Insights at UBC Sauder

B.C. election Q&A - How the platforms stack up on international trade

Posted 2017-05-03

In the third of a four-part series, we speak to UBC Sauder Professor John Ries about the B.C. Liberals, NDP and Green Party approaches to trade, and how their respective platforms will impact taxpayers.

John Ries

All three parties have differing viewpoints on international trade. What are your thoughts on these platforms?

The Liberals are explicitly pro-trade, whereas the NDP’s platform makes limited reference to trade and appears more inward oriented as indicated by its “Buy B.C.” marketing initiative, a reduction in log exports, and a differential carbon tax to support import-competing industries. Like the NDP, the Green Party views further restriction of log exports as a means to protect jobs in B.C.

While the proposal of keeping logs in B.C. to serve the needs of B.C. sawmills is superficially appealing, this policy is problematic because it will be viewed by the U.S. as another type of subsidy, thereby compounding the difficulties surrounding softwood lumber negotiations.

However, all three parties have some similarities; they see a role for the government in promoting wood exports – B.C.’s number one export – and they also advocate for policies that indirectly promote exports by enhancing factors of production such as skills, technology and infrastructure.

Examining each platform in its entirety, I believe the B.C. Liberals’ plan for lower taxes, better infrastructure, reduced red-tape and skill promotion can improve economic efficiency. Although the NDP also hopes to strengthen infrastructure and skills in B.C., their policies of slightly higher corporate taxes and a $15/hour minimum wage will not make B.C. more attractive to businesses. The Green Party’s primary focus is fostering a sustainable economy with an emphasis on innovation in clean technologies.

How do the platforms compare to current federal policies surrounding international trade?

Prime Minister Justin Trudeau and the federal Liberal Party support the North American Free Trade Agreement (NAFTA) and new free trade agreements with countries such as China. The B.C. Liberals’ advocacy of free trade is consistent with federal policy, while the Green Party vows to work with the federal government on trade policy. The NDP appears to be oriented towards the protection of local interests and it is questionable whether they would pull with the Trudeau government in advocating for a free and open trading environment.

The Liberals are committing to more trade missions – will this have a positive impact for the province?

UBC Sauder professor Keith Head and I previously researched the Jean Chretien Team Canada trade missions in the 1990s and found there was no significant trade creation.

Following a mission, exports from Canada to the visited country were just as likely to fall as they were to rise. Despite the lack of research supporting trade missions, the B.C. Liberals remain committed to them. While there is a logic to such trade missions—government may reduce information barriers and lower the risk of adverse policy actions—it is important to find evidence that supports their use. Otherwise, there is a danger that these missions will come to be viewed as taxpayer sponsored “photo ops.”