It must be a singular experience to be overshadowed by someone who isn’t even there—anyone wishing to know what that feels like can turn to Jim Flaherty.
Canada’s finance minister was the sole representative from North America at a conference on trade and investment sponsored by the U.K. government today in London. The other illustrious panelists included British Chancellor of the Exchequer George Osborne, German Finance Minister Wolfgang Schäuble and International Monetary Fund Managing Director Christine Lagarde. And yet, Canada’s man was unmistakably outshone by Uncle Sam—in absentia.
“This is, if you like, for the West and countries like Britain a sink or swim moment,” British Prime Minister David Cameron told the very same audience a few hours earlier. And no one in the room made any effort to conceal that the U.S. is a much bigger buoy for Europe than Canada when it comes to boosting growth by negotiating free trade deals.
In questions from the audience—made up largely of the London financial elite—and answers from the European trio on stage, the trade accord Ottawa hopes to soon ink with the European Union sounded almost like an afterthought compared to the parallel agreement the EU has more recently begun negotiating with the U.S.
The Conservatives desperately need to close the deal, which the two sides started discussing in 2009 and which is supposed to generate around $28 billion in new business a year. But Europe’s attention has unmistakably shifted to the larger U.S. prize.
Flaherty, for his part, did little to help his case. “We’re very keen on free trade agreements,” he reassured all present, proceeding then to draw a comparison between the EU-Canada deal and the North American Free Trade Agreement, which, he said, has been “an incredible success.” But the minister has dubious evidence to offer in order to back up his profession of undying loyalty to the cause of free flowing trade and capital.
“I think we need to make sure that we as a government avoid protectionism,” he said. The statement obscures the fact that Ottawa just raised tariffs on 72 developing countries. (Flaherty insists this gives Canada bargaining power to negotiate trade concessions vis-à-vis the likes of China, but, as Canadian Business‘ Duncan Hood put it, the strategy seems “a strange way to cozy up” to the world’s fastest-growing consumer market.)
Similarly, on the issue of people from abroad bidding to run Canadian companies, the minister had no hesitation in proclaiming that “we welcome foreign direct investment in Canada.” He then added nonchalantly that that government has “put in a couple of new rules about sovereign wealth funds.” The rules, he explained, are “to ensure that investments, when they are made, are made for commercial purposes.”
Too bad the government’s most recent tweak to the regime governing domestic investments by foreign state-owned enterprises has, if anything, left investors abroad even more perplexed than they were before. (More on that here, and here.)
Now, none of these minor free trade mishaps is responsible for the delays in signing the Canada-EU agreement. There are much worse offenses—and offenders—out there. But as the competition heats up among struggling Western economies to revive growth by locking in trade accords, a middle-weight country like Canada can hardly afford to send mixed signals.