A new free-trade consensus for Canada and Ontario

Don’t call it a comeback; we’ve had industrial policies before. 

Indeed, it might not come as a surprise when free trade makes an appearance again, this time as a focus of the Ontario election on June 2. The difference, however, will be its lack of debate.

Broadly speaking, previous debate has been between those on the right praising the economic opportunities offered by free trade and those on the left criticizing that it seems to come at the expense of sovereignty and manufacturing jobs.

In the past few days, we’ve seen border blockades shut down major trade routes, with some American officials using the blockages to justify their calls to locate more manufacturing operations in the U.S. Faced with this not-so-neighbourly competition for manufacturing jobs and investment, the left-right trade divide has largely been bridged. And this newfound common ground will be on display during the Ontario election campaign. 

For Canadian companies, this creates a new dynamic and a new opportunity: a loose partnership with the government to protect access, opportunities, and even the trade agreements themselves.

Problems ranging from housing unaffordability and infrastructure deficits to the state of the health-care system will be included in Ontario party platforms. But, in many ways, the Ontario election will be both backward-looking (opposition parties will focus on pandemic management) and forward-looking (all parties, especially the ruling Progressive Conservatives, will tout the best ways to spur the economic recovery). 

Free trade will be one way, but it won’t be free trade as we’ve previously known it. At best, it will be free-ish trade — neither free nor managed, but free when it’s convenient. And the way parties present it in their economic-development plans won’t differ much.

Consider the recent policies of Premier Doug Ford’s government. Some may recall him criticizing Liberal-government funding programs as “corporate welfare.” Yet, in the face of restricted exports of personal protective equipment (PPE) in August 2020, the federal and provincial governments each gave 3M Canada $23.3 million to help build a plant in Brockville, Ont., to make N95 respirators. The governments billed the investment as a “partnership” between them and 3M Canada, and as a way of securing a domestic supply of PPE. The Opposition complained that it didn’t happen sooner.

In December 2021, the Ford government created a Council on U.S. Trade and Industry Competitiveness. Chaired by Unifor National President Jerry Dias, the council could be the perfect illustration of the new left-right consensus on trade policy. Faced with an ambivalent (at best) primary trading partner and a rapidly changing global economic environment, the Ontario government needs real-time information on its domestic economy, and how particular industries and companies are faring. Government is partnering with industry and workers to protect existing free-trade rights and to strengthen economic competitiveness. 

Auto manufacturing is perhaps the strongest example of an industry operating on a North American platform. Yet the scramble to lead in electric-vehicle (EV) manufacture, which preceded the recent blockade of the Ambassador Bridge, means Ontario will probably soon make a big investment to attract an EV-battery manufacturer to the province — and many other governments around the world will be doing the same thing. The Ontario election won’t pose a threat to this foreign investment.

In the current environment, there’s a preference for commerce to have some form of strong local presence. Both industry and governments recognize this. At the same time, governments want to protect their domestic economies, be they Canadian or foreign-owned companies. Moreover, many Ontario companies see an opportunity to scale up, and often need some kind of government backing to do so. In the interests of Ontario jobs, the Ontario economy, and Ontario’s position globally, the Ontario government will increasingly act as a partner with business. 

This isn’t the end of globalization. But it’s a turn toward it, with national (and, increasingly, sub-national) characteristics. 

Governments around the world are shoring up their domestic resilience. Canada and Ontario, long seen as boy scouts who keep their international obligations, are interested in doing the same.

With an election looming, Ontario’s political parties want local companies to tell them what their economic-development plans should contain, which they’ll include in their party platforms. 

Governments are involving themselves again in the shaping and directing of economic development, as the Ontario election will demonstrate. Companies shouldn’t be surprised to find that the fundamentals of our economic policy are no longer debated on the campaign trail.

Brian Zeiler-Kligman is vice-president of Ontario-government relations at Sussex Strategy Group and an adjunct professor of International Business at York University.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

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