International Trade and Investment, The Economy, What's New

B.C.’s pipeline demands set a dangerous precedent

Read it in the Globe and Mail here.

Oh, the irony. Just as we start celebrating Canada’s 150th birthday as a nation, a dangerous precedent threatens, for the future, a hallmark of this country’s past success.

Almost five years ago, British Columbia announced five “conditions” for its “approval” of the Kinder Morgan TransMountain pipeline expansion. The last of the five conditions – that there be a “fair share of benefits” for British Columbians – has now been met, with Kinder Morgan agreeing to pay $500-million to $1-billion over 20 years to the B.C. government. Environmental concerns will be addressed by the 194 specific national and provincial conditions for the project, plus the federal commitment to a $1.5-billion ocean-protection plan. But the fifth condition was all about money and local politics.

The problem? We don’t hold each other up for ransom in this country. At least, we haven’t for 150 years.

Canada is an unlikely success story. Our vast geography and unique mix of backgrounds led to the creation of a unique, decentralized federation. After 150 years of this grand experiment, we have a lot to be proud of. But it has only worked because people of courage were willing to compromise and invest – both politically and financially – for the greater good. They created our Constitution, which unites us politically.

Yet, we seem to be losing our understanding of Canadian history and of the Constitution. Either that, or maybe just the political courage needed to uphold it. Rather than nation-building, this is nation-dividing.

It is hard to blame British Columbia for trying to exact as much as possible for itself. The blame really lies with those, including the federal government, who five years ago said nothing when these conditions were first proposed. By their silence, they seemed to accept the idea that, somehow, British Columbia had the right to say no.

But, in Canadian law, it did not. Neither provincial governments nor municipalities have, under the Constitution, the power to block cross-border pipelines.

Of course, they have the right to raise local concerns – and other provinces, as well as the federal government, need to listen, understand and sometimes compromise. Collectively, we need to ensure best practices in terms of safety and the environment, including prevention, mitigation and the like. But charging a price to ensure a “local” economic benefit flies in the face of the concept of national undertakings, and is a dangerous precedent.

Imagine Ontario refusing to allow railway track to be laid across it, because transporting grain from the Prairies to Montreal or St. John for export was of “no benefit” to Ontario. Imagine if more rail capacity is needed to ship wheat and potash from Saskatchewan, and Alberta decides to charge a percentage of the price just to allow these products to pass through?

The drafters of the Constitution understood the local pressures faced by politicians, the temptation to succumb to them and the need to protect the national interest. Section 92 sets out all of the provincial powers, but specifically reserves to the federal Parliament key jurisdiction over shipping lines, railways, canals, telegraphs and other works or undertakings (including pipelines) that connect one province with any other province, or beyond.

Barack Obama, worrying about the direction the United States seems to be taking, said this in his farewell speech: “Our Constitution is a remarkable, beautiful gift. But it’s really just a piece of parchment. It has no power on its own. We, the people, give it power – with our participation, and the choices we make … [and] whether or not we respect and enforce the rule of law. America is no fragile thing. But the gains of our long journey to freedom are not assured.”

We in Canada may be less concerned with our freedom, but we should be concerned about how we function as a country. Canada is no fragile thing, but the success of our 150-year journey has been in large part due to how our Constitution functions. Just as our neighbours to the south must work to uphold their Constitution, we too must uphold ours.

The Economy, What's New

The Case for Free Trade within Canada

It’s actually harder to sell goods and services between provinces and territories than to the United States.

(read it in The Walrus here.)

July 29, 2016

Imagine your community has a plant that manufactures industrial lighting. Customers include hospitals, schools, and office buildings. The plant employs sixty-five people. The community has received notice that it will soon be closing.

The owner of the business has four similar plants across the country. Because of high transportation costs, it was more cost-effective to have multiple plants able to satisfy customers in different regions. But the owner has decided to invest in new equipment to switch production to much more energy-efficient led lighting. Not only is led lighting better for the environment, it is smaller and lighter, and transportation costs are less of a factor. Consolidating the four plants into one will allow the owner to afford the new equipment purchase needed to switch to led manufacture.
Lowering trade barriers and increasing trade flows are actually still better for most communities.
There are good things in that story: a growing business embracing innovation to produce better, environmentally friendly products more efficiently. But those sixty-five people—their families, and the people they, in turn, buy things from—are worried and unhappy. Unless and until they find other, comparably-paying work, there will be some challenge for your community and that’s where everyone’s focus is. So what happens? Invariably, people will call on their local politicians to “protect” the plant. The politicians should “protect those jobs”; “protect those opportunities for the younger generation”; “protect the community.”
This is a classic example of “All politics is local.” It doesn’t matter that other people will get those jobs, even if somewhere else. Or that the manufacturer will become more efficient and competitive; that she’ll then be able to sell more lighting products, resulting in growth and more jobs—somewhere. Or that the new products will be far better for the environment. Or that, when a province (including yours) needs to build more schools or hospitals, the manufacturer will be able to supply less expensive, higher quality lighting—thus saving taxpayer money.

Sadly, no. In local politics, there is no room for the larger public good, and only rarely is there room for long-term thinking. Other communities be damned. Future prosperity be damned. Immediate self-interest, even if short-sighted, trumps all. And heartstring-pulling stories make for more interesting news for the media. The combined effect encourages politicians to react accordingly.
The irony is that the best interests of the community as a whole are usually better served by not engaging in protectionism, because it does nothing to ‘protect’ longer-term economic prosperity. Lowering trade barriers and increasing trade flows are actually still better for most communities. Positive effects include greater competition, lower prices for consumers, lower input prices for manufacturers and assemblers, better products, greater productivity, more growth and, yes, more jobs—but these positives are diffuse, spread around to many people. Free trade is better for the majority, but the positive effects don’t make for easy, emotion-stirring sound-bites. The concept of greater prosperity for the whole is harder to visualize or articulate in simple terms, but is no less real.
Canada is a trading nation. It started with furs, wood, resources, and we still rely more than most countries on trade with others. Perversely, however, but because of local politics, we have more difficulty selling goods and services between and among our own provinces and territories than we do to and from the United States. More than twenty years ago, we established what is called the Agreement on Internal Trade (ait). Yet beer, wine, transportation, energy, labour, construction, government procurement—all are affected by barriers of one sort or another.
But just this July, the members of the Council of the Federation (Canada’s provincial and territorial premiers) emerged at the end of their gathering in Whitehorse and announce, with no small amount of fanfare, an “historic”, “ground-breaking” “agreement” on opening internal trade. They even gave it an ambitious name, the Canadian Free Trade Agreement (cfta).
All of which sounds positive, except for one problem: there is no agreement, there are no details—for all the noise, all we got was a short press-release-geared statement about an agreement-in-principle. And recalling that over the years, prior sets of premiers have made similar announcements but to no real effect, one is left with something of a boy-crying-wolf feeling about this announcement. The words “historic”, “ground-breaking” and even “agreement” sound very positive—certainly for the politicians—but they are entirely hypothetical without an actual, detailed agreement and a strong enforcement mechanism to keep the parties in line.
There may, however, be some light: We are told that the cfta will take a “negative list” approach. This is a good start. This would mean that trade in all goods and services would be open between the provinces and territories, except for those items or areas of commerce that are specifically exempted or excluded. The success—or failure—of the cfta will depend entirely on how little—or how much—the premiers exclude or exempt.
Worryingly, we are already being told that the provinces will still be able to create exemptions to maintain barriers, or create programs, that are meant to “assist local businesses.” (Remember, all politics is local.)
This could mean that, despite all of those words, nothing will change. The devil will be in the details—and that only if the premiers and the ministers ever get around to them. No timeline has even been suggested.

A critical question in all of this, particularly when the provinces and territories have such a poor track record on trade, is where is the federal government? Internal trade barriers created by the provinces and the territories are contrary to Canada’s Constitution. It couldn’t be clearer. Section 91 of the Constitution Act, under Distribution of Legislative Powers, says that the exclusive legislative authority of the Parliament of Canada extends to the Regulation of Trade and Commerce.
Yet the feds weren’t even at the table when the premiers hashed out their idea of the cfta. Encouraging greater efficiency, greater competitiveness, greater prosperity across the whole country is part of the federal government’s job.
The Canadian government not only should do, but must do what is best for the whole of Canada. The provinces and territories are not the ones on whom we can rely to look after the national interest; not when they have to deal with their respective local political pressures. With a majority government at the federal level, the opportunity is now. It will not be easy. But tough decisions and tough actions are needed to start forcing the premiers to realize that this cannot be left only to them. If no concrete results with the cfta are seen, and soon, the federal government should finally step in and enforce its own Constitution.
So how do we get politicians to actually make this happen?
Recognizing the political dynamics, particularly those of local politics, we need to change the public discourse so as to have more people understand why it is in our self-interest to move toward freer trade, and away from the easy but false language of “protectionism.” Nationalistic language of “We should do this for the country as a whole” will not work. Nor will hoping for some vague sense of patriotic selflessness. It is hard for a province (more precisely its politicians), to open up, for example, construction opportunities to companies from outside the province, in the face of vocal local opposition, simply because of some feel-good idea about Canada as a whole. Each province and territory should do so because it is in the best economic interests of its own people.
Protectionism takes from society as a whole, including those least able to afford it, and gives to a few. No one begrudges anyone a livelihood, yet study after study has shown that the cost to taxpayers of protecting or subsidizing jobs is always a multiple—sometimes a very large multiple—of the wages of the workers thus protected or subsidized. And “protection” by one province will only encourage other provinces to “protect” their own. What we end up “protecting” is inefficiency, uncompetitiveness, lower growth and, ultimately, and most ironically, unemployment.
But in the world of local politics, particularly local politics, the heartstring-pulling potential is still heavily slanted to the negative effects on the few. This is not to seem heartless—the pain is very real for those going through it. We need more effective ways to help people who lose jobs with transition in terms of skills and mobility to where other jobs are. But the fact that we don’t do a good enough job in those respects is no reason to make bad decisions elsewhere.
Taxpayers, consumers, businesses—voters—should be loudly calling on their governments to obtain, and to ensure that their enterprises and consumers can obtain, the best infrastructure, goods, and services at the best prices, regardless of the source. We need to change the message at the local level.
Finally, we need to put more pressure on the federal government to start taking an active role. Diplomacy and encouraging words are good, but only if they work. If we do not see progress toward more open internal trade, and soon, the federal government should have the courage to intervene as the law permits—indeed, requires—it to do.
After all, our politicians are entrusted with a responsibility to do what’s best for the whole, not just a few, and we must hold them accountable for fulfilling that responsibility.
Martha Hall Findlay is an executive fellow at the School of Public Policy, University of Calgary, and a former member of parliament.

The Economy, What's New

Railways and Pipelines – the Constitution Hasn’t Changed

You can also read it here.

March 25, 2016 – for The Globe and Mail

Martha Hall Findlay

Executive Fellow, The School of Public Policy, University of Calgary

 

If we started today, there’s a good chance Canada would never get off the ground.

Our history is unique: Just like south of the border, we started with great wide expanses. Different paths gave us the United Kingdom’s parliamentary system, but then, given our vast geography, we integrated it with a unique version of a de-centralized, federation – a unique solution to the challenges of creating, and then governing, a unique country.

By and large, it has worked pretty well.

Roy MacGregor, that superb observer and reporter on all things Canadian, compared Canada to a bumblebee. By all rights the creature, given its outsized body and tiny wings, shouldn’t be able to fly — but it does. Canada is big, and spread out, and in the early years the idea of all of the parts being one country seemed, if not impossible, awfully unlikely.

But it flew.

It did so because people of courage were willing to compromise and invest – both politically and financially – for the greater good. They created our Constitution, which unites us politically, and built the railways that transported goods, products and people from one part of the country to other parts of the country, often to go on to global markets. The original four provinces in fact made the completion of the Intercolonial Railway by the federal government a condition – a requirement – of signing the deal. Grain, wood, fish, minerals, livestock – without the ability to transport the fruits of our natural resources across the country, we wouldn’t be the successful country we are today.

That understanding of Canadian history and of the Constitution (or the political courage needed to uphold it) seems to be evaporating. We are forgetting not just how the Constitution works, but a fundamental ingredient of Canada’s success: the need, sometimes, for compromise on local or special interests for the greater national good. Rather than building our nation, we are in the process of, dangerously, dividing it – and in doing so, losing altitude and hitting ground.

Imagine trying to build a railway today – it wouldn’t stand a chance. If municipal mayors feel that they can prevent a pipeline being built because it is “too risky”, imagine what they would do, now, about a railway. Imagine if politicians in Ontario refused to allow track to be laid crossing Ontario, because transporting grain from the prairies to Montreal or St. John for export was of “no benefit” to Ontario.

What about the Trans-Canada Highway? Imagine if the building of that national link – or any road for that matter – were contingent on proving that it did not contribute to greenhouse gas emissions. Given that 20% of all of Canada’s GHGs come from driving cars and trucks, it wouldn’t stand a chance either.

The founding fathers drafted the Constitution the way they did because they understood the local pressures faced by politicians – and the temptation to succumb to them. Section 91 sets out all of the federal Parliament’s powers; Section 92 sets out all of the provincial powers — but specifically reserves to the federal Parliament key jurisdiction over shipping lines, railways, canals, telegraphs and other works or undertakings (including, today, pipelines) that connect one province with any other province(s), or beyond. It also gives the federal Parliament the right to declare any work, even though “wholly situate within” a province, to be for the general advantage of Canada or of two or more provinces – and thus under federal jurisdiction. This ‘declaratory power’ has been invoked more than 400 times since 1867.

The system has worked well for Canada – but only because we have upheld it.

Despite declarations by some politicians, and headlines provided by various polls, municipal and provincial governments do not, under the Constitution, have the power to block pipelines. Of course they have the right to raise local concerns – and other provinces, as well as the federal government, need to listen, understand and yes, sometimes everyone needs to compromise. But no development is risk free. Whether it is a railway, a highway, or a pipeline, one must analyse and balance the costs and the benefits (including probabilities of any risk). Collectively, we need to ensure best practices in terms of safety and the environment, including prevention, mitigation and the like. But in the end, the federal government must decide.

The right things are being said. Both the Prime Minister and the Minister of Natural Resources have acknowledged the need to get Canada’s oil to tidewater. But action is needed, and soon.

The Economy, What's New

When the automobile came along, nobody bailed out Ravenna

You can also read it at the Globe and Mail here.

February 27, 2016

Martha Hall Findlay

Executive Fellow, The School of Public Policy, University of Calgary

Ravenna is 12 km inland from the southern shore of Georgian Bay, up the side of the Beaver Valley, in the rolling farmland of Southern Ontario. If you blink as you hit the intersection of Grey County Roads 2 and 119, you will miss it, because today, Ravenna is barely a sign and an intersection of two rural roads.

Yet once upon a time, Ravenna was a bustling community, with 2 hotels, a blacksmith, stables, a feed store, a general store. Ravenna existed because it was pretty much halfway between Barrie and Owen Sound by horse and buggy. But then someone had the nerve to invent a new-fangled thing called an automobile. Soon, nobody needed the hotels, the stables or the blacksmith. The local farmers could get more of what they needed in the larger towns of Thornbury, Clarksburg and Collingwood, so the feed store and general store were closed too. It certainly wasn’t the fault of the folks from Ravenna – but their world had changed.

Why tell this story? Because the same thing is happening all around us today. Technological changes allow supply and demand chains to change. They allow opportunities for people to work in new and different sectors and places. They can also reduce demand for certain products and services, and reduce demand for various skills and labour in previously busy industries. But a major part of the history and economic success of Canada – of North America – has been one of internal migration, as people adapted and moved to where the opportunities were.

Unfortunately, our memories are all too short. These days, each time there is a disruption, a technological change, a shift in demand for products, services or for labour, the default reaction is to expect governments to step in to maintain the status quo. “We need help to keep our young people here.” “We can’t let this town die.” “The government must support this industry.” “We need to protect the family farm.” In most cases, that is exactly what the government should not do.

Let’s go back to little Ravenna. Should the government of the day have stepped in and artificially kept those two hotels open? Should it have given public money to the blacksmith with which to keep his employees paid, even if there was nothing left for them to do? Should it have given the general store a bail-out, in the hopes that somehow it could generate sales again? Of course not. Ravenna was a lovely place to live and call home, but not when doing so was no longer sustainable. When did we develop the notion that one has the right to stay ‘home’ even if there is no longer any work there, or the right to continue working at the same job if there is no longer sufficient demand for it, all at the expense of other taxpayers?

A more recent example: It is not the fault of the Toronto, Montreal or Calgary taxi drivers that their regulated (and protected) system is being disrupted by Uber’s innovative and popular service which new technology has now made possible. Yet trying to prevent or deny access to new and innovative products or services for which there is great demand, while artificially maintaining less effective and less efficient alternatives, makes no sense.

The good people of Ravenna, like so many people in our history, moved homes, found new work and started new lives, all on their own, without public assistance. But changing jobs, changing skill sets, even more so uprooting and changing homes, can all be difficult for people and their families. We want to be compassionate, and our society can afford to be. Publicly-funded support for people in need as they transition to other jobs and/or other places is not only compassionate, it makes sense economically — but only if it assists people through transition to something else, not to protect an unsustainable status quo. This type of support could include money for moving if needed, for income bridging, for training for different occupations that are more in demand elsewhere, and perhaps even easier access to start-up capital for new businesses. (A good number of people who lost their jobs during the major 1980s oil patch downturn started what became successful enterprises.)

It is unrealistic (and irresponsible) to expect government to use public money to artificially support a town, an industry or an individual company if the need for that town no longer exists, if there is no longer demand for what that industry produces, or if a company, for reasons of bad management or otherwise, cannot sustainably supply what demand there is for its products or services.

No one would argue that government should have artificially kept those two hotels open in Ravenna.

 

International Trade and Investment, The Economy, What's New

Financial Post: Foreign investors need clarity

Foreign direct investment is like a pipeline of energy (pun intended) into the Canadian economy. According to the International Monetary Fund, FDI benefits small open economies like Canada by allowing owners of capital to diversify their lending and investment, thereby reducing their risks and costs of finance. In the shorter run, it generates tax revenues and…</style>//d2uzdrx7k4koxz.cloudfront.net/user/view.act?fuid=MjA2Mzg2NDg=&showDate=true//d2uzdrx7k4koxz.cloudfront.net/user/js/rh.js

 

Supply Management, The Economy, What's New

National Post: Jen Gerson: There is at least one major flaw with the TPP: It doesn’t kill supply management

 If there is one reason above all others to hesitate in voting for the NDP, it’s the party’s inbred aversion to free trade. As the NDP tries to shore up its left flank in the face of drooping poll numbers, this habit was on full display as the 12 countries, including Canada, inked the Trans-Pacific Partnership.… Continue reading
Blog, The Economy, The Environment, What's New

The Divestment Movement: Well-intentioned but misguided.

http://www.theglobeandmail.com/globe-debate/fossil-fuels-divestment-movement-good-intention-bad-idea/article22743277/

http://www.lapresse.ca/debats/votre-opinion/201501/30/01-4840013-bien-intentionne-mais-malavise.php

Martha Hall Findlay | Jean Charest

Partnership for Resource Trade

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The so-called divestment movement, encouraged by the environmental group 350 (www.350.org), calls for universities, churches, other non-profits and individuals to divest their investment holdings from major fossil fuel companies. Although based on legitimate concerns over climate change, the idea is fundamentally misguided.

Most of us agree that the burning of fossil fuels contributes to climate change. Many individuals and enterprises are responding through conservation, reducing their own energy use. Many are developing technologies that improve efficiency in the use of fossil fuels and in the processes of extraction. We are achieving much better gas mileage in cars and trucks. We are reducing GHG emissions from the production and burning of a barrel of oil, a cubic foot of natural gas, and from the production of electricity. But we also know that we still have a long way to go.

The underlying question, though, is this: Does the GHG emission problem lie with the fossil fuel producers, who are fulfilling existing demand, or with those creatingthat demand? Is it the fault of the people driving cars, or the trucking companies? (Transportation produces fully a quarter of Canada’s GHG emissions.) Should we blame the manufacturers that provide jobs? Or the consumers who create demand for the things that those manufacturers make?

The problem lies with the demand – it’s not the fault of those meeting the demand.

Besides, many of those “big bad fossil fuel” companies are also the biggest investors in renewable energy such as solar and wind power generation, and in research (including university research) for technologies to improve conservation, efficiency and overall environmental sustainability. Will divestment of these companies reduce their ability to invest in these other efforts? In any case, it will do nothing to reduce the market’s reliance on, or demand for fossil fuels.

Yet, according to a report released by the Sustainable and Education Policy Network (SEPN) (www.sepn.ca) there are now 27 active Canadian post secondary divestment campaigns. Most of these are student-led, and until recently, have not resulted in any actual changes in investment policy. However, in November 2014, Concordia University became the first university in Canada to agree to partially divest $5 million of its endowment from fossil fuels in order to consider alternatives.

Now a student-led campaign at UBC (UBCC350) has encouraged the UBC Faculty Association to hold an online referendum on the issue (voting to occur between January 26 and February 6).

If, as an individual, you choose not to invest in otherwise profitable companie because of personal ‘moral’ issues, that is your call. But investment decisions for university endowments must be based on one thing: which investments will bring the best financial returns. If fossil fuel companies are a bad financial investment, that’s reason to divest. Otherwise, divestment is inappropriate.

Donors (and potential donors) may be concerned that their donations will not go as far if invested with less than optimum return.

Canadian taxpayers (including many of those fossil fuel companies) provide by far the majority of university funding. Taxpayers do not get to choose where their taxes go, but should be concerned that the money used by universities, including endowment money, goes as far as possible to benefit the university and its operations. (Endowments are not tax-funded, but indirectly supported by taxpayers by way of tax-deductibility of donations.)

As for the students so actively campaigning for divestment, many of them also call for lower tuition, better facilities, better programs, smaller classes, better research funding – all of which require money from those taxes and those endowments (and sometimes direct funding from the very companies they are targeting). They also call for jobs when they graduate – a good number of which may be in, or reliant on, the energy sector. Many of them also drive cars, and most live in heated apartments, cook food and use mobile phones and computers. That energy needs to come from somewhere. As long as we use fossil fuels, even as we move to other sources, what purpose is served by punishing the producers?

Much good is being done by groups such as 350 and SEPN, but their promotion of the so-called divestment movement is mis-placed. Most of us are concerned about climate change and want to reduce the world’s emissions of GHGs. The answer, however, is to focus on reducing the growing worldwide demand for fossil fuels, not to target those simply meeting the demand.

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Le mouvement pour le désinvestissement ─ bien intentionné mais malavisé Partenariat pour le commerce des ressources

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Le mouvement dit du désinvestissement, soutenu par le groupe environnemental 350, demande aux universités, aux organismes sans but lucratif ainsi qu’aux particuliers de se dessaisir de leurs participations dans les grandes entreprises pétrolières. Malgré les inquiétudes légitimes qui l’animent, liées aux changements climatiques, l’idée défendue est fondamentalement erronée.

On convient généralement que l’utilisation des combustibles fossiles contribue aux changements climatiques. Bien des gens et des entreprises réagissent par la prise de mesures de conservation et une consommation moindre d’énergie. De nombreuses avancées technologiques permettent aussi de réaliser des économies d’énergie et de rendre plus efficaces les procédés d’extraction. Les automobiles et les camions consomment moins de carburant. Nous savons cependant qu’il reste encore beaucoup à faire.

De manière plus fondamentale, il faut toutefois se demander si les responsables du problème de l’émission de gaz à effet de serre sont les producteurs d’énergie fossile, qui répondent à la demande existante, ou bien ceux qui créent cette demande. Devraiton blâmer les fabricants fournisseurs d’emplois, dans cette optique, ou les consommateurs qui demandent leurs produits? Le problème vient selon nous de la demande.

Par ailleurs, les « grandes méchantes pétrolières » comptent parmi les principaux investisseurs dans les énergies renouvelables, comme l’énergie solaire ou éolienne, et dans la recherche technologique (notamment la recherche universitaire) qui vise à accroître les économies d’énergie et à assurer un environnement durable. Le retrait des investissements dans ces entreprises seraitil un frein à ces efforts?

Selon un rapport publié par le Sustainability and Education Policy Network (SEPN) (www.sepn.ca), malgré tout, 27 campagnes de désinvestissement sont menées en ce moment même au Canada. La plupart sont organisées par des étudiants. Jusqu’à récemment, il n’en était résulté aucune modification véritable des politiques d’investissement. Toutefois en novembre 2014, à titre d’exemple, l’Université Concordia est devenue la première université canadienne à retirer des investissements dans les pétrolières, de 5 M$, de son fonds de dotation.

C’est votre affaire si, à titre individuel, vous choisissez pour des raisons « morales » de ne pas investir dans des entreprises par ailleurs rentables. Les décisions de placement des fonds de dotation universitaires doivent par contre s’appuyer sur un critère : quels investissements sontils les plus profitables? Si les pétrolières sont un mauvais placement, il est judicieux d’en retirer ses investissements. Sinon, ce n’est pas opportun.

Les contribuables canadiens (y compris les entreprises pétrolières) sont de loin la principale source de financement universitaire. Ils ne décident pas là où vont leurs impôts, mais ils se soucient de savoir si l’argent versé aux universités, y compris aux fonds de dotation, est investi de la meilleure manière possible. Quant aux étudiants militant si énergiquement en faveur du désinvestissement, bon nombre demandent également des frais de scolarité moins élevés, de meilleurs programmes et un financement accru de la recherche – or, tout cela est financé par ces impôts et fonds de dotation.

Les groupes tels que le 350 et le SEPN sont bénéfiques, mais ils font fausse route en appuyant le mouvement dit du désinvestissement. Tous, nous nous inquiétons des changements climatiques et souhaitons la réduction des émissions de GES. La solution consiste à réduire la demande en pétrole, toutefois, et non à punir ceux qui répondent tout simplement à la demande.

Martha Hall Findlay, a former Member of Parliament, is an Executive Fellow at the School of Public Policy of the University of Calgary and is Chair of the Advisory Council of The Partnership for Resource Trade (www.powerofcanada.ca).

Jean Charest, Partner at McCarthy Tétrault and former Premier of Québec, chairs the Partnership’s Steering Committee.

*************

Martha Hall Findlay, ancienne députée, est fellow cadre supérieur à la School of Public Policy de l’Université de Calgary et présidente du conseil consultatif du Partenariat pour le commerce des ressources (www.forceducanada.ca)

Jean Charest, associé chez McCarthy Tétrault et ancien premier ministre du Québec, préside le Comité directeur du Partenariat pour le commerce des ressources.

Blog, Government and Democracy, The Economy, What's New

Op-Ed – Ottawa Citizen – Premiers should resist the power of the vocal few

Martha’s Op-Ed in the Ottawa Citizen, based on her longer piece in the November issue of Inside Policy, the magazine of the Macdonald-Laurier Institute.

Martha Hall Findlay: Premiers should resist the power of the vocal few

Ontario Premier and Liberal Leader Kathleen Wynne, right, is shown how to use a piece of machinery by employee Christopher Rembacz, as she tours Cyclone MFG Inc., a company which manufactures parts for the aviation industry, during a campaign stop in Mississauga, Ont., on Tuesday, May 13, 2014.
Ontario Premier and Liberal Leader Kathleen Wynne, right, is shown how to use a piece of machinery by employee Christopher Rembacz, as she tours Cyclone MFG Inc., a company which manufactures parts for the aviation industry, during a campaign stop in Mississauga, Ont., on Tuesday, May 13, 2014.Chris Young / CP 

The benefits of open trade between countries are well established. The same applies to trade between our Canadian provinces and territories, yet while certain premiers are showing leadership in moving toward more open inter-provincial trade, others show signs of regressing into greater protectionism. Even as we work toward concluding free trade deals internationally, we’re still stumbling at home.

Politicians by their nature respond to what is being said in the public realm – and we as a society have allowed our public discourse to become too dominated by special interest groups – the vocal few.

While the economic theories supporting free trade versus protectionism are widely accepted, there are no special interest groups of economists loudly espousing them.

We need to change the public discourse to make doing so more politically palatable. We also need to remind our political leaders that theirs is a responsibility to the betterment of the whole.

For example: Ontario should be able, indeed, encouraged by Ontario taxpayers, to hire the company that can build the best new hospital or highway at the best price, regardless of where the company itself comes from – and put the money saved toward other useful purposes that benefit the community.

Yet Ontario requires companies to have “local knowledge” in order to win contracts for long-term infrastructure projects. Premier Kathleen Wynne, now with a majority mandate, has an opportunity to set her own path – to join other provincial leaders, particularly those in BC, Alberta and Saskatchewan, in opening up inter-provincial trade. Unfortunately, to this point, indications are that she would instead add to the restrictions.

Free traders are often painted by special interest groups as being unconcerned for the welfare of locals. Not true. Tariffs, quotas, non-tariff barriers in the form of more subtle requirements (such as “local knowledge”) in effect take resources away from the wider population to give extra to the much smaller number of owners and workers in the favoured industry.

Robin Hood must be shaking his head, as this redistribution of wealth goes the wrong way. Protectionism takes from society as a whole, including those least able to afford it, and gives to a few. No one begrudges anyone a livelihood, yet study after study has shown that the cost to taxpayers of protecting or subsidizing jobs is always a multiple – sometimes a very large multiple – of the wages of the workers thus protected or subsidized. And Ontario “protection” will only encourage other provinces to “protect” their own, preventing those same Ontario companies from expanding.

So how do we get from understanding good policy on opening up interprovincial trade to politicians deciding to do so?

Nationalistic language of “We should do this for the country as a whole” will not work, nor some vague sense of patriotic selflessness. Ontario will not open up construction opportunities to non-Ontario enterprises simply because of some feel-good idea about Canada as a whole. Ontario should do so because it is in the best economic interests of Ontarians.

The language of “protection”, of “saving jobs”, of “encouraging local” sounds good. It pulls at our heartstrings. But even though the larger population suffers from protectionist policies, the effect is more diffuse and impossible to fit into easy, heartstring-pulling sound bites. The concept of greater prosperity for the whole is harder to articulate in simple terms, but we must speak out.

Taxpayers, consumers, voters, all should be actively, loudly calling on their governments to source the best infrastructure, goods and services at the best prices, regardless of the source – particularly when public purses are increasingly under pressure.

And we should encourage the leadership of several premiers in this regard. We need them to step up even more, and to call for those still hesitating to come off the sidelines.

Martha Hall Findlay, a former Liberal member of Parliament, is an executive fellow at the School of Public Policy of the University of Calgary and Chair of the Advisory Council of The Partnership for Resource Trade (www.powerofcanada.ca). This op-ed is based on a longer piece in the November issue of Inside Policy, the magazine of the Macdonald-Laurier Institute.

Blog, Government and Democracy, The Economy, What's New

Resist the power of the vocal few

Read the November 2014 Issue of Inside Policy here.

Inside Policy November 2014 Magazine Cover While the benefits of open trade are well established, it’s easy for the vocal minority groups who benefit from protectionism to drown out the best  interests of the majority. Martha Hall Findlay calls on politicians to resist the calls of special interests and act for the benefit of the whole.

Martha Hall Findlay

 

 “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy… If a foreign  country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them with some part of the produce of our own  industry, employed in a way in which we have some advantage.” – Adam Smith, 1776

Adam Smith’s summary of the benefit of trade between countries applies to our Canadian provinces and territories, too. And after well more than 200  years it bears repeating now, as while certain provincial premiers are showing leadership in moving toward more open inter-provincial trade, others show  signs of regressing into greater protectionism. Even as we work toward concluding free trade deals internationally, we’re still stumbling at home.

Why is this so difficult? It’s easy to point to political leadership (or the lack thereof), but political leadership is often easier said than done. Politicians by  their nature respond to what is being said in the public realm — and we as a society have allowed our public discourse to become too dominated by  special interest groups.

The reality is that it is difficult for politicians (and their advisers) not to succumb to the pressure of the vocal few. While the economic theories supporting free trade versus protectionism are widely accepted, there are no special interest groups of economists loudly espousing them – and when politicians are striving for re-election, practice doesn’t always keep up with theory.

We need to remind our political leaders that theirs is a responsibility to the betterment of the whole; at the same time, we need to work at changing the public discourse to make doing so more politically palatable.

A simple example: If a construction company in Manitoba (or France, for that matter) has specific design and construction expertise that allows it to build a new hospital more cost-effectively than the Ontario alternatives, then Ontario should be able – indeed, encouraged – to hire the company that can do the job best at the best price, regardless of where it comes from. The taxpayers of Ontario should be able to get the best new hospital for their money – and put the money they save to other useful purposes that benefit the community.

Yet Ontario requires companies to have “local knowledge” in order to win contracts for long-term infrastructure projects. The concept was introduced by Dalton McGuinty just before he stepped down. His successor, Premier Kathleen Wynne, now with a majority mandate, has an opportunity to set her own path — to join other provincial leaders, particularly those in BC, Alberta and Saskatchewan, in opening up inter-provincial trade, including access to this kind of work. Unfortunately, at time of writing, indications were that she would instead add to the restrictions.

Proponents of open trade are often painted by special interest groups as being unconcerned for the welfare of locals. This is not true. Tariffs, quotas, non-tariff barriers in the form of more subtle requirements (such as “local knowledge”) have the effect of taking resources away from the wider population in order to give extra to the much smaller number of owners and workers in the favoured industry – in Ontario’s case a small number of established construction companies and the unions with which they have close ties.

This redistribution of wealth goes the wrong way. Protectionism takes from society as a whole, including those least able to afford it, and gives to a few. And although no one begrudges anyone a livelihood, the apparent benefit to the relatively few working in these enterprises is less than it may appear. Ontario “protection” will only encourage other provinces to “protect” their own – effectively restricting those Ontario companies (and their employees) from expanding. And study after study has shown that that the cost to taxpayers of protecting or subsidizing jobs is always a multiple – sometimes a very large multiple – of the wages of the workers thus protected or subsidized.

Not only does it not make economic sense, it harms the larger community – yet politicians still succumb. Alan Blinder, Professor of Economics and Public Affairs at Princeton and author of “Hard Heads, Soft Hearts”[1] put it nicely: “Trade protection secures concentrated and highly visible gains for a small minority by imposing diffuse and almost invisible costs on a vast and unknowing majority. That makes protectionism at once economically graceless and politically fetching.”

So how do we get from good policy on opening up interprovincial trade to good political decisions that would open up inter provincial trade?

Some are using nationalistic language of “We should do this for the country as a whole,” but a vague sense of patriotic selflessness simply won’t succeed. Ontario will not (and arguably should not) open up construction opportunities to non-Ontario enterprises simply because of some feel-good idea that Canadians should be more “Canadian” and spread the wealth around. We need to be loud and clear: the Ontario government should do so because it is in the best economic interests of Ontarians.

We must move the public discourse away from the easier-to-promote language of protection for a few, to the harder-to-articulate-simply but hugely important language of greater prosperity for the whole. The language of “protection”, of “saving jobs”, of “encouraging local” all sounds good. It pulls at our heartstrings. Small groups can concentrate their messages and effectively create a wider perception of harm. On the other hand, the larger population suffers from protectionist policies, but the effect is more diffuse and impossible to fit into easy, heartstring-pulling sound bites. Individuals are often not aware of the negative consequences of protectionism –even those who do have no focused way to articulate their concern.

Taxpayers, consumers, voters – all should be actively, loudly calling on their governments to source the best infrastructure and the best services at the best prices, regardless of the source – particularly when public purses are increasingly under pressure.

We should be heartened by the leadership – not just at the provincial or territorial level, but truly national leadership — being shown by several premiers in this regard. Absent action on the part of the federal government to use its constitutional powers to move this forward, we need these provincial and territorial leaders to step up even more, and for those still hesitating, to come off the sidelines. After all, politicians are entrusted with a responsibility to do what’s best for the whole, not just a few, and we must hold them accountable for fulfilling that responsibility.

Martha Hall Findlay, a former Member of Parliament, is an Executive Fellow at the School of Public Policy of the University of Calgary and Chair of the Advisory Council of The Partnership for Resource Trade (www.powerofcanada.ca).

* * * * *

[1] Alan S. Blinder, Hard Heads, Soft Hearts – Tough-Minded Economics for a Just Society (Cambridge, Massachusetts : Perseus Books, 1987)

 

 

Blog, International Trade and Investment, The Economy, What's New

End The Foot Dragging and Sign The Trade Deal with Europe

View online at the Globe and Mail here: http://www.theglobeandmail.com/globe-debate/end-the-foot-dragging-and-sign-the-trade-deal-with-europe/article20757135/

CETA – Partnership for Resource Trade

September, 2014

Thankfully, international trade is an area where, at least in more recent times, political partisanship takes a back seat. (Mostly.)

There will always be naysayers, but the overwhelming evidence points to trade being better, economically and socially, for both exporters and importers. In almost every case (acknowledging certain continuing challenges with developing countries), the tide of rising prosperity from international commerce, done responsibly, lifts all boats.

For Canada, a major trading nation which, in relative terms, depends far more on trade than many others, the more access we have to other markets the better. Although global multilateral trade negotiations have faltered, bilateral and regional arrangements that reduce tariffs and other barriers have been increasing, simply because it makes economic sense to do so. The recent agreement on the final text of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) is very welcome news – for both Canada and Europe.

Canada is a resource-rich country. We produce high quality food, fish, wood products, minerals, energy — and an extraordinary variety of related products and services – that the rest of the world wants. Our various resource sectors provide high-value-added jobs in diverse areas such as agri-science, technical innovation, research and development, engineering and design. Canadians continue to create and build more efficient and more environmentally sustainable growing, extracting, processing and manufacturing methods, which in turn make our products and services more attractive to the world.

Canadians in all of these sectors – the business people, the workers, the growers, as well as the millions of Canadian consumers who will benefit from more access to better-priced European goods – all welcome CETA and look forward to its implementation.

CETA will open the massive European market to more Canadian goods and services. With 500 million people and $17 trillion GDP, the European Union is the world’s largest integrated economy area, and Canada’s second-largest trading partner. CETA also represents a new generation of treaties, and makes the most of increasing globalization. As its name suggests, it is ambitiously comprehensive in addressing far more than just goods, but services as well, and not just tariffs, but investment and government procurement. CETA means opportunities for Canadian exporters, service providers, importers and consumers, and is forecast to deliver a 20% boost in bilateral trade, the equivalent of creating almost 80,000 jobs. These new trade opportunities will encourage greater diversification of our economy and give stronger incentives to the development of our businesses, products and services.

It also moves both Canada and the countries of the European Union to enhance the human and social dimensions of our relationship, particularly in regard to the environment, research, innovation and culture.

In a world of increasingly interdependent economies, CETA positions Canada well. Strategically, the fact that the Europeans chose to proceed with Canada as a prelude to the US/EU negotiations speaks to how Canada can position itself as a bridge in the important transatlantic relationship between our two continents. And adding CETA to NAFTA – the biggest and richest consumer market in the world with Europe together with the 450 million people of the NAFTA area – puts Canada right in the middle of the biggest trade zone in the world.

The rising economic and political power of emerging and increasingly aggressive economies also creates a much bigger geopolitical challenge. And here, the stakes are very high. What is at play? Particularly with the absence of comprehensive multilateral progress, which countries, or regional blocks, will set the rules of trade? Canada, the EU and the US together comprise 45% of the world’s GDP and a third of its trade. Finalizing CETA is a major step in substantially strengthening our hand in protecting our vital economic interests.

Canada cannot wait on the sidelines, but must be a full participant, and CETA is an excellent step forward.

The CETA trade deal is overwhelmingly a good thing for Canada and Canadians, and we encourage those now tasked with finalizing the details and getting it ratified to do so as quickly as possible.

Martha Hall Findlay, an MP from 2008 to 2011, is an executive fellow at the School of Public Policy at the University of Calgary and chairs the Advisory Council of the Partnership for Resource Trade.

 Jean Charest, Partner at McCarthy Tétrault and former Premier of Québec, chairs the Partnership’s Steering Committee.

 

View online at Le Devoir here: http://www.ledevoir.com/economie/actualites-economiques/419236/l-aecg-entre-l-union-europeenne-et-le-canada-un-traite-a-conclure-et-a-adopter-au-plus-vite

 

AECG – Partenariat pour le commerce des ressources

Septembre 2014

Heureusement, le commerce international est un domaine où, ces derniers temps du moins, la majorité des activités politiques partisanes ont été reléguées au second plan.

Il y aura toujours des récalcitrants, mais une preuve abondante démontre que le commerce est meilleur, sur les plans économique et social, pour les exportateurs et les importateurs. Dans presque tous les cas (compte tenu de certains défis permanents que posent les pays en développement), la marée montante de la prospérité issue du commerce international, si celui-ci est fait de manière responsable, soulève tous les bateaux.

Plus le Canada, nation commerçante d’envergure qui, en termes relatifs, dépend davantage du commerce que bon nombre d’autres pays, a accès à des marchés variés, mieux c’est. Bien que des négociations commerciales multilatérales mondiales aient achoppé, force est de constater que les accords régionaux et bilatéraux ayant pour objet la réduction de tarifs et la suppression d’autres barrières sont à la hausse parce qu’ils sont tout simplement réalistes sur le plan économique. L’entente récente sur le libellé définitif de l’Accord économique et commercial global entre le Canada et l’Union européenne (l’« AECG ») est une excellente nouvelle, tant pour le Canada que l’Europe.

Le Canada est un pays riche en ressources. Nous produisons des aliments, du poisson, des produits du bois, des minéraux et de l’énergie de première qualité de même qu’une vaste gamme de produits et services connexes que veut le reste du monde. Nos divers secteurs des ressources fournissent des emplois de grande qualité dans divers domaines, notamment dans les secteurs agro-scientifique, de l’innovation technique, de la recherche et du développement, du génie et de la conception. Les Canadiens continuent d’inventer et d’élaborer des méthodes de culture, d’extraction, de traitement et de fabrication plus efficaces et durables sur le plan environnemental, de sorte que nos produits et services sont particulièrement attrayants sur le marché mondial.

Les Canadiens de tous ces secteurs, qu’il s’agisse de gens d’affaires, de travailleurs, de producteurs ou des millions de consommateurs canadiens qui bénéficieront d’un accès accru à des biens européens à meilleur prix, se réjouissent de l’AECG et de sa mise en œuvre prochaine.

L’AECG permettra à un nombre croissant de biens et de services canadiens de percer l’immense marché européen. L’Union européenne, dotée d’une population de 500 millions d’habitants et d’un produit intérieur brut (« PIB ») de 17 billions de dollars, est la plus grande économie intégrée du monde ainsi que le deuxième partenaire commercial en importance du Canada. Qui plus est, l’AECG fait partie d’une nouvelle génération de traités qui tirent parti de la mondialisation croissante. Comme son nom l’indique, cet accord de très grande envergure vise plus que des biens et des tarifs. En effet, il s’applique aussi à des services, des placements et des marchés publics. L’AECG est synonyme de possibilités d’affaires pour les exportateurs, les fournisseurs de services, les importateurs et les consommateurs canadiens et devrait entraîner une augmentation de 20 % du commerce bilatéral, ce qui correspond à la création de quelque 80 000 emplois. Ces nouvelles occasions d’affaires donneront lieu à une plus grande diversification de notre économie de même qu’à de meilleurs incitatifs en vue du développement de nos entreprises, produits et services.

En outre, l’accord incite le Canada et les pays membres de l’Union européenne à mettre en valeur les dimensions humaines et sociales de notre relation, particulièrement à la lumière de l’environnement, de la recherche, de l’innovation et de la culture.

Dans un monde où les économies sont de plus en plus interdépendantes, l’AECG permet au Canada de renforcer sa position. D’un point de vue stratégique, le fait que l’Union européenne ait choisi de collaborer avec le Canada avant d’entamer ses négociations avec les États-Unis montre comment notre pays peut se positionner pour faire le pont dans la relation transatlantique cruciale entre les deux continents. Le Canada se trouve au milieu de la plus importante zone commerciale du monde grâce à l’AECG et à l’ALENA, accords qui visent respectivement le marché de consommation le plus grand et le plus riche de la planète ainsi que les 450 millions d’habitants nord-américains.

Le pouvoir économique et politique grandissant d’économies émergentes de plus en plus dynamiques pose aussi un défi géopolitique d’un tout autre ordre où les enjeux sont fort élevés. Que sont ces enjeux? Plus particulièrement, en l’absence de progrès multilatéraux substantiels, quels pays, ou blocs régionaux, établiront les règles commerciales? Ensemble, le Canada, l’UE et les É.-U. représentent 45 % du PIB et le tiers du commerce à l’échelle planétaire. L’achèvement de l’AECG constitue une étape majeure nous permettant de renforcer considérablement notre position pour protéger nos intérêts économiques vitaux.

Le Canada ne peut se permettre d’attendre dans les coulisses. Il se doit de participer pleinement et l’AECG lui donne l’occasion rêvée de le faire.

L’AECG représente une occasion en or pour le Canada et les Canadiens, et nous encourageons les personnes qui sont maintenant chargées d’arrêter définitivement l’accord et de le faire ratifier d’agir ainsi dans les meilleurs délais.

Martha Hall Findlay, députée entre 2008 et 2011 et membre exécutif de l’École de politique publique de lUniversité de Calgary, préside le Conseil consultatif du Partenariat pour le commerce des ressources.

 Jean Charest, associé chez McCarthy Tétrault et ancien premier ministre du Québec, préside le Comité directeur du Partenariat pour le commerce des ressources.