Bad times call for good government

What do you do when you're a country, like Canada, that depends on exports and the world seems to be going to hell in a handbasket?

The United States, our biggest export market, is embroiled in political turmoil. The European Union, an important customer, is busy juggling massive debts. The shock waves from these centres are reverberating in many parts of the world.

The Harper government's answer to all this is to diversify our sales abroad by signing more free trade agreements. And it's doing a dandy job of it. What it's not doing as well is helping people take advantage of the new opportunities.

An important focus for the Harper government's trade efforts has been Latin America. Canada has free trade agreements with Peru, Chile, Colombia, Costa Rica and Panama. To boost our trade in the region, Prime Minister Stephen Harper this fall visited Brazil, Colombia, Costa Rica and Honduras.

Canada's opposition leaders didn't like his visit to Colombia because they don't like the politics of the nation's president, Juan Manuel Santos. But Santos's standing increased this month when his troops killed Colombia's top guerrilla boss, Alfonso Cano.

Harper signed a free trade agreement with Honduran President Porfirio Lobo, who's anxious to dump his nation's dismal human rights record. He didn't have as much luck in Brazil, the region's biggest player. Brazil has been bothered by a major increase in imports and is trying to curb their growth.

As well, federal Trade Minister Ed Fast is trying to work out an investment-protection scheme with China, our second-biggest trading partner. He's also developing a free trade agreement with the EU, which is having a difficult time concentrating on trade right now.

An upshot of all their work is Canadian exports are 30 per cent more diversified than a decade ago, says CIBC World Markets. The share of our exports to the U.S. -- about 75 per cent -- is back to the pre-NAFTA level. This figure could drop to 60 per cent by the end of the decade, says the bank.

A slew of recent reports, however, says Ottawa must revamp costly programs that are supposed to help manufacturers and exporters.

The Canadian International Council says our knowledge and intellectual property are leaving the country at an astounding rate. Between 2006 and 2010, some 137 Canadian startups changed hands. Nearly 60 of them went to foreigners, taking with them 200 vital patents, says the council.

A World Bank report says in 2010, Canadian companies spent US$4.5 billion more buying intellectual property around the world than they took in. We're even losing out on canola, a Canadian invention. Foreigners own 85 per cent of the genetically modified canola varieties in use.

At the National Research Council, the new head of the 94-year-old institution, John McDougall, formerly of the Alberta Research Council, is turning it away from many tiny projects to some large, priority ones that may pay off and improve our export picture.

The federal government spends nearly $7 billion a year on 60 research and development programs run by 17 different departments and agencies. A report by Tom Jenkins, chairman of Open Text Corp., says they have failed to increase business R&D spending. Little effort, he says, is made to analyze the effectiveness of the programs.

On the competitiveness front, Canada fell to 12th place in the world in business competitiveness this year, says the World Economic Forum, compared to 10th place last year and ninth in 2009. The Conference Board of Canada says we're dropping because other nations are improving, and we've basically stayed the same.

On education and skills training, a major impact of globalization is to transfer low-paid, unskilled jobs from Canada to developing nations. As a result, our young people need a good education.

But the Institute of Chartered Accountants in Manitoba says in a report this month that Manitoba's dropout rate increased to more than 11 per cent last year -- one of the highest in Canada. Our economy will suffer if action isn't taken, says the institute.

Gov. Gen. David Johnston, a noted academic, sums up the situation this way: "We still are far too dependent on our national resources being exported in a very raw state and we're not sufficiently engaged in... adding value to both goods and services to compete with the rest of the world."

Johnston was speaking to students in B.C. -- an appropriate audience. Unless Canada improves its record with research and development, innovations, intellectual property and education, many young people could end up in a form of an Occupy tent community instead of in a good job.

Tom Ford is editor of the Issues Network.

Republished from the Winnipeg Free Press print edition November 14, 2011 A10