GOLDBERG: Carney must change feds’ approach in dealing with trade war

Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice CenterCanada is set to get a new prime minister at a moment when the stakes could not be higher: the nation is in the midst of an unprecedented trade conflict with its biggest trading partner.To date, the federal Liberal government has lacked a sense of urgency in responding to the crisis. Mark Carney, Canada’s prime minister-designate, has a chance to change that by shifting the feds’ approach to energy projects and eliminating internal trade barriers.U.S. President Donald Trump has been talking about imposing tariffs on Canada for the past three months. Unfortunately, Prime Minister Justin Trudeau spent months acting as if the tariff threat wasn’t real.Trudeau only belatedly started taking actions to strengthen Canada’s border security as the clock ticked down the zero hour, in a desperate last-minute attempt to meet Trump’s demands.Yet according to Trump, Trudeau failed to take enough action. Some punishing tariffs are already hammering Canada’s economy, while others are set to take effect early next month.It’s long been evident that Trump’s decision to impose sweeping tariffs on Canada’s economy is not just about fentanyl crossing the border: less than one per cent of the fentanyl entering the United States comes through the northern border. His major goal is clearly to cripple Canada’s economy in an attempt to get companies to move their jobs and economic activity to the United States.How should Canada respond?There are at least two key areas where immediate action is needed: unleashing Canadian energy and tearing down Canada’s internal trade barriers.Since the Liberals came to power in 2015, $670 billion worth of natural resource projects have either been cancelled or put on hold by the federal government.The feds have blockaded projects like Energy East, Northern Gateway, and Énergie Saguenay that would have sent tens of billions of dollars’ worth of Canadian oil and natural gas to Asia and Europe, and allowed eastern Canada to be powered by Canadian energy rather than importing oil from dictatorships like Saudi Arabia.No less than 77 per cent of Canada’s exports go to the United States, including $150 billion per year in oil, natural gas, and petroleum products. Canada needs to diversify. Trump’s tariff threats should have led to a sense of urgency, with the federal government reversing course and greenlighting some of the 31 energy projects it has stymied since coming to power in 2015.Sadly, no action has been taken on the energy front. Just talk that the Liberals might have to reconsider their position on pipelines.Carney is a well-known climate hawk. He’s talked about the need for 80 per cent of Canada’s natural resources to stay in the ground to fight climate change. But the moment demands a different approach. Unleashing Canadian energy is the key to diversifying our economy. Carney should shift the feds’ approach and approve energy projects that have been blocked over the past decade. If he doesn’t, Canadians will look to elect a new government that will.Then there’s internal trade. Canada does have domestic free trade, but with a major caveat. There are more than 400 carve-outs to Canada’s internal free trade deal. The impact of those carve-outs is dramatic.Because of the provinces’ non-tariff barriers on each other’s goods, Canada has a de facto 21 per cent domestic tariff when provinces want to trade with each other, according to the International Monetary Fund.That means it’s easier to trade with a couple dozen countries Canada has free trade agreements with than it is for provinces to trade with each other.Studies have shown that ending interprovincial trade barriers should be a bigger boost to the national economy than the cost of the tariffs the Trump administration has imposed on Canada.Canada’s internal trade minister, Anita Anand, says progress has been made on eliminating int.erprovincial trade barriers, but the proof will be in the pudding.Carney should convene a meeting of Canada’s first ministers immediately and demand that all internal trade barriers be torn down within 30 days.Canada can’t afford to wait a moment longer.Make no mistake: the Trudeau government has been behind the curve in responding to the Trump administration’s tariffs threats since day one. Carney has a chance to take a new approach by changing the feds’ approach to energy projects and finally pushing for a comprehensive deal on internal free trade.If he fails to get this done, or lets ideology get in the way, Canadians will quickly be searching for a new prime minister who will.Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center.