Having concluded that stagnant, broke, and dysfunctional America is Canada’s “biggest liability,” Canadian author and economist Jeff Rubin has decided that it’s time for Canada to reorient its compass—to use China’s appetite for oil to find new trading partners.
Click on: www.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/time-for-canada-to-find-new-trading-partners/article2132282/
Rubin’s tipping point is extremely small.
Because of bottlenecks in US oil pipeline infrastructure—that are addressed by the proposed Keystone XL pipeline from Canada—a temporary glut in the US oil market exists. Consequently, Canadian oil exporters are receiving $22 less for a barrel of oil from Americans than they would be receiving today from the Chinese. They are getting very rich off their closest friend, but could be getting even richer if they made China their new partner.
Jeff Rubin has the reckless brain power to take one problem and use it to change the world.
In his recent book “Why Your World is about to get a whole lot Smaller” he decided that globalization would soon perish on the transportation costs of peak oil prices. Now, immediate frustration with the oil US market aligns him with phantom business and government leaders who talk of moving Canada away from the US. Apparently, globalization, geopolitics and good risk management practices now suggest that Canada would be safer and more prosperous as an Asian appendage.
One organization rather familiar with this Post-Watergate Canadian dream—the Canadian Department of Foreign Affairs and International Trade—isn’t buying it.
The department just released its official 2011 trade and investment update. While the front office was racing around South America helping Stephen Harper diversify Canadian trade, the professionals were finalizing a tough-minded, politically guts assessment of Canada’s long-term trade prospects. At the very end, it presented a forecast of Canadian trade shares out to 2040. Embedded in caveats, Section V concludes:
“Employing a frequently-used and well-tested model of trade in conjunction with private-sector forecasts of economic growth for each of Canada’s trading partners, we develop a long-term outlook for Canadian exports to 2040. The results of this forecast show that, due to size and proximity to Canada, the U.S. will continue to be, by far, Canada’s most important export market. However, as a result of their strong growth, China, India, and Brazil will all become much more important destinations for Canadian exports going forward.”
Click on: http://www.international.gc.ca/economist-economiste/performance/state-point/state_2011_point/2011_5.aspx?lang=eng&view=d
“By far” literally means three quarters of Canada’s merchandize exports will most likely continue to go to the US. The report is optimistic on world growth, emerging markets and globalization. So, Canada’s junior partners will likely change. China, Brazil, India, and Spain will rise, but the US will remain the cornerstone of Canadian trade.
Of course, this forecast’s assumptions will vary over time. Politics and polemists can also make the outcomes different, certainly smaller. Nevertheless, Jeff Rubin and others who wish to escape the dominance of the US market cannot claim they are merely embracing the inevitable. They want to do something big against the grain.