Chairman's Desk

‘Made in Canada’ movement born when trusted trade deals quickly evaporated

This article originally appeared in the Toronto Star on April 19, 2020.

Of all the things underpinning our pre-COVID19 lives that we paid little mind to, supply chains would have been at the top of the list.

And for good reason. Parts were seamlessly delivered on a just-in-time basis to our factories. Shops were filled to the rafters with the latest fashions. Shelves were loaded with asparagus and fresh berries, even in the dead of winter.

But as the song goes, “you don’t know what you’ve got till it’s gone,” and the past few weeks have shown how little time it takes for, if not it all to be gone, at least for the cupboard to be bare.

Initially, it was our reliance on Chinese goods that proved problematic as that country’s economy shut down. Since then, China has rebounded but at a cost. By leveraging its position as a vital supplier to the Western world, China has systemically strengthened its state power through commercial networks that manufacture and transport essential goods like medicines and personal protective equipment.

It’s no surprise that President Xi has taken advantage of this crisis to manoeuvre China toward greater dominance. It is also no surprise just how successful China has been in disrupting supply chains and isolating countries like Canada along the way.

To make matters worse, these moves come while our closest ally, the United States, seems intent on leaving us further isolated.

Two weeks ago, in a move Premier Ford declared “totally unacceptable,” U.S. officials halted the shipment to Ontario of 500,000 medical masks from manufacturer 3M.

The situation was resolved but the episode underscored the frightening reality that Canada, with zero domestic capacity to produce N95 masks, is wholly dependent on a supply chain built on trust.

So, amidst this never-before-contemplated disruption, maybe it’s time for a return to “made in Canada.”

Canada’s manufacturing sector has been shrinking for decades as trade deals like NAFTA have taken effect and production has moved overseas. For a long time, this decline has been characterized as the inevitable cost of globalization. But now, when Canada needs quick, reliable access to goods that we find more difficult than ever to acquire, we need to reconsider those assumptions.

We must recognize that, even setting aside COVID-19, the world has changed. Exhibit A? The 3M issue. It is simply inconceivable that Presidents Bush or Obama, or any other former president for that matter, would pressure an American company to withhold life-saving equipment from Canada.

So too, the nature of Chinese power has changed the world. This week, the EU’s competition commissioner, Margrethe Vestager, explicitly urged member governments to consider ownership stakes in European companies whose tumbling stock market values may leave them susceptible to Chinese takeover during or after this pandemic. Canada’s industries are equally susceptible to anti-competitive efforts by China.

Conservative leadership candidate Erin O’Toole has leapt on these trends. In a campaign video released this week, O’Toole called out “corrupt foreign governments” and “incompetent global institutions,” like China and the World Health Organization, which have left Canada to fend for itself. O’Toole’s solution? “Buy, build, and grow Canadian.”

In the latter half of the 20th century, Canada’s economy was denationalized — through the sale of Crown corporations like Petro Canada, CN Rail and Air Canada — in the belief that the same public policy outcomes, previously pursued through ownership, could be achieved through regulation. At that time, both citizens and governments felt confident in the effectiveness of those regulatory policy tools.

As our leaders plan their long-term response to our latest economic catastrophe, already christened “the Great Lockdown,” it is worth asking whether they continue to have the same confidence in those same policy tools.

It’s possible that Canada’s response to the long-term problems this crisis has exposed will rely on not only a new role for the private sector but also a new relationship between public and private sector. As the last recession taught us, government bailouts alone will not bring back Canadian manufacturing. Nor will they bring us a supply chain we can trust.

That’s something that will take all of us — government, business and all Canadians — to do. As the prime minister says, “we are all in this together.”