VANCOUVER — There was little ambiguity in the market’s gleeful reaction to the tariff ceasefire between the U.S. and China. Stocks surged as the headlines flashed on Monday, and stayed aloft over the days that followed. The S&P 500 index rose some five per cent this week. On Thursday, the S&P/TSX composite index set an intraday record.  

Peter Xotta, chief executive of the Vancouver Fraser Port Authority, had a different reaction. Any lowering of trade barriers is a positive for an enterprise based on trade. But for the boss of Canada’s largest port, it was hard to avoid thinking about all the chaos that soon would be floating his way. 

“The summary coming out of the press this morning is that there is a pent-up demand for about a 35-per-cent surge in volume coming from China to North America,” Xotta said in an interview at his harbour-level office in the landmark Canada Place complex on the Vancouver waterfront. “There isn’t sufficient marine capacity to handle that in the time frame that you know that the shippers would all like it to occur. 

“It’ll be a significant stressor on the supply chain: the marine supply chain, then the port supply chain and the real supply chain,” he continued. “There’s likely to be a consequence in terms of pricing those services as demand spikes.” 

The Port of Vancouver is a good place to root a conversation about all that Canada could become—and all the things we’ve done over the last couple of decades to ensure that potential is never realized, which emerged as the theme of a breakfast event The Logic and TMX Group hosted a few blocks from Xotta’s office on Monday. 

All paths to reducing our reliance on Donald Trump’s America run through the Port of Vancouver, the gateway through which most tangible goods must pass to reach those fast-growing markets in Asia. 

But thanks to decades of indecision, that gateway is barely wide enough to handle existing traffic, making it a chokepoint for whatever dreams Canada has of quickly diverting southbound exports to Asian buyers. 

The World Bank’s latest container port performance index ranked Vancouver 356 of 405 ports in the world and 22 of 28 in North America. That’s a higher rank than Vancouver’s main rival on the Pacific Ocean, the Port of Los Angeles, but nonetheless a testament to how international commerce has advanced far faster than our capacity to manage it.  

The Vancouver port’s leaders knew this day would come. In 2003, they proposed building a second terminal. It took a decade to get the federal and provincial governments to start a review, and then another decade to win approval. The port still expects it will need another few years to obtain all the necessary construction permits and that it will be yet another decade before the new terminal is operational. 

No one thinks an infrastructure project that will spread out over more than 300 acres of coastland should get an automatic green light. But three decades? The failure of successive governments to take the project seriously is one of the reasons Canada is feeling so vulnerable today. Exports can only go south when the path west is blocked by stacks of containers waiting to be moved, or rail cars waiting to unload.  

“It is amongst the most challenging things to do because of the conflict with other uses and concerns around the environment,” Xotta said of the port expansion, “but it is something that Canada must get its head around if we are to continue to expand our trade relations.” 

Xotta wasn’t at the breakfast, but most of the guests shared his frustration with the country’s regulatory paralysis. The big question on the menu—along with hearty plates of sausage, bacon, eggs and potatoes—was the productivity crisis. To get people talking, each table had cards with two provocations: that the new U.S. president is actually good for Canada, and that Canada no longer is capable of big things. 

It might have been the best event of this type that I’ve ever attended. Microphones were ferried from table to table, and the participants—who included Audaxa Ventures co-founder Hilary Kilgour and Andrew Robinson, chief executive of Nisg̱a’a Lisims Government—were nudged to share their views on how to build a more resilient economy. This group of a couple dozen conducted something approximating a conversation. The dominant view from this slice of the Left Coast: the productivity problem is a regulatory problem. 

“We need to get rid of the clutter,” said Laura Jones, president of the Business Council of British Columbia, seconding a point made by Susannah Pierce, former head of Shell’s Canadian operation.  

“This country is not obsessed with results,” said Sue Paish, chief executive of Digital, the government-backed innovation cluster that focuses on developing digital technology companies. She reinforced Jones’s contention that regulation has been allowed to accumulate because the country lacks an overarching vision. 

Bill Lomax, chief executive of First Nations Bank of Canada, said reconciliation by its nature is inefficient, which is a reason to work harder on making the interaction between Indigenous communities, the federal and provincial governments and investors as cohesive as possible. 

“Something is stalling people,” said Jeanette Jackson, chief executive of cleantech accelerator Foresight, wondering if the problem had become so severe that governments should arbitrarily cut regulation by 10 per cent.  

I’ve been recording laments about overregulation for the better part of three decades. There’s something different about the frustration that’s being aired these days. One of the buzziest business books of the year is Abundance, which shows how progressive politics is inadvertently smothering the supply side of the economy. Earlier this year, Statistics Canada economist Wulong Gu took the debate beyond sentiment analysis; he showed empirically that regulatory requirements increased 2.1 per cent between 2006 and 2021, a burden his estimates equate with a decline in GDP growth of 1.7 percentage points. 

One response to the smothering effect of regulation is to urge entrepreneurs to persevere: no one said business was supposed to be easy. Steve de Jong, founder and CEO of Vrify, a company that uses AI to identify mineral veins, didn’t disagree that regulation was a problem. But he also observed that companies that help people solve a problem tend to find a way past any obstacle. “If you don’t have the right thing to sell, you don’t have anything,” no matter the regulatory or tax structure, he said.

We could apply that ethos to policy-making. That’s what Paish and others mean when they say regulation has piled up because we haven’t defined what we want to achieve. In policy terms, the product or service is the outcome. Paish would start with the result and work backwards. “No result, no reward,” she said.

Consider the Port of Vancouver’s star-crossed attempts to build a second terminal. More than 80 per cent of the electorate just voted for parties that promised to reduce Canada’s dependence on the U.S. economy. That’s the result. If we had decided that’s what we wanted two decades ago, then Terminal Two might already be operational. “Our value proposition as a country has historically, and will be for many, many years, ‘Buy our stuff, we’ll get it to you,’” Xotta said. “That means making those supply chain investments in a timely way.” 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.