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27 January 2017

The PQ’s improvisation in economic matters just doesn’t work

Quebec must have an economy that is both open and dominant.

This is an essential condition in order to offer our companies the opportunity to grow and to thrive, both at home and abroad, as has been demonstrated by numerous star players of which we can be very proud.

It is not by isolating Quebec, or by building a wall at our borders, that we will help our companies and help Quebec as a whole.  Quebec has a local market whose size remains limited and which does not offer the same growth opportunities for our companies as foreign markets do, whether those markets are large or small. It would be a mistake not to take advantage of these opportunities by exporting our products and developing other markets.

Others may call this “economic nationalism” or refer to it by another name, but it is clear that by closing ourselves off, we would be depriving our companies of growth opportunities. The consequence of protectionism would be that our companies would weaken and become vulnerable.  Indeed, all of Quebec would be weaker.

Our trade balance with the United States is positive (+$25 billion), which means that we export more than we import.  Therefore, Quebec is enriched by these exchanges. If we close ourselves off, we will be depriving ourselves of these opportunities, and we will get weaker.  It’s that simple!  These are the risks of pursuing protectionist policies.  In a market of 350 million people, like the United States, the short term risks are perhaps less significant, but for a market and an economy as small as Quebec’s, the effects would be devastating. I do not know of any economic models (past or present) where protectionism and lack of openess toward external markets proved to be beneficial for the society which attempted it.

The PQ’s economic plan just doesn’t work.  It didn’t work in the 18 months that they were in power, and the outcome would be even worse in the current economic climate. The PQ’s economic record is unequivocal:  20,000 jobs lost in the private sector, increase in the unemployment rate (+0.4%), slowing of economic growth, loss of confidence by companies in the economy, decrease in private investments, reduction of Quebec’s credit rating. This performance is truly sad, especially since it was “achieved” in only 18 months, during a time when most of our neighbours were enjoying renewed economic growth.

Should we fear protectionist threats? Of course, but the reverse is true too.  It is for this reason that the policies of panic and improvisation promoted by the PQ to confront this situation are much more worrisome – and indeed dangerous – than the situation itself.

The United States is an important trade partner for Quebec, and the intentions signalled south of the border certainly do represent a threat – one to which we must respond. However, we should not lose sight of the fact that many US states are also significant trade partners, and our economies are closely integrated.  We will make sure that it stays that way, because it is in our mutual interest that these links remain intact.  Quebec also has many opportunities in Asia and Europe, particularly once the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) has ben implemented.  The PQ’s economic policies would deprive Quebec of these opportunities.

We must take these threats and these risks seriously, but we must also take seriously the opportunities that the decisions which the Americans will make will generate, and act in an orderly manner. This is what we have been – and will continue – doing.  Creating a business environment that is more stable, competitive and stimulating, so that companies can evolve over time, and become stronger and more dominant.  We are building a stronger economy.

Since the beginning of our term in office, companies’ confidence in the economy and household consumption have galvanized our economy.  At 1.7%, the level of economic growth forecast for Quebec in 2017 will be superior to that of the rest of Canada and the United States. 190,000 jobs have been created in Quebec during our term in office, almost all of them full-time positions in the private sector, and credit agencies have increased our credit rating.  It is also important to recognize the dynamic performance of companies such as CGI, Couche-tard, and many others which are less well-known or whose impact on foreign markets is more modest, but who are equally important to the galvanization and showcasing of Quebec’s economy. Finally, if we only take into account the 2015-2016 fiscal year, closing ourselves off would have deprived Quebec of 80 international investment projects with a combined value of $1.3 billion, supporting 5000 jobs throughout Quebec.

Very recently, internationally renowned companies such as Siemens, ABB and Arcelor have chosen to invest a combined total of more than $700 million in Quebec. They have done so because we have a dynamic economy which attracts investment.

There are two options – either we respond to the mounting tide of protectionism with our own protectionism, close ourselves off, and weaken our economy, or we create favourable conditions for the growth and the development of our economy, both at home and abroad, and, by doing so, create high-quality jobs. This is what we have done until now, and this is what we will continue to do. We will continue to commit ourselves to the defense of Quebec’s interests and the interests of Quebec companies, to face protectionism head-on, and accompany our companies in their efforts to develop their domestic and international expertise.

While some people devote all their energy to speaking of division and closing themselves off, promoting a narrow vision and lacking ambition, our government will act and aim further and higher for our companies and for our economy. That is real economic nationalism.

Carlos J.  Leitão
Member for Robert-Baldwin and Minister of Finance