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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
