Ottawa to prioritize trade diversification with infrastructure fund, minister says

Ottawa plans to open up applications for its new $5-billion trade infrastructure fund in the next six to eight weeks, and will prioritize projects that help meet the government’s goal of expanding overseas trade, says Transportation Minister Steven MacKinnon.

In an interview with The Globe and Mail on Friday, Mr. MacKinnon said that through the Trade Diversification Corridors Fund, the government is looking to support a range of projects – from port expansions to rail improvements – that help move more Canadian products to the coasts and onto ships bound for overseas markets.

“The North Star, if you will, is the Prime Minister’s commitment to double our non-U.S. exports. So we’re going to be looking to be very specific at helping the country achieve that goal. And so we’ll look at all project submissions more or less through that lens,” he said during a visit to a Canadian National Railway Co. yard in Brampton, Ont.

As for when the money will begin to flow: “I don’t know that I can answer that with any precision, but we’re talking months,” he said.

The big infusion of federal cash into transportation infrastructure is a key part of Prime Minister Mark Carney’s efforts to diversify trade away from a protectionist United States, which is currently the destination for around three-quarters of Canadian exports.

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Rail bottlenecks, inefficient ports and congested highways are nothing new in Canada. But Mr. Carney’s promise to double non-U.S. exports to $600-billion from $300-billion has made addressing these long-standing challenges a national priority.

The Trade Diversification Corridors Fund, which the Liberals promised in their spring election platform and which was in the budget passed this month, is essentially a top-up of the previous National Trade Corridors Fund.

That fund was launched in 2017 and has committed around $4.1-billion to 214 projects across the country, 59 of which have been completed. Funded projects ranged from $55,000 to install licence-plate-reader technology on the Peace Bridge between Fort Erie, Ont., and Buffalo, to $135-million to reconstruct 110 kilometres of highway and replace a bridge in Yukon.

The new $5-billion fund will operate in a similar manner, with money distributed across different regions to both large and small projects, Mr. MacKinnon said.

“Trust me, there’s an equitable distribution of sandpaper,” he said, referring to bottlenecks in the transportation system that slow down the movement of goods. “There will be no problem splitting this money up equitably.”

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The need for investment is massive. The Association of Canadian Port Authorities alone, which represents 17 port authorities, has identified nearly $10-billion in additional capital investment needs over the next 15 years. That could potentially grow to as much as $21.5-billion, depending on port expansion plans, the association estimates.

Major port plans include expanding the Contrecoeur container terminal in Montreal and the Roberts Bank terminal in Vancouver, as well as building out export capacity at the port in Prince Rupert, B.C.

Marc-André Roy, co-chief executive officer of infrastructure consulting firm CPCS, said $5-billion is a drop in the bucket when it comes to Canadian trade infrastructure needs. Transport Canada may get the best bang for its buck by focusing on improvements to existing infrastructure, rather than trying to build massive new projects, he said.

“A challenge with big, flashy projects is that they take forever,” Mr. Roy said in an interview.

“If you’re just tweaking the existing system, it will cost a lot less and it will be a lot faster,” he said. And there’s less risk of the asset becoming underutilized if trade returns to normal with the U.S., he added.

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Ottawa is also rolling out a separate $1-billion Arctic Infrastructure Fund, which will focus on projects in Northern Canada with both civilian and military uses.

The trade corridors fund is only one leg of the trade diversification stool. Others include the Major Projects Office, which is meant to speed up the permitting process for large resource and infrastructure projects, and expanded funding for government agencies and Crown corporations involved in international trade promotion.

Earlier this year, Ottawa earmarked $5-billion for Export Development Canada to expand its suite of financial products – including loans, insurance and foreign-exchange guarantees – for companies looking to sell into new markets.

The budget also contained several pots of money for exporters, including $68.5-million to help small and medium-sized enterprises attend international trade shows and conduct market research.

International Trade Minister Maninder Sidhu, who accompanied Mr. MacKinnon to the CN rail yard, said trade diversification requires more than simply signing free-trade agreements. Companies need increased exposure to foreign markets, and officials need to do better at promoting Canadian businesses abroad.

“You can put in all the trade agreements you want, but if the businesses are not using them or utilizing them, what good are they?” Mr. Sidhu, who had a career as a customs broker before entering politics, said in an interview.

“In order to sell, you have to show up. And it’s show up more than once,” he said. “Billion-dollar deals are not done on one handshake. They take time.”