Trade Policy Making in Canada: Are We Doing It Right?

K.J. Charles was Professor of Economics, Lakehead University, Thunder Bay.

This is a down-to-earth book by an official in the public service of Canada, who was active in the formulation of Canadian trade policy over the years. He was involved in both the Kennedy Round and the Tokyo Rounds of trade negotiations in the GATT, as well as numerous bilateral and multilateral trade discussions. To the question in the title of the book, the author’s answer is a resounding “no.”

In formulating trade policy, a number of competing interests have to be reconciled. While industries seeking the domestic market clamour for protection, export industries call for a liberalization of our trade to gain access to foreign markets. Though it must take these conflicting demands into consideration, trade policy should be based less on tactical considerations and more on the long-term interests of Canadian economic development. The author examines the reorganization of the trade policy function announced in 1982 and concludes that the system that existed prior to 1982, while not flawless, was on balance better than the new system. He feels that reorganization has created problems more serious than those it was intended to solve. In his view the separation of import, export, and domestic economic development in Ottawa is the root cause of many of these problems. He advocates the creation of a separate trade department, which would provide a single window in Ottawa on trade and investment matters for the private sector. Secondly, he would return responsibility for trade to the Department of Regional Industrial Expansion (DRIE) and would transfer tariff and import policy from Finance to the new trade centre. He also proposes that the three quasi-independent institutions — the Tariff Board, the Anti-dumping Tribunal and the Textile and Clothing Board — be amalgamated into a single agency, combining their existing functions and research staffs. Canadian industries in all sectors could petition this amalgamated agency to carry out public inquiries into their claims of unfair import competition. The agency would also carry out trade-related research and public inquiries on its own initiative or at the instance of the government. The 1982 reorganization, in a bold and outward-looking move, combined trade and foreign affairs in the Department of External Affairs. The author’s recommendation that this combination be terminated and responsibilities for trade be placed in the hands of DRIE, extending its mandate to cover import policy, is a call to turn the clock back. It might also be dangerous, for it could lead to the development of an excessively protectionist approach in DRIE. The author is aware of this danger but is confident that steps can be taken to ensure that this does not happen. The present government has created a separate Ministry of International Trade, meeting the author half-way.