"Everybody thinks this is a 50-pound sack of seeds," said Steven Fabijanski as he hefts a large white bag onto a table. "Actually, it's 8,000 liters of jet fuel."
That is what Agrisoma Biosciences, the company Fabijanski runs in Quebec, plans to make from the bagful of carinata, or Ethiopian mustard seed. In January, a Boeing 787 Dreamliner operated by Qantas flew from Los Angeles to Melbourne on a mixture of jet fuel and juice extracted from Agrisoma's mustard seeds. Eventually, a third of biofuel for aviation will come from seeds bred by the company, Fabijanski predicted. His slogan is: "Don't drill, plant."
Biofuel looks like an industry of the future in a country that depends on those of the past. Oil and vehicles, Canada's two biggest exports, are both declining.
Oil from Alberta's tar sands is expensive to produce. The United States, by far its biggest foreign customer, is fracking more and importing less. Carmaking has never fully recovered from a U.S. recession in 2008. Production has dropped from a peak of 3 million vehicles in 1999 to 2.2 million last year.
With Donald Trump in the White House, Canadians worry that things will get worse. No one knows what will come out of the renegotiation demanded by Trump of the North American Free Trade Agreement (NAFTA) with the United States and Mexico, under which the trade in vehicles takes place. Business executives also worry about the new U.S. tax law, which slashes the tax on corporate profits from 35 to21 percent, below the average Canadian rate of 26.7 percent. Jack Mintz, an economist, has called it a "tax tsunami" for Canada. That and the threat to NAFTA are encouraging U.S. businesses to keep their money at home rather than investing in Canada, said the central bank.
This comes on top of other discouragements to growth. The workforce is shrinking as aging baby boomers retire. Economists worry that consumers, who have built up record levels of debt, will spend less as interest rates rise. Dominic Barton, the managing partner of McKinsey, a consultancy, has warned that, without changes, GDP will grow by an average of 1.5 percent over the next 50 years, half the rate of the previous 50. The economy grew 3 percent last year. But the government forecasts a slowdown to 2.2 percent this year and to 1.6 percent in 2019.
These gloomy expectations were in the air when Bill Morneau, the finance minister, presented the government's budget in parliament last week. Businesspeople were hoping he would give the economy a quick boost, perhaps by reducing taxes to match Trump's corporate cut or with a dose of deregulation. Morneau disappointed them. The budget continues the government's methodical approach to fixing the economy's problems. Morneau and the prime minister, Justin Trudeau, prefer to plant patiently rather than to drill aggressively.
That was evident in the "equality and growth" budget's big idea: putting more women to work. Just more than 61 percent of working-age women have a job or are looking for one, compared with around 70 percent of men. Women working full time earn 88 percent of what men do on average. That is not bad by the standards of other rich countries. But Morneau reckons that much could be gained by doing better. If female participation in the labor force rose to that of men, an unlikely scenario, the economy would be 4 percent larger, according to RBC.
Morneau quoted that prediction to justify a range of female-friendly policies. He will raise the child benefit, which parents can spend on day care, and improve incentives for new fathers to take time off work. There will be extra money for female entrepreneurs and to fight sexual harassment. The federal government will close its own pay gap, Morneau said.
Female-friendliness is fashionable, but it also fits with the strategy of removing economic roadblocks advocated by Barton, a Canadian who leads a panel that advises the government on how to promote growth. Encouraging women to work is a politically palatable alternative to raising immigration.
Moving beyond the U.S.
Polls suggest that Canadians do not want to increase the target from its current 310,000 a year. The government plans to spend $140 billion on infrastructure over 12 years. It has not yet followed economists' advice to improve competitiveness by lifting restrictions on foreign ownership of airlines and telecoms firms.
More appealing to the Liberal government is the idea of trading more with countries besides the United States. The value of foreign trade is equivalent to 64 percent of Canada's GDP. The United States buys three-quarters of its exports. Apart from threatening NAFTA, the Trump administration has slapped tariffs on Canadian softwood and newsprint, and may impose them on steel and aluminum. Canada needs friendlier partners.
It is making progress. An economic and trade deal with the European Union, negotiated by the previous government, took effect last September. Canada is scheduled to sign a deal with 10 Pacific countries, including Japan and Vietnam, on Thursday.
But Trudeau failed to launch trade talks with China on a visit there in December. His trip last month to India, with which Canada has been conducting fruitless talks since 2010, was a disappointment. Morneau did not mention India when he listed "new markets" Canada hopes to enter.