Canada’s ability to compete in the global economy was one of the predominant themes for Canadian investors in 2018; over the course of a single year, Canada fell from the 10th to 12th place in terms of its global competitiveness, according to the World Economic Forum’s 2018 Global Competitiveness Report.
And with Canada stuck in the middle of an ever-worsening trade war, Canada’s global competitiveness could be at risk of declining even further.
In an interview with BNN Bloomberg, former Canadian foreign affairs minister Peter MacKay stated,
“. . . We [Canada] seem to be collateral damage [in the U.S.-China trade war] . . . We are far more exposed, I would say, given some of the frailties in our own economy and not to mention our energy sector.”
MacKay went on to say that,
“We [Canada] are caught in the backdraft of U.S. politics and this enormous trade dispute that’s going on between China and U.S. . . . There’s not a lot we can do about it.”
So what can Canada do to weather the economic storm of the U.S.-China trade war?
Aside from new innovation funds and trade agreements, it may come down to Canada’s regulatory environment.
In a recent Financial Post video, Craig Alexander, chief economist at Deloitte Canada, suggested that Canada’s main focus should be on improving competitiveness by reducing regulations,
“We’ve seen issues in Canada on the regulatory front around difficulty getting national infrastructure projects done . . . “People might immediately leap to the example of pipelines . . . But this goes far beyond pipelines . . . in one case, one of our major ports, it’s going to take us close to 10 years to get approval to actually build the expansion.”
Canada’s Regulatory Environment Could Be Key To Future Canadian Competitiveness
As former Canadian foreign affairs minister Peter MacKay said so himself, Canada is relatively powerless in the U.S.-China trade war. Knowing this, Canada needs to focus on improving factors it can control, such as trade diversification—and more importantly—its regulatory environment.