When Canada opened its first-ever U.S. office for the country’s export credit agency in Atlanta last week, it was making a multilayered statement on its trade philosophy.
The message? The country is both bullish on the U.S. South and committed to the idea that Canadian and American firms (and their economies) work better when they work together.
President Donald Trump has refused to immunize the U.S.’s neighbor to the north from his 25 percent steel and 10 percent aluminum tariffs, even as the parties seek to ratify the USMCA, the NAFTA update signed late last year.
But even as it has imposed its own retaliatory measures, Canada has continued to beat the drum for what it calls “integrative trade,” the idea that trade is not an “us or them” proposition. Companies work in global supply chains, the thinking goes, and regions compete with other regions. Trade deficits and imports are not inherently bad, as long as they make industries more competitive together.
That’s why the new Export Development Canada office is focused on funding projects and guaranteeing loans that can help Canadian firms integrate into U.S. supply chains, even though much of that activity will happen outside Canada’s borders. By some economists’ estimates, Canadian firms working outside Canada create value that is equal to nearly 40 percent of Canadian GDP.
“Canada is a small nation, therefore we have to think globally in terms of scale,” said Mairead Lavery, president and CEO of EDC. “It’s not just about exports from Canada, but it’s about imports as well as two-way investment.”
U.S. firms can think the same way, Ms. Lavery told Global Atlanta in an interview, setting up shop in Canada to access the country’s free-trade agreements with Europe or the CP-TPP, a deal with (now) 11 Pacific Rim countries that the U.S. helped lead before pulling out in 2017.
Enabling cross-border services is another objective, especially given the way that digital media and e-commerce are moving. That’s one reason Canada was the partner country for Atlanta’s Fintech South, bringing nine companies to the region’s premier annual event in this key sector. EDC can also help local and regional banks in the South better finance trade projects.
In recent years, Mr. Trump has launched sweeping reevaluation of U.S. trade policy that has touched off a period of global “trade acrimony.” The resulting uncertainty has crimped investment from the very engines that should be driving even more growth: small and medium-sized companies, said Peter Hall, vice president and chief economist at Export Development Canada.
The silver lining, in his view, is in the end goal of negotiators on both sides: Improving the deals so that they address the concerns of disenfranchised voters — those supposedly harmed by trade — with whom populist messages so readily resonate.
Clearing up the trade picture will go a long way toward unlocking further growth in global economy, which Mr. Hall believes still hasn’t fully recovered a decade after the Great Recession.
Unemployment rates may be at record lows, but the labor force participation rate has also decreased, an abnormal pattern.
“We have asked certain millennials to wait seven or eight years for their first meaningful job. That’s a big chunk of your life, and it’s an even bigger chunk of your career,” he said in a breakfast seminar for executives during the EDC launch events.
But as mid-career professionals and millennials continue to come back to the labor force, they will add a spending boost that should drive further business and housing investment, which still haven’t roared back as they should have, Mr. Hall said.
“This is a new dynamo late in the cycle, and we don’t normally see that. This is fueling the economy going forward.”
The idea of putting the agency’s 20th global office in the U.S. is not a post-trade-war invention. Ms. Lavery said talks on the subject began in 2014. At the time, Export Development Canada wanted to push companies into high-growth emerging markets globally. It turned out that many wanted to start their export journey a bit closer to home.
“We needed to listen to our customers. They told us that they wanted to go first to the U.S. That was really the catalyzing moment,” Ms. Lavery said.
The team at the Canadian Consulate General in Atlanta, including Consul General Nadia Theodore, who also happens to be a trade expert and experienced negotiator, played heavily into the decision. As a city, Atlanta has also been a leader in economic inclusion, a notion dear to the heart of Canada’s government.
But it’s also about the numbers. Georgia has seen export growth to Canada at nearly twice the rate of the U.S. as a whole, and the state’s ports and airports are becoming increasingly important gateways for global trade.
Atlanta is a growing tech hub that holds opportunities for collaboration with Canadian firms, Ms. Theodore told Global Atlanta in a Consular Conversation at Miller & Martin PLLC Thursday.
“Frankly, there is also no doubt that the opportunities in what we call the 21st-century economy — everything to do with tech, fintech, gaming, AI, all of that — is where Atlanta is right now and where Atlanta is going in the future.”
She added the Southeast U.S. Canadian Provinces Alliance, which is set to be held in Montreal June 2-4, shows how collaborative this region has been with Canada at the grassroots level — underscoring the health at the root of bilateral ties, even when things get tense in national negotiations.
“The numbers don’t lie,” she said. “When we ran the numbers and based our decision on actual data, you cannot deny that the Southeast USA is booming and is set to be a leader of the global economy.”