For exporters and international trade watchers, Budget 2016 didn’t have as many enticements as last year’s. However, parts of this budget’s key themes — innovation, clean technology and infrastructure spending — will have an impact on trade.
And some items could keenly enhance trade opportunities, including the promised review and ratification of the Comprehensive Economic and Trade Agreement with the European Union and continued interest in consulting Canadians on their interest in the Trans-Pacific Partnership. Budget 2016, which will see a deficit of $29.4 billion and assumes $25/barrel of oil in 2016, says the government will pursue the expansion of trade relationships with emerging markets and mentions China and India specifically.
Further, the budget commits to building infrastructure that will facilitate trade, supporting manufacturers through increased tariff relief, helping “high-impact” firms grow and renewing the Canadian Technology Accelerator Initiative, which is operated by Global Affairs Canada’s Canadian Trade Commissioner Service and will receive $4 million over 2016. It will support Canadian ICT, life sciences and clean-tech firms with mentoring and connections to global markets.
In addition, Export Development Canada’s Accelerated Growth Service is cited as a new initiative to help high-impact firms “scale up” and “further their global competitiveness.” The pilot for this program is scheduled to roll out in early April 2016.
For manufacturers in the consumer goods and transportation sectors, the budget announced tariff elimination on a dozen manufacturing inputs for an estimated $9 million in tariff savings over five years. Public consultations will consider further tariff eliminations on food manufacturing ingredients.
On innovation, the government is still finalizing its agenda, but the budget pinpointed some actions to help innovative businesses, particularly SMEs. It will dedicate $800 million over four years to support innovation networks and clusters, and provide an additional $50 million in 2016-17 for the National Research Council Canada’s Industrial Research Assistance Program (IRAP).
On the clean technology and climate change fronts, the budget reiterated EDC’s commitment to regular green bond issuance and committed $1 billion over four years to support future clean technology investments in the forestry, fisheries, mining, energy and agriculture sectors. An additional $130 million will be committed over five years to support clean technology research, development and demonstrations.
When it comes to infrastructure, Budget 2016 committed $120 billion over 10 years, with the first five-year phase focused on public transit, water and wastewater systems, affordable housing and protection of infrastructure from climate change. Phase two of the plan — which kicks in on year six — won’t be revealed until next year, but it’s expected that it will focus on improving trade corridors.
“Media have speculated that the second phase could include the creation of the Canada Infrastructure Bank, which was promised in the Liberal platform but doesn’t appear in the budget,” according to EDC analysis.
There was a goodie for those working in the automotive sector’s cleaner vehicles space — the Automotive Innovation Fund, which focuses on new vehicle technologies, was extended to 2020-21. Meanwhile in aerospace, the budget will allocate $50 million over five years while the oil and gas sector received the same amount over two years for Natural Resources Canada to invest in technologies that will reduce greenhouse gas emissions in that sector.
On agriculture, the current five-year policy framework remains, with $3 billion in spending. The budget specifically allocates $30 million over six years to agriculture and agri-food initiatives that support advanced research in agricultural genomics. Absent, however, is a Conservative government pledge of $4.3 billion in compensation for Canada’s dairy, egg and poultry industries to offset concessions made on supply-management under CETA and the TPP. Also absent is a Liberal campaign promise of $160 million in an Agri-Food Value Added Investment Fund that would help processors develop “new value-added products that reflect change tastes and market opportunities.”