sure helps. There is no question about it. It is regarded as a big step along the way. Not there yet, but definitely helps. >> One of the realities seems to be that we are in a world, in an environment, where trade and freer trade, ever freer trade, is not really a given anymore. Uh, you could say that it started with the Trump administration, but it's been adopted everywhere, Janice. And we see it from the UK. We see it in Europe, even in Canada. There is just a more protectionist mentality. For a trading nation, an exporting nation like ours, what kind of complications does that present? >> This is probably our biggest challenge, Amanda. The world has stepped back from free trade. It's not that the proportion of global trade as a proportion of our global GDP is not growing. It is, but it is increasingly regionalized. For Canada, there is no question that will push us to concentrate on our own region, and particularly our biggest trading partner, the United States. >> Even there, we are all reminded of course from the renegotiation of NAFTA, now CUSMA that you know, things aren't always flowers and sunshine with our relationship when it comes to trade with the US. Are we still though do you think in a pretty good position in terms of keeping at least the free trade we have, if not expanding it into some problematic areas that we have seen in the past, like softwood lumber, like steel. >> You know, complacency is our biggest enemy here. Um, it's not only Trump. It is the Biden administration, which continues to talk about raising tariffs. Um, we are on the verge, I think, of some extraordinary new measures directed against China. It is the Biden Secretary of Trade who said, NAFTA II, CUSMA, is up for renewal. Everybody should come to that table with a degree of uncertainty. Nobody should take this for granted. Canadians cannot take this for granted. >> Which does introduce this uncertainty. This kind of renegotiation. The sunset clause they built back into this agreement every six years. Meanwhile, Janice, I do have to ask you. We have this bill passing through now, passed second reading of the senate, that would make it illegal to negotiate around supply management. How does that hamper us as we head back into reopening the negotiations of that North American deal? >> I am shaking my head, Amanda. The biggest issue-- one of the two biggest issues that were toughest to negotiate with the Trump administration last time was supply management. It is our form of protectionism. I have no doubt it will be on the table for the next renegotiation that will take place beginning in 2026. Should this bill pass the senate and become law, it effectively ties the next government's hands. Now you can say, that's great. We can say to the United States we are constrained by law. I don't think that will cut it with US trade negotiators. >> Amanda: Janice, we've got to leave it there. It's great to have you for this. >> Pleasure. >> Amanda: Janice Stein is a professor at the Munk School of Global Affairs and Public Policy. Our relationship with the US of course remains the most important one we have in just about every way. But with the nation's elbows up right now, what does the path ahead look like? Beth Burke is Chief Executive Officer of the Canadian American Business Council. Beth, thanks for being with us. >> Hi Amanda. Thanks so much for having me. >> So, this all-important relationship feels like it was a little bit tested as we renegotiated NAFTA, now USMCA, or CUSMA. What do your members-- What's the kind of impression you get about the feeling between the two countries right now? >> You know, I think the relationship is really strong, right? There's about 200-- sorry, 400,000 people crossing the border each day, $2.6 billion of goods and services moving across. I think from a business perspective, it couldn't be stronger. We are invested in making the economies work together, focussed on how having business at the table is important to both countries. >> And the trade agreements obviously keep things flowing. Do you feel as though there is nervousness about the revisitation of that agreement in two years, or are businesses more focussed on just getting the job done day in, day out? >> Well, I think both, right? The Canadian-American Business Council was intimately involved when USMCA was negotiated the first time, and we intend to be very vocal partners as the

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