The CEO Poll: Trade woes

Canadian business leaders blame high dollar, high taxes for export decline.

The Conference Board of Canada released a major study on the country’s role in international trade (Stuck in Neutral), which argues that Canadian companies have missed big opportunities to contribute to U.S. and Asian supply chains. Canadian CEOs concur, according to a recent web poll by COMPAS Inc., but they see the decline of domestic manufacturing as a more serious problem than the Board seems to.

The 130 respondents agreed with the Board study that lack of business initiative and poor Canadian tax policy are key factors in Canada’s international supply-chain weakness. They also saw regulatory and non-tariff barriers to trade as culprits. By an immense margin, however, panelists were convinced that “relative to commodities, manufacturing has greater intrinsic value for Canada because of the R&D and other desirable functions that often go hand in hand with manufacturing.” By contrast, the Conference Board report implies that the decline of Canadian manufacturing may not be a major dilemma insofar as the commodities that we export are rising in price while manufactured goods are falling in price.

“The manufacturing in Canada has been strongly, adversely affected by factors that everyone is aware of,” wrote one respondent. “1. Strong Canadian dollar as our labour costs were greater than in U.S. 2. Imports without controls including dumping from the Far East. 3. Canadian taxes and lack of manufacturing concern from all government levels. 4. Commodities may generate a good tax base, but what happens if this trend reverses?”

Many of the CEOs blamed tax policy, which they say hinders domestic companies doing business abroad. “I remember a tax regime [in the ’70s and ’80s] at both the corporate and the personal level being designed to reward hard work and innovation,” wrote one respondent. “Today at all levels — federal, provincial and local — we are taxed to a torturous extent, andto what end? Our economy has failed, apart from what the good Lord put in the ground for us.” Amen.