Trudeau must act now to protect Canada from Trump's domestic agenda: Business council

An influential organization representing Canada'sbiggest corporations is urging Justin Trudeau to take ambitioussteps to shield the country from threats posed by Donald Trump'sdomestic economic agenda.

In a letter to the prime minister, the head of the BusinessCouncil of Canada warns Ottawa to make Canada more competitive asthe U.S. president pursues his plans to slash corporate taxes andease regulatory obstacles.

Otherwise, John Manley writes, Canada's ability to attract newjobs and investment will suffer.

The letter comes one day after Trump provided a measure ofcomfort to Canadian business leaders and entrepreneurs, saying heplanned only to tweak the North American Free Trade Agreement inways that would be of mutual benefit to both countries.

In recent weeks, the future of another proposal that has been amajor concern for Canadian firms has also come into doubt: theborder-adjustment tax. Trump told a newspaper last month thatimposing a border tax would be "too complicated."

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But despite such reassuring signals, Manley is urging Ottawa toadopt "a laser-like focus on competitiveness" to ensure Canada cangenerate stronger long-term growth in the changing environment.

"Even if the border tax proposal is abandoned and key pillars ofNAFTA remain in place, initiatives such as tax reform, changes toenvironmental policy and deregulation could have seriousconsequences for Canada's economy," the former Liberal MP andChretien cabinet minister writes.

In particular, he lists four key ways Trudeau can boost Canadiancompetitiveness:

• Streamline the regulatory process for major private-sectorinfrastructure projects. He says Ottawa can attract more privatebusiness investment by making sure regulatory approval processes aretransparent, predictable, fact-based and can reach decisions quicklychange that Manley says would be helpful to natural resourcessectors.
• Cutting corporate tax rates. Manley says the combinedfederal-provincial taxes paid by corporations in Canada are higherthan those in most industrialized countries in the Organisation forEconomic Co-operation and Development. With tax reform likely on theway in the U.S., he warns that Canada must stay competitive.
• Make Canada an international trading and investment hub. Amidrising protectionism, Manley says Canada must give exporters accessto new markets by deepening its trading relationships with Japan,India and China.
• Address the risk that businesses will move to places with lessrestrictive climate policies. The U.S. and several other bigeconomies are implementing plans that will impose lowercarbon-pricing costs on businesses than those in Canada

Manleywarns that jobs and business activity could simply relocate tocheaper jurisdictions. He recommends using the revenue fromcarbon-pricing programs to help offset costs for companies and tosupport the creation of new technologies to help reduce Canadianemissions.

Trudeau has also been facing political pressure to take immediateaction at home to help Canada brace for any spillover effects fromchanges in the U.S.

Interim Conservative leader Rona Ambrose has called on theLiberals to adjust domestic policies because Trump plans to reduceenergy costs, cut corporate and personal taxes and push for morederegulation -- a plan she fears will help the U.S. steal jobs fromCanada.

"Can the prime minister name one single economic policy that hehas changed since the election of President Trump to protect oureconomy from Trump's low-tax agenda?" Ambrose asked Wednesdayduring question period.

She has also accused the Trudeau government of implementingpolicies that have raised costs for Canadians -- from a carbon taxand an income-tax hike for top earners to higher payroll costs foremployers through the expanded Canada Pension Plan.

Growth through investment

Finance Minister Bill Morneau has signalled that the Liberalgovernment aims to lift long-term growth by staying on its currentpath, one of multibillion-dollar infrastructure investments andenhanced child-benefit cheques for families.

It also includes borrowing and several years of budgetaryshortfalls.

Last fall, Morneau predicted a deficit this year of $25.1billion. The annual shortfalls are gradually expected to shrink overthe coming years to $14.6 billion in 2021-22.

The government, however, has declined to give a time frame as towhen it expects to bring the books back into balance.

"We recognize that in order to create good-paying jobs formiddle-class Canadians, we have to have an economy that is
working," Morneau said in the Commons.

"We know that making investments in our economy is critically important."