Canada’s Role in International Aid Support

The April 19 edition of the Globe and Mail featured a guest column from the Honourable Jim Flaherty, Minister of Finance, who spoke of modernizing a foreign aid program called the General Preferential Tariff. Created in 1974, this program was a commitment from many developed Western countries to assist the economies of the poorest “Third World” countries. A lot has changed since the 1970’s, and our government feels justified in modifying the approach of the Tariff.

The way the program works is companies from the countries identified as in need of assistance are given preferential access to the markets of the participating countries, who generally treat the program as an international aid program. Over the last few decades though, the countries who require assistance from the program have changed, and the Harper Government felt that the program’s list of participating countries had to be modified to reflect this reality.

How much have things changed since 1974? For some countries, things have changed a lot. In 1980, the Canadian economy was worth approximately $269 billion and was therefore bigger than China’s ($252 billion), Brazil’s ($235 billion), and India’s ($189 billion). Now, however, China’s $7.3-trillion economy, Brazil’s $2.5-trillion economy and India’s $1.8-trillion economy have all overtaken Canada’s, currently estimated at $1.7 trillion.

Until this recent call for modernization of the program though, these countries continued to received preferential treatment from Canada, although other countries involved in the program have modified their list of countries in need of assistance a long time ago.

Regarding the modernization of the program, Flaherty stated that the “recent changes will provide an important incentive for many countries to open their markets to Canada through reciprocal trade agreements that will allow for more export opportunities – meaning better jobs for Canadians – and further tariff reductions for Canadian consumers.”

What’s your view on the matter?  Be sure to weigh in.