The Port of Vancouver on July 20, 2023.CHRIS HELGREN/Reuters
Paul Jenkins is a senior fellow at the C.D. Howe Institute and former senior deputy governor of the Bank of Canada, while Mark Kruger holds senior fellow appointments at the Yicai Research Institute, the Centre for International Governance Innovation and the University of Alberta’s China Institute.
The global economy has become fragmented, and an important cause has been the inability of international trade and finance governance institutions to adapt to changing realities. However, Canada has a unique opportunity to help repair today’s global trading system.
This year, the country is chairing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Commission. The CPTPP is a free-trade agreement between Canada and 10 other countries in the Indo-Pacific (Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).
The commission’s role includes considering new applicants and setting the standards they must meet. As chair, Canada can help move the global economy back along a path toward a more open, rules-based trading system.
Efforts to renew existing global institutions to better reflect current economic realities are important. They are key to promoting the benefits of trade and investment among economies. Nurturing new institutions such as the CPTPP and promoting broad accession to it are effective ways to counter global economic fragmentation caused by the rapid rise in tariffs, restrictions and beggar-thy-neighbour policies of the past few years.
A “next generation” trade agreement, the CPTPP takes World Trade Organization rules a step further in key areas such as electronic commerce, intellectual property and state-owned enterprises, and its expansion would help strengthen global trade rules, deepen economic co-operation on trade and sustain an open global trading system.
The benefits for Canada specifically are further export-market diversification and greater ties with the fast-expanding markets of the Indo-Pacific region. Further, helping today’s global economy is a key opportunity that will carry over when Canada welcomes the G7 summit in 2025.
Bottom line: Broadening the CPTPP offers the prospect of strengthening global governance and addressing common economic challenges for members and for the global economy writ large, while expanding Canada’s markets.
Notably, a half-dozen countries have applied to join the CPTPP. One of which is China, whose entry would boost global GDP by $600-billion annually, representing an increase in global incomes of more than 0.5 per cent.
However, there’s a catch. The challenge for both Canada and subsequent commission chairs is to ensure that China agrees to meet the high standards members have maintained so far.
This high bar includes member countries eliminating or substantially reducing tariffs and other trade barriers; strong commitments to opening their markets; abiding by strict rules and protection of foreign companies; and operating within, as well as helping to promote, a predictable, comprehensive framework in digital trade flows.
For accession, China would need to demonstrate that a socialist market economy can be consistent with fair trade. The applications of both China and Taiwan also represent a particularly challenging area to navigate, but not an insuperable one given they are both members of other organizations such as APEC.
If the U.S. were to also join the CPTPP, it would gain from preferential access to growing Pacific Rim markets, in particular that of China’s services sector. But it would need to step well back from its current mercantilist mindset, which risks becoming worse. Therefore, both China and the U.S. joining are best viewed as long-term goals.
One of the most important goals for Canada’s chairmanship should be to clarify the rules of accession, which would be a big step forward in sustaining the CPTPP’s expansion.
Canada should help promote and accelerate the inclusion of Costa Rica, Uruguay, Ecuador, and Ukraine, all of whom have applied to the CPTPP. And it should help move forward discussions with South Korea, Indonesia, Philippines and Thailand, countries that have all expressed interest in joining.
In sum, as chair, Canada should champion discussion and understanding of the long-run goal of broad accession to the CPTPP.
Open and inclusive institutions are at the core of ensuring each economy can benefit from global economic integration, and the CPTPP is a landmark on the way forward.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
