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The Manitoba Co-operator | January 19, 2017
Protectionism game raises economic stakes Trade policies that hurt Canada could blow back on the U.S. also, David Frum says BY LISA GUENTHER
“When Canadian farmers borrow money, they borrow from Canadian banks. But where are the Canadian banks getting their capital from?”
Staff / Saskatoon
A
s U.S. president-elect Donald Trump’s inauguration day approaches, the business world is pondering how the new administration might affect the world economy. Trump’s pride in his unpredictability is troubling, given he’s the president-elect, said David Frum, the Toronto-born, Wa s h i n g t o n - b a s e d p o l i t i cal commentator, senior editor for The Atlantic and former speechwriter for then U.S. president George W. Bush. However, it’s not necessarily all bad news, he told an audience at Prairieland Park on Jan. 10 during the CropSphere conference. Frum, the conference’s opening keynote speaker, said he foresees big tax cuts, corporate tax reform and few spending cuts under Trump. The U.S. could turn into an “import magnet,” pulling up global economic growth, Frum said. Given the low unemployment numbers in the U.S. and Tr u m p’s a n t i - i m m i g ra t i o n stance, however, the country could also flip into inflation. The likelihood of inflation depends on whether
David Frum
‘Integrated relationships’
Workers show to visitors an inflatable chicken that local media say bears resemblance to U.S. president-elect Donald Trump as their factory braces for the Year of the Rooster in Jiaxing, Zhejiang province, China, on Jan. 12. Photo: Reuters/Aly Song
the U.S. has already reached its capacity for economic growth. Frum was “agnostic” on whether that was the case, though he said they were in the neighbourhood. But Trump’s commitment to protectionism, combined with his capriciousness, mean trade troubles are likely on the hori-
zon. Speaking to media on the conference sidelines, Frum said the stakes are “colossal” for the U.S., Canada, and the world. “You blow up world trading systems, that’s not something that just touches other people. It touches everybody.” Frum said Trump has a point
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about abuses by China. China does have currency problems, he said, but the problem has to be handled carefully, keeping the end goal in mind. “You don’t make a cure that’s worse than the problem.” But will Trump’s protectionism directly impact Canada’s agricultural exports? Trump has a lot of energy, Frum said, but it’s finite. He may direct his energy away from issues that would hurt Canada. As well, the president does not form the whole of the government, Frum added. Along with Congress, there are people working for government agencies who are “very sophisticated” about trade and economic issues, he said. Canadians have already been reminding members of the U.S. Congress about the importance of trade between the two countries, he said. The continental investment economy is so integrated that it’s not feasible to hurt Canada without blowback in the U.S., he added. “When Canadian farmers borrow money, they borrow from Canadian banks. But where are the Canadian banks getting their capital from? They’re going to a global financial market.”
U.S.-Canada relations don’t run entirely through the national capitals, Frum said. The governor of South Dakota and premier of Saskatchewan are likely to be concerned about the same issues, and have the same views on those issues, for example. “These are integrated relationships that look a lot like the domestic economy, frankly,” said Frum. Frum also fielded questions from the CropSphere audience. Asked about whether Canada’s planned carbon tax will hurt exports, he said it will depend on program design. It will need to be remittable at the border to be economically neutral, he said. Frum’s main advice to Prime Minister Justin Trudeau is to remember that Trump is “emotionally needy” and “sensitive.” “He loves compliments. And just when you think you’ve given him enough compliments to turn your own stomach, that’s when the compliments are beginning to work.” Frum was also asked about the likelihood of impeachment. It would take a huge financial scandal or real evidence of collusion with Russia to remove Trump, Frum said. As for whether Trump will soften once he takes office, Frum said there was little chance of maturing at Trump’s age. “There’s only decay.” Frum repeatedly emphasized that Trump would not be the whole government, given the role of Congress and other institutions. “We’re going to see a test of the whole American system.”
news
Pork research cluster gets $1.8 million STAFF / The federal government is putting up nearly $2 million in additional funding for its pork research cluster to respond to consumer concerns around humane treatment of animals. The additional money brings the total commitment from the federal government to nearly $15 million from 2013-18, said Lawrence MacAulay, federal agriculture minister, in a news release. “This investment in research in animal health and welfare helps respond to the interests of consumers and will help put
more money in the pockets of our producers,” MacAulay said. Swine Innovation Porc, which manages the research cluster, works with industry, government and academia to facilitate research, technology transfer and commercialization initiatives designed to enhance the profitability of the Canadian pork value chain. In 2015, Canada was the third-largest pork exporter, with sales of $3.45 billion to 95 countries. The investment in the research cluster is part of AAFC’s AgriInnovation Program, a $698-million initiative under the five-year Growing Forward 2 framework, designed to support industryled research and development.