Canada back is a lack of political creativity

Cahier spécial : A policy vision to escape the race to the bottom


Conclusion


We completely reject the common assumption that it is impossible to sustain a viable, profitable, dynamic auto manufacturing industry in a high-wage economy.

The experience of other industrialized jurisdictions, where automotive manufacturing is a continuing source of growth and prosperity (rather than job loss and displacement), provides ample justification for our faith.

The key difference between Canada and jurisdictions like Germany, Korea, Japan, and even the U.S. is not labour costs (which are high in all of these countries).

Willingness by policymakers to play an active role.

The key difference is a willingness by policymakers to play an active, guiding role in building an industry, and constructing an international advantage.

In Canada, in contrast, policy has relied too much on the assumption that private market forces will automatically create a valuable, appropriate role for us in global economic affairs – and hence government can do no better than to get out of the way.

If we continue to follow that course, our future is clear: Canada will increasingly specialize in the extraction and export of raw natural resources (especially bitumen).

That business will generate certain economic benefits, of course, but cannot provide the foundation for sustained, shared, regionally and sectorally balanced prosperity.

For that Canada needs a different approach

The policy vision described in this paper would mark a significant change in philosophy and direction on the part of our governments. It would move us closer to the perspectives and practices of most other successful auto-producing jurisdictions (and away from the laissez faire assumptions that have dominated policy in most of the Anglo-Saxon world, including Canada, for a generation).

But our proposals, while innovative in the Canadian context, are neither utopian nor untried.

In our judgment, the only thing holding Canada back is a lack of political creativity – the creativity we need to rethink our policy framework, and rebuild a viable new auto industry that can provide good jobs for another generation of Canadians.


 

Tables des matières

1.       A policy vision to escape the race to the bottom

Summary :

Global pressures on the industry are more severe all the time

Impacts of a Canadian dollar

we must adopt a new approach

2.       Decline in auto manufacturing employment in Canada

To Hell and Back – Canada’s Auto Industry After the Crisis

Industrialized countries experienced a decline

Preventing plant closures

Government intervention

3.       Automotive trade deficit reached an all-time record of $15.6 billion

Auto  Industry - Free Trade

Canada-U.S. Auto Pact

World Trade Organization

Trade Balance

Mexico

4.       CANADIAN Petro-Dollar

CANADIAN Petro-Dollar

5.       Race to the bottom

Race to the bottom

Donc, à qui profite la mondialisation ?

Les gagnants

6.       Productivity, Investment and Technology

Productivity, Investment and Technology

Productivity

Investment and Technology

7.       Center of gravity is clearly shifting south

Re-thinking Canada’s : A New Policy Vision

And it won’t stop there

We do not accept this grim scenario as natural, efficient, or inevitable.

8.       Free trade theories failures

Re-think Trade Policy

With every other trading partner

Optimistic predictions of the free trade theories failures

Canadian trade negotiators have a responsibility

9.       The Bank’s power to bring down the dollar is unquestioned

Intervene to Reduce the Canadian Dollar Exchange Rate (1)

Canadian dollar r far above value

Theory freely floating exchange failures

Bank of Canada interventions.

10.    Restrict foreign resource takeovers

Intervene to Reduce the Canadian Dollar Exchange Rate (2)

Slowing down resource developments (especially in the oil sands)

Preventing foreign takeovers of Canadian resource assets

11.    Canada back is a lack of political creativity

Conclusion

Willingness by policymakers to play an active role.