As I leave for Japan today to speak at a conference hosted by the Canadian Embassy entitled “Investing in Canada’s Natural Resources: Navigating the New Landscape”,  I notice that the prime minister is travelling to Columbia to be an observer at the Pacific Alliance trade meeting involving Chile, Columbia, Mexico, and Peru.  Early in his administration, Mr. Harper emphasized the need to build commercial relations with Latin America, and since then he has signed bilateral free trade agreements with Chile, Columbia, and Peru, in addition to our NAFTA agreement with Mexico.  Both the Canadian Embassy’s initiative in Japan and the prime minister’s trip to South America are part of a broad-based Canadian strategy to stimulate growth through trade and investment.

There is a plethora of free trade agreements currently being negotiated. It would appear, however, that one of Canada’s biggest challenges is devoting the resources required to conclude these negotiations. This was our primary reason for passing on China’s request to enter into free trade discussions.  In addition to determining whether we ought to proceed with a partnership with the Pacific Alliance, Canadian officials are negotiating FTAs with Europe, Korea, Japan, and a Trans-Pacific Partnership with countries like Japan, Vietnam, Malaysia, Singapore, Australia, New Zealand, and the United States.  All of this is great stuff, but these agreements require political trade-offs. A number of protected industries in Canada will soon face more competition if these agreements are concluded, including agriculture, auto, telecommunications, and pharma. Some tough decisions will have to be made—decisions with political consequences. Everyone likes the idea of free trade until their industry faces the onslaught of foreign competition.

The good news is that Canada can compete when we put our minds to it. When the Canada/US FTA was signed, it was widely predicted to mark the end of the Canadian wine industry; in reality, however, it did just the opposite—as a result of the FTA, the industry reinvested in high quality grapes and the wine-making process. The Canadian wine industry is now thriving more than ever.  (As a side note, icewine is a favourite of the Japanese, so I’m sure I’ll enjoy some on my trip!)

But with just over two years left in the federal government’s mandate, the big question is whether it has the risk tolerance to conclude these agreements.  The agreements don’t tend to have high profiles, except among those who stand to benefit or lose the most. Time is running out, and with the government’s ethical record being questioned as of late, they may need a dramatic channel changer (and I don’t think Senate reform will do the trick).

Economic policy designed to speak directly to the interest of the average consumer is politically attractive.  Bringing down the price of cars, milk, poultry, cheese, and cellular services could all be popular with the prime minister’s Tim Hortons’ voter.  The trick is to decide which battle to fight politically—which sacred cow has the highest reward for the lowest risk.  It will be interesting to watch the federal government’s next steps, as they will go a long way to establishing its economic legacy either as a stable steward of the economy, or a transformational leader for change.  I suspect the choice will come down to the prime minister’s calculation on the clearest path to re-election.