With that nasty ‘r’ word rearing its economy-stifling head in this country, and our biggest trading partner suffering from a housing crisis followed by a banking debacle and automakers now itching for government assistance and retail spending down, what’s a small and medium-sized business owner to do?
Heed the advice and opinions of a group of experts recently gathered by the Hamilton, Burlington, Brantford and Oakville chambers of commerce at the Royal Botanical Gardens for a seminar called Bordering on Opportunity, Doing Business with the U. S.
As conference keynote speaker, author and former Edmonton MP David Kilgour pointed out Canada depends on trade more than any other developed economy.
In fact, 40 per cent of Canada’s national income comes from doing business with the U. S. That’s more trade with the U. S. in a week than Canada does with China in one year.
“No Canadian should ever forget how dependent many of our jobs are on American buyers of our services and products. If U. S. consumers reduce their buying because of reduced confidence in their employment prospects, housing, equity and other market futures, Canadians are going to catch worse than colds,” said Kilgour who co-wrote a book on the subject entitled Uneasy Neighbo(u)rs: The USA and the Dynamics of State, Industry and Culture.
“The future of new trade legislation is needed,” added Kilgour. “We have to improve confidence on Main Street to improve the current situation.”
To do this he wants a World Trade Organization to oversee banking systems previously run “like a Ponzi scheme.”
Considering that almost one-quarter of Canadian-U. S. trade is focused on building cars and trucks, Kilgour said governments on both sides of the border can’t allow three million jobs in the auto sector to go. Over the last 10 years four million manufacturing jobs have been lost.
He stressed that increased production of fuel-efficient green cars must be among the demands loan guarantors place on the Big Three automakers. “They are the way of the future,” said Kilgour.
Peter Buchanan, senior economist and strategist with CIBC, expects economic recovery to begin by the middle of 2009.
Already, the S&P/TSX Composite Index has lost 44 per cent of its value between June and late November. In comparison, during the Great Depression of the 1930s the stock market dropped 80 per cent and the bursting of the tech bubble in the 1990s, as well as the Second World War reduced it by 50 per cent, too.
While John Nay, U. S. Consul General, based in Toronto said the trade relationship between Canada and the U. S. is a mutually- beneficial one creating millions of jobs that are advantageous to all people, “trade doesn’t trump security.”
Emphasis on enhanced border patrols is expected to improve, not deter, economic efficiency, said Nay.
More than 90 per cent of trade flow occurs at five gateways. At the Detroit border crossing alone, more than one truck crosses every 2.5 seconds per day in the span of one year.
Paul Bates, Dean and Industry Professor in Financial Management Services at the DeGroote School of Business at McMaster University, says with $2 billion in trade moving across those borders “there’s no doubt our fortunes are linked inextricably with the U. S. but we have to fix the problems of counterfeit and pirated products passing between border patrols.”