Trudeau must act on Trump’s domestic plan

make canada innovative again
Former Industry minister and moderator John Manley puts on a red baseball cap as he jokes around before moderating a session with Innovation, Science and Economic Development Minister Navdeep Singh Bains at a conference in Ottawa, Wednesday October 12, 2016. An influential organization representing Canada's biggest corporations is urging Justin Trudeau to take ambitious steps to shield the country from threats posed by Donald Trump's domestic economic agenda. THE CANADIAN PRESS/Adrian Wyld

OTTAWA – An influential organization representing Canada’s biggest corporations is urging Justin Trudeau to take ambitious steps to shield the country from threats posed by Donald Trump’s domestic economic agenda.

In a letter to the prime minister, the head of the Business Council of Canada warns Ottawa to make Canada more competitive as the U.S. president pursues his plans to slash corporate taxes and ease regulatory obstacles.

Otherwise, John Manley writes, Canada’s ability to attract new jobs and investment will suffer.

Manley sent the letter Tuesday, one day after the Trudeau-Trump meeting in Washington provided a measure of comfort to corporate Canada.

After the meeting, Trump eased fears somewhat for Canadian business leaders by saying he planned only to tweak the North American Free Trade Agreement in ways that would be of mutual benefit to both countries.

In recent weeks, the future of another proposal that has been a major concern for Canadian firms has also come into doubt: the border-adjustment tax. Trump told a newspaper last month that a border tax was “too complicated.”

But despite those reassuring signals out of the U.S., Manley is urging Ottawa to adopt “a laser-like focus on competitiveness” to ensure Canada can generate stronger long-term growth in the changing environment.

“Even if the border tax proposal is abandoned and key pillars of NAFTA remain in place, initiatives such as tax reform, changes to environmental policy and deregulation could have serious consequences for Canada’s economy,” writes Manley, a former Liberal MP and Chretien cabinet minister.

He lists four key ways Trudeau can boost Canadian competitiveness:

  • Streamline the regulatory process for major private-sector infrastructure projects. He says Ottawa can attract more private business investment by making sure regulatory approval processes are transparent, predictable, fact-based and can reach decisions quickly — change that Manley says would be particularly important for natural resources sectors.
  • Cutting corporate tax rates. Manley says the combined federal-provincial taxes paid by corporations in Canada are higher than those in most industrialized countries in the Organisation for Economic Co-operation and Development. With tax reform likely on the way in the U.S., he warns that Canada must stay competitive.
  • Make Canada an international trading and investment hub. Amid rising protectionism, Manley says Canada must give exporters access to new markets by deepening its trading relationships with Japan, India and China.
  • Address the risk that businesses will move to places with less restrictive climate policies.

He says the U.S. and several other big economies are implementing plans that will impose lower carbon-pricing costs on businesses than those in Canada. Manley warns that jobs and business activity could simply relocate to cheaper jurisdictions. He recommends that funds raised via carbon-pricing programs should be used to help offset costs for companies and to support the creation of new technologies to help reduce Canadian emissions.