David Dodge: Trade the biggest risk for Canada's economic outlook
Former Bank of Canada Governor David Dodge says the United States is deliberately creating global trade uncertainty to drive investment to its shores.
“The White House and the people around the president look at the world in a way that, if they can create uncertainty about investment elsewhere in the world, then both Americans and foreigners will come and invest more in the United States,” Dodge told BNN Bloomberg on Monday.
“If they can create that degree of uncertainty on the trade side, then they see that as benefitting the United States.”
His comments come days after the Trump administration lifted exemptions for Canada, Mexico and the European Union on its punishing metals tariffs. That decision has prompted challenges to the World Trade Organization and retaliatory measures from America’s trade allies.
Dodge, currently senior advisor at Bennett Jones, sees the Americans' actions as a threat to the WTO.
“They are undermining the WTO as an organization,” Dodge said. “They are definitely ‘America first,’ and [of] a view that if the rest of the world looks less attractive then, somehow, America gains. To me, it’s a very peculiar view and, obviously, to our Prime Minister it’s a peculiar view.”
“I think they understand perfectly that there are ways that the U.S. can become more attractive as a place to invest and that’s what they’re going after.”
Current Bank of Canada Governor Stephen Poloz said in an interview with BNN Bloomberg on Friday that the ongoing NAFTA negotiations threaten to drive investment in Canada away for good.
"Just the discussion of [NAFTA risk] for the last 18 months has got everybody's radar on full – companies postponing or delaying important decisions, or making decisions that are different – investing in the United States, or what have you – just to hedge against the risk," Poloz said.
Dodge said that Canada is doing what it can to hedge against the Trump administration’s protectionism.
“The first response is to push back, just as the government has done,” Dodge said. “Appearing weak is not a good way to operate, so the government did the right thing.”
“Canadian business is absolutely right to ensure that we are on good relations with U.S. states, with Congress and with U.S. business. So, the so-called charm offensive makes absolutely good sense.”
Dodge added that Canada could also take advantage of the partnerships it has that the U.S. does not to open up new investment and trade avenues in Asia and Europe.
“We have just entered into a new TPP arrangement, a new CETA arrangement. We should be working very hard to exploit those trade arrangements.”