The Northern Tiger: What the U.S. Could Learn From Canada

By Colin Robertson

Today, the Aspen Institute‘s program on Manufacturing and Society in the 21st Century is releasing a timely new study focusing on how Canada has successfully addressed fiscal and competitiveness problems similar to those the U.S. is currently facing.

With support from the Canadian Council of Chief Executives (CCCE) and authored by Jeremy Leonard, the report describes how Canada, “under governments of all political stripes…has profoundly restructured its economy, gotten its fiscal house in order, created a competitive business tax environment, and come into its own as a strong economic player in North America and beyond.”

From the paper:

A better understanding of the evolution of Canada’s economy is of great importance to U.S. businesses and policy makers along a number of dimensions. Most obvious is that Canada is not only the top U.S. export  market, but the segmentation of production has also led to cross-border value chains, and increasing interdependence of the manufacturing sector on either side of the border. Canadian and U.S. manufacturers no longer sell each other finished products, they make things together for consumption in North America and around the world. As businesses take a more continental approach to location decisions, Canada’s business environment may present opportunities for U.S. and non-North American firms and vice versa, depending on the specific requirements of the business task in question. More cross-border collaboration and communication at the industry and business level will help to further optimize continental supply chains…

…Beyond cross-border lessons learned from the economic experiences over the past 15 years, the more important observation is that Canada and the United States have become for all intents and purposes an integrated economic space, making things together rather than selling finished goods to one another. Firms on either side of the border are thus partners more than they are competitors. In this sense, Canada and the United  States have “outgrown” NAFTA and require complementary sets of agreements with regard to energy supply, security and a whole host of other issues. The Beyond the Border initiative addresses many of them and for that reason must move forward successfully. But energy remains an area where discussions need to take place in order to avoid trade “irritants” such as the rejection of the Keystone XL pipeline.  Canada has a strong hand in terms of supply, and the United States certainly has the demand.

Click here for the full report.

As Americans, at both the federal and state level, look at ‘getting government right’ in this age of austerity, there are lessons from Canada in the ’90s that have relevance today. The Canadian government, in which CCCE CEO John Manley played a key role as Industry, and later, Finance Minister and Deputy Prime Minister, has asked the following six basic questions of existing programs and acted accordingly:

• Is it in the public interest?
• Is it a legitimate role for government?
• Is it federal or provincial?
• Is it public or private?
• Is it affordable?
• How can we make it more efficient?

Canadian Provincial governments followed suit with the result that, while in 1995 it had proclaimed Canada an “honorary member of the Third World,” The Wall Street Journal now praises the country as “a favored destination for investors seeking refuge from the turmoil sweeping the euro zone and the continuing uncertainty over the U.S. fiscal position. The country is now the world’s third-biggest issuer of sovereign debt to be rated triple-A by all three major credit-ratings…”

There are lessons to be learned from the ‘northern tiger’.