Why do business in Canada? Why not? Operating a business in Canada is better for your bottom line than operating your business in the United States, and thanks to NAFTA (the North American Trade Agreement), you’ll still have access to the entire North American market.

Currently, according to a detailed 10-month study of international business costs in 11 countries in North America, Europe and Asia-Pacific by KMPG, Canada’s business costs are the lowest recorded in the study, and roughly 9 percent lower than in the USA after taxes depending on the industry.

One reason for this is the lower labour costs in Canada; total labor costs, including wages and salaries, statutory benefits, and other benefits, are lowest in Canada. In the United States, benefit costs are 32 percent of total salary, while in Canada these costs are only 29 percent. And the cost of wages is also lower in Canada than in the USA (Invest in Canada).

Production costs are also lower in Canada. The cost of electricity, for instance, is 22 percent lower than the cost of electricity in the USA (based on annual electricity costs for the average manufacturer), and Canadian land and building costs are 8 percent lower. And Canada not only has a world class technology infrastructure, but has the lowest business telephone and wireless charges of all the countries involved in the study.

Chris Wattie/Canwest News ServiceCanadian Auto Workers President Ken Lewenza speaks during a news conference on Parliament Hill in Ottawa, Feb. 10, 2009.

Union leaders were on Parliament Hill Tuesday pushing for the federal government to adopt a “Buy Canadian” policy before it rolls out its $40-billion economic stimulus package.

“We’re here today to insist that Canada needs comprehensive rules to ensure governments buy Canadian-made products and services, rules that will support Canadian manufacturing jobs, generate payroll and local spending and ultimately generate tax dollars that come back to the public purse,” Ken Lewenza, Canadian Auto Workers president, said at a news conference.

He said a ‘Buy Canadian’ policy would not violate NAFTA or other trade agreements, nor would it provoke a trade war.

“These arguments are completely false, raised as a smokescreen by those clinging to the rapidly failing ideology of endless free trade and de-regulation — the very ideas that got us in the mess today,” he said.

The CAW’s campaign comes amidst the ongoing controversy associated with the American government’s stimulus package that contained a “Buy American” provision. The plan stipulated that steel used in infrastructure projects must be made in the United States, which raised concerns about U.S. protectionism and trade agreement violations. The clause was later watered down to offset the controversy.

But Mr. Lewenza, joined at Tuesday’s new conference by the United Steelworkers national director Ken Neumann, said the unions are advocating for similar rules, which they say are not protectionist.

“At a time when our governments are poised to spend billions on much needed infrastructure we are calling on all levels of government to immediately enact comprehensive ‘Buy Canadian’ policies, to keep our tax dollars at home. At this time, we simply can’t afford not to,” said Mr. Lewenza.

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CANADA EXPORTED A TOTAL OF $39.2-BILLION WORTH OF MERCHANDISE TO THESE COUNTRIES IN NOVEMBER, 2008: United States 73% ($28.9-billion) Japan 3.0% …

Canada is in the midst of a wave of free-trade negotiations that could soon include the European Union, hopefully India and possibly Japan, in a high-speed effort to wean exporters off their entrenched dependence on the United States. But even as Ottawa opens doors, exporters appear reluctant to carry the expense of establishing themselves in distant markets.

As a result, Canadian exporters are feeling the effects of a narrowly focused trade portfolio as U. S. trade declines amid a deepening recession. To make matters worse, Canadian businesses are rattled by the emergence of a “Buy American” mentality in the United States, and the likelihood that parts of the North American Free Trade Agreement, which encompasses Canada, the United States and Mexico, will be back on the negotiating table.

Never has the need to diversify Canada’s trading partners been so apparent. In November, 2008, Canada shipped 73% of its merchandise exports to the United States, a figure that represents a significant decline.

“There is flexibility with NAFTA,” Stockwell Day, Canada’s Trade Minister, said in an interview with the Financial Post. He said the Barack Obama administration had not indicated it would like a wholesale renegotiation of NAFTA, but had expressed an interest in renegotiating the side accords regarding labour and the environment.

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