C.D. Howe Institute offers advice on keeping trade lanes open

by Inside Logistics Online Staff

TORONTO – Canada must champion open international trade and remain an ‘honest partner’ in the face of a worrying trend among G7 nations towards export restrictions on critical goods, says the C.D. Howe Institute’s Crisis Working Group on Business Continuity and Trade.

The group of economists and industry experts, co-chaired by Dwight Duncan, senior strategic advisor at McMillan LLP and former Ontario minister of finance, and Jeanette Patell, vice-president of government affairs and policy for GE Canada, held its third meeting on April 7, 2020.

They emphasized that open international trade is essential to Canada – both in the immediate crisis and for the long-term.  The working group observed a worrisome tide of export restrictions on critical goods internationally – most immediately reflected in the U.S. president’s threat to prohibit N95 mask exports to Canada.

The Institute recommends a number of courses of action.

First, it suggests Canada must invest in:

  • Robust international relationships to draw upon in times of need;
  • Strategic stockpiles of critical goods (e.g., personal protective equipment); and
  • Long-run capabilities (e.g., skills and innovation) to support resiliency and rebound from this crisis.

Second, Canada should take immediate measures to:

  • Temporarily reduce import tariffs on critical supplies, including agricultural products;
  • Reduce the risk of COVID-19 disruptions in essential sectors (e.g., food processing plants); and
  • Aggressively address inter-provincial trade barriers.

Canadians should also brace themselves for a rise in the cost of food – possibly by as much as 10 or 15 percent –with price impacts from the depreciation of the Canadian dollar, slowed international shipments, possible export restrictions, and reduced mobility for foreign agricultural workers. Though the group noted supply chains remain robust and Canadians should continue to have enough food to eat, there may be less variety and higher costs – particularly for fresh and imported products.

Working group members also highlighted risks of near-term bottlenecks in food processing, distribution and retail from COVID-19 related shut-downs and potential labour shortages.

Specific processing plants are critical links for access to certain products for major population centres. Health and safety measures are therefore essential to safeguard these workplaces against transmission of the virus.

To this end, the working group understands that the Canadian Food Inspection Agency is at full strength and is actively engaged with key food producers to ensure the integrity of these processing plants.

A well, some members of the working group members pointed to an average tariff of roughly 15 percent on agricultural imports across almost half of agricultural goods. Particularly given the risks of increased consumer costs for food, certain working group members encouraged governments to reduce agricultural tariffs.