Canada depends on trade and the latest, friend-shoring, might benefit from Canada’s friendly reputation
“Friend-shoring” should be easier for Canada than most countries, some think, because Canada has been trying to follow that approach for years.
“I think it’s similar to where we’ve already been focused,” Greg Northey, Pulse Canada’s director of industry relations, said in an interview.
“Canada (should) benefit from something like this because we are a (supporter of) trade rules, we’re active players in the (World Trade Organization) and other trade deals, we’ve had a focus towards free and open trade.”
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The term “friend-shoring” is a spin on the concept of “home-shoring,” which itself is a play on the term “off-shoring.” Off-shoring is the practice of companies in the western industrialized world moving much of their production and supply chain to countries in which labour and other expenses are cheaper. The companies move production off-shore.
That phenomenon has seen millions of jobs move overseas from western nations to cheaper countries, such as China and Vietnam.
Home-shoring has been a response by both right-wing nationalists like former United States President Donald Trump and traditional left-wing critics of globalization. If only foreign goods could be blocked or hit with costs that would make them uncompetitive, industrial production and jobs would return to the home country, they think.
Most economists consider that sort of protectionism a disaster, raising costs for producers and consumers, hampering production rather than helping it, and perverting the rational functioning of the domestic economy.
The concept of friend-shoring attempts to find a middle ground between globalization and protectionism. Many western nations have been rattled by the naked rule-breaking and belligerence of China, by the actions of Russia since it launched its invasion of Ukraine, and by the slide into protectionism by many countries since before the pandemic. Many in the West want to find a way to protect themselves from the manipulations of the giant authoritarian powers without abandoning globalization and embracing protectionism.
Friend-shoring is the idea that countries that believe in the rules-based international trading system should focus on developing vital trade amongst themselves while minimizing their dependence upon the states that abuse their power or show little regard to fair play.
Canada’s deputy prime minister Chrystia Freeland has been a vocal champion of the friend-shoring concept. Her recent speech at the Brookings Institute garnered world attention, with some labelling her view the “Freeland doctrine.”
The approach is more of an evolution of Canada’s aggressive pursuit of trade deals with other nations than something radically new. Canada’s vulnerability to unpredictable markets has been a problem since the mid-2000s.
Canada’s over-reliance on China as a market was made stark by the Meng-Michaels crisis, which saw the biggest canola market almost entirely disappear overnight. The threat of Trump to tear up North American Free Trade Agreement spooked exporters who rely upon the U.S. market for sales.
But for some countries less committed to open trade but similarly worried by countries like China and Russia, it has sparked much reflection and what some in Canada see as an opportunity.
Canada’s export-oriented agricultural industries will be the most affected part of the national economy by whatever develops.
“We should be in a good space to capitalize on any push from countries to do friend-shoring,” said Northey.
Canada tends to follow trade rules and to operate a mostly open economy, so friendly nations should look upon Canada as a safe place to source goods, to base production and in which to invest, the theory goes.
That’s why it’s important to farmers for this country to get its house in order in terms of reliability. Regardless of political affinities, if Canada wants its friends to rely upon it as a source of supply, it has to become more reliable than it has been recently.
“If we want to be considered one of those friends with a group of countries within that sort of friendship circle… it is about what kind of requirements are they going to have? We have to make sure we’re attractive, that we don’t have these sorts of (rail and logistical) delays,” said Northey.
