Morneau Sees Sustained Growth, No Direct Brexit Hit on Canada

(Bloomberg) -- Canadian Finance Minister Bill Morneau is striking an upbeat tone on the fate of his country’s economy, even in the face of global trade shocks and a brewing feud with China.

Morneau, speaking to reporters Wednesday in Sherbooke, Quebec, downplayed the long-term trade impact of Canada-China tensions and of Brexit. The finance minister will present a budget in the coming months that will carry Prime Minister Justin Trudeau’s Liberals into an election this autumn.

“Private sector economists are all looking towards a period of sustained growth, so we’re not actually looking right now with any expectation of difficult times,” Morneau said. “We always need to be worried about being resilient in the face of potential challenges. With the strongest job numbers we’ve seen in over four decades, we’re in a positive situation. Our goal of course is to figure out how we maintain that growth.”

Canada relies heavily on exports to drive its economy, but trouble is brewing. The U.S., its top trading partner, continues to levy tariffs on Canadian steel and aluminum. Morneau said he pressed U.S. Treasury Secretary Steven Mnuchin during a meeting in Washington this month to lift those tariffs.

“We talked about from our perspective the importance of removing the Section 232 tariffs on steel and aluminum and I’m continuing to be engaged in that, as are my colleagues,” he said, referring to the section of U.S. trade law that was used to impose the levies. Mnuchin “gave me a sense of the progress” in U.S.-China trade talks, he added.

Good Jobs

China is Canada’s second-largest trading partner, though the countries are in a rising feud after the arrest in Vancouver last month of a Huawei Technologies Co. executive. China has since seized two Canadians, including a former diplomat, and sentenced a third to death on a drug charge. Morneau said it’s a difficult diplomatic moment, but that “our ongoing goal of course is to have long-term economic relationships around the world that ensure that people can have good jobs here in Canada.”

Morneau said the government is watching the progress of Brexit proceedings in the U.K., Canada’s fifth-largest trading partner. “We don’t see this as something that’s directly problematic for the Canadian economy, but obviously it’s something that’s difficult for the global economy,” and “an enormous challenge” for the U.K. government, he said.

Canada isn’t in a rush to sell the Trans Mountain oil pipeline that it bought last year, the finance minister said. The country’s priority now is proceeding with responding to a court ruling that struck down the project’s permit, he said.

“Right now, we’re dealing with the response to the federal court of appeal. We’re looking at how we can respond appropriately to think about how the project can move forward in the right way,” he said, adding the government would be open to talks with indigenous communities about taking an ownership stake in the pipeline. “We’ve said that this is not going to be a project, a pipeline, that will be owned over the long-term by the government.”

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