OTTAWA (Reuters) - Canada’s new trade minister cautioned on Thursday that the strong currency and growing competition from emerging economies could stall the country’s export growth.
In his inaugural speech, Ed Fast promised quick action on the Conservative government’s trade agenda, including signing free trade agreements with the European Union and India, deepening ties with the United States and penetrating new markets in Asia.
But he added that “competitiveness challenges” remain.
“If we’re not careful those competitive challenges will become our Achilles’ Heel,” he said.
Fast, a lawyer, was appointed trade minister after the Conservatives won a majority in the May 2 general election. He is best known for his parliamentary work on criminal justice issues and his role in boosting maximum sentences for online sexual predators.
Canada’s trade-reliant economy has fully recovered from the recession but growth has been restrained by the exchange rate with the U.S. dollar, which erodes exporter competitiveness.
The commodity-linked currency in April hit its highest level against the U.S. dollar since November 2007.
The central bank chief and finance minister have been hounding businesses to find ways to compete with the new normal of a currency on par with the U.S. dollar. These include investing in new technologies and taking other steps to outperform global competitors.
Perrin Beatty, chief executive of the Canadian Chamber of Commerce and a former Conservative cabinet minister, warned Canada’s dismal productivity rate, which he said is about 25 percent below that of the United States, was the biggest problem facing exporters.
“The issue for me isn’t the dollar, it’s productivity. We could have a dollar trading above par as long as productivity is where it needs to be,” Perrin told reporters following Fast’s speech.
Perrin said he was encouraged by signs manufacturers were investing heavily and expanding production.
”It means that Canadian business is scrambling, making massive new investments in machinery and equipment to improve their productivity, upgrading skills of their workers.
Editing by Jeffrey Hodgson