Border Blockades’ Limited Duration Had Little Trade Impact, Says Finance Official

The cross-country border blockades of last winter to protest COVID-19 restrictions had a limited impact on trade, a senior finance department official told the Public Order Emergency Commission on Nov. 17.

“I think that it’s fair to say that the economic impact was limited, but it was limited because the duration of the blockades was limited,” said Rhys Mendes, assistant deputy minister for economic policy at the ministry of finance.

Mendes was testifying alongside other department officials, including Deputy Minister Michael Sabia and Assistant Deputy Minister Isabelle Jacques.

The commission is reviewing the government’s invocation of the Emergencies Act on Feb. 14 to deal in part with the border blockades, most of which were resolved before the invocation. The act’s powers were also not used to clear any lingering blockade.

Mendes was presented with an April memo to the prime minister prepared by the Privy Council Office (PCO) on the issue of merchandise trade in February 2022, the month that saw the border blockades.

“February data confirm that the border crossing blockades in February had limited impact on the flow of goods, as lower traffic at the impacted border crossings was partly offset by increased trade activity at other crossings,” says the memo classified “Secret” but delivered to the commission completely unredacted.

“This suggests that border protests likely did not significantly disrupt the Canadian economic activity in February, in line with the advance real GDP estimate, which anticipates a growth of 0.8%.”

The PCO memo quoted Statistics Canada data showing that real exports increased by 0.5 percent in February from January and real imports rose by 2.8 percent.

Mendes commented that the impact was limited due to the duration of the blockades, with production being ramped up once trade resumed normally.

“I would also just add that it’s not possible to say that they didn’t have any impact, because we know that many auto plants had either shut down or reduced hours, reduced shifts,” Mendes added.

The finance official told the commission his department didn’t undertake an analysis after the events to evaluate the trade impacts, saying after the fact assessments are not commonly done as it’s difficult to identify the impacts after the event.

“Whether it’s the trade data, or GDP, or labour force data, there were confounding factors affecting things,” he said.

“For instance, there was an Omicron wave in January of this year, which would have adversely affected economic activity and therefore would have affected the growth rate of economic activity between January and February, [it] would have affected hours worked.”

Mendes added there were also semi-conductor shortages in January which impacted the automotive industry.

“There would be normally some ramp up in February to try to make up for that if the parts started to come in. That sort of confounds the ability to see the full effect of the blockades on auto production.”

Mendes’ superior Michael Sabia told the commission the blockades came at a difficult time for the Canadian economy, with supply chain woes,  rising inflation, and the level of business investments which he called a “chronic issue” for Canada.

He said the disruptions at the border raised concerns in the U.S. administration about Canada’s reliability as a trading partner.

“This was not a second tier issue in the Canada-U.S. relationship, this was a first tier issue,” said Sabia.