Stephen Harper closed Canada’s first national investment summit in Toronto on Tuesday, in front of hundreds of the world’s wealthiest investors, and backed the government’s decision to walk away from trade talks with the United States.
He is a notable person to be saying it. Harper has described himself as probably the most pro-American prime minister in Canadian history, and he led the Conservative Party for over a decade.
The decision had to be a very difficult one, he said, but he believes the government had no choice but to take that path. It is clear, he added, that the current American administration views Canada’s level of economic integration as incompatible with its separate sovereignty, and so to maintain that sovereignty Canada must pursue diminished reliance upon the United States. There will be significant costs to the effort, costs he hopes and believes Canadians are able and prepared to accept. He finds it all very sad, and equally necessary.
The background: a last-ditch attempt at a deal collapsed in August, Mark Carney suspended the talks and recalled his negotiators, accusing the Americans of introducing unacceptable demands at the last minute. Fifty percent American tariffs followed on billions of dollars of Canadian exports, and Ottawa retaliated. The summit itself is part of a push to attract a trillion dollars of new investment over five years.
Now read it as an operator, because this is the single hardest conversation in business and almost nobody has it in time.
You have one account that takes most of your output. It has made you. Every piece of equipment you own was bought against its volume, your staffing is built around its delivery schedule, and your entire cost structure assumes it. Over time the terms have drifted. They pay later. They demand more. The last renewal came with conditions that would have hurt, and you signed anyway, because what else was there.
At some point the terms cross a line where accepting them costs you more than losing the account would. That line is real and it arrives long before anyone acknowledges it, because the arithmetic of walking away is brutal in year one and only works out in year three, and year one is the one you have to survive.
What Harper is describing is a business making that decision at national scale, and the honesty of his phrasing is what makes it useful. He did not say it will be fine. He said it will cost, and that he hopes people are prepared to accept the cost. That is a far better sentence than any reassurance, and it is exactly what the owner of that over-concentrated business needs to say out loud to their own staff.
The rest of his argument is the part that decides whether it works. Canada, he said, cannot let the administration hollow out its industrial capacity, and must become more internally competitive, more externally connected and more truly sovereign than it has been. He named natural resources as the country’s special comparative advantage and said Canada has come nowhere close to realising its potential, noting it was poised to become an energy superpower in 2015 and is not one now. Leadership, he said, is defined by taking accountability for what you can control.
That last line is the whole discipline. Diversification is not a decision to make less money from one customer. It is a programme of work to become sellable to others, and it has to start before the break, not after it.
Canada is having that conversation in public, with its biggest customer listening.
Most businesses never have it at all.
Source: CBC News, “Stephen Harper says Canada had ‘no choice’ but to walk away from U.S. trade talks”
