What is TIIFA?

What is TIIFA?

Where does the value come from when you are creating a financial plan? There are many intangible sources of value like peace of mind, confidence in confirmation, uncovering unknowns that may be causing stress or preparation for different circumstances like market events.

TIIFA is focusing on tangible costs that tend to plague most people and prevent them from reaching their financial goals

T = Taxes

Taxes are a well-known item that people recognize as being a large expense. Typically, the accountant or tax preparer would find tax savings by claiming credits unknown to someone, or tax harvesting of capital gains, or finding expenses to claim in the case of a business. The financial planner can find value in the link between a person’s income, their taxes and their investments or asset base. Depending on what accounts you have your investments in, the tax consequences will flow differently once assets are sold and income is claimed. This is particularly true for registered accounts. Timing of withdrawal can be key with respect to tax savings, and combined with business income, non-registered income and other sources like pensions, CPP, OAS or principle can change how the cash flows are organized to minimize taxes as well as paying the bills and keeping the lifestyle intact.

I = Interest

Most financial planners do not get into debt management or debt servicing, because this is the realm of the lender or mortgage broker. When you have decisions that cross disciplines like paying debt versus investments, buying real estate versus other investments, business versus employment, having someone who has general knowledge in many areas to see the big picture can find savings that someone with a piece of the picture may not be able to find. An easy example is whether to pay a $40,000 Visa bill with a 20% interest rate versus investing in an RRSP. Unless your investing skills are highly rated, paying off the 20% debt will be how to maximize your assets. There are exceptions to this rule if the VISA debt is short-lived and the RRSP will have future benefit, or there is a personal reason why the debt is a good idea.

I = Inflation

Inflation is one of the least understood concepts in finance, largely because money is nebulous. The value of money is not really known by most people. The idea of inflation is discussed like it is normal so people just assume that it is always there and not controllable. Inflation can’t be controlled per se, but knowing what it is can be useful in preparing for future expenses, how much they can rise, in what areas etc. Inflation turns out to be expensive over many years due to its constant erosion of your money over time.

F = Fees

Fees pertain to investment fees mainly, but fees can encompass banking fees, car leasing fees, convenience fees etc. Once you get into the mindset of “nothing is free – where is the cost”, “are the fees I am paying justified for what I am getting” and in the investment world “how much am I really paying for these investments and / or service?”, you will discover how much you are paying in fees.  One cardinal rule is that the customer always pays the bill, so make sure you understand what you are paying for. Once the understanding is there, it is time to balance out cost versus needs, and then to negotiate. If you can haggle at a flea market, surely negotiating something that can save you hundreds of thousands of dollars over your lifetime is worthwhile to do. This same thinking applies to negotiating mortgages, other debts, etc.

A = Addictions

Addictions are defined as small but frequent drains of capital from your budget that you either are not aware of or do not want to see. By finding these “leaks” and consciously deciding what to do about them, your budget tends to reflect more of what you want from your money and less about subconscious habits or fears that may be driving your money situation. This aspect is very personal and will require a lot of introspection and monitoring on the part of the client since it is their money and only they can decide what to spend it on or not. Discussing your money with someone tends to bring habits to light simply by virtue of the discussion. Sometimes the act of monitoring your spending reveals various things. Paying in cash to force you to be more aware of what you are doing is another method that may yield results. Sometimes discussing debt, taxes or another aspect of money can reveal something smaller but frequent that can help accumulate more assets over time. There are the stereotypical addictions like smoking, alcoholism, gambling, compulsive eating, compulsive shopping etc. which are likely psychological and emotional in nature, but talking about them can go a long way to discover what the root cause of these addictions are. There is typically a trauma or emotional event, some programming in your upbringing or from the media that has shaped your beliefs, or it may be a compensating influence such as “I never was able to do this in childhood, now that I can, I am going whole hog!”

TIIFA can serve a purpose in discovering where to find value in your financial situation.


What Else Do I Need to Think About in Retirement Beside Money?

There is a lot of buzz out there about having enough assets or income to be ready for retirement. Enough assets and income for what? The key to the financial side of retirement is to know what your expenses are. From there, extra costs like taxes can be added, and then the assets generating the income can be forecasted to see how it will pay for these costs. How to arrive at these expenses means asking yourself: “What kind of lifestyle do I want to have?” Since there are so many variations of the answer to this question, there is some introspection that likely will take place that will help form the retirement vision.

There are 5 proposed elements to the retirement mindset. These are health, energy, time, relationships and money. These elements work together to provide a lifestyle picture which is more holistic and encompassing for this stage of life. There are questions proposed to get you thinking about how these elements have a role in your retirement.
Aside from money, health is the second most talked about topic when it comes to retirement, but the focus tends to be on nursing homes and long term care. What about extra costs for home renovations, equipment, supplements, extended health care etc.? Maybe you don’t feel like making the trip to the cottage or down south as often as you used to. Maybe you can’t take transit the way that you used to and prefer to drive your car for convenience? Maybe you have certain health issues and need to be near certain specialists or alternative care practitioners? Perhaps a health condition means you need to eat certain foods, have certain clothing or have different gadgets to keep your environment purer that you otherwise would have needed.

What is energy? This can be thought of as motivation or willingness to do various tasks. You may not want to travel as much as you used to, even though you are physically able to. You may not tolerate working long hours like you did when you were younger. You may prefer things to be slower and quieter. Is this consistent with a condominium in the downtown of a congested, loud city? You may tend to want things close by. The doctor and dentist go without saying but what about friends, activities, your hair stylist or stores? There may be a point when you don’t want to drive anymore and this will change your whole routine.

What about time? The myth among working people is that retirees have all the time in the world. Nothing can be more wrong! Oh sure, there is not work to go to each day, but there are household chores, hobbies, associations to be a part of, people to take care of, pets, household repairs and things that there was no time for before retirement. What are you going to do with your time? People who are not prepared for this will be in for shock as they may either be bored out of their mind without work, or may be overwhelmed at the change.

Relationships are key as well. Many people think relationships are not going to change in retirement, but they can. The first thing to consider is your spouse: Are you used to having this person around all day every day? Going to work and seeing them for a few hours at night is not the same thing. Having a spouse and small children and running around all day is not the same thing as spending all of your time with someone. Will their habits start to annoy you? Are you going to have different needs if you are home during the day time? The same thinking applies to your children. Are they expecting you to babysit your grandchildren all of the time? Are they expecting you to come off the bench and pitch hit when they need some time alone? Maybe you want to have some fun in retirement, and maybe this is not consistent with what they had in mind. Conversely, what about taking care of you and what is involved with that? Are you expecting your kids to come out and do things for you and in what circumstances? The thinking expands to include friends, extended family etc. There is also the idea of where do you want to live? Most people don’t change their home in retirement, but it depends. Are you banking on your home as your retirement fund meaning you will have to sell it and free up cash? Where will you live then? A house is different than a condominium and a city is different than the suburbs or the rural areas.

Money is the substance that allows all of these elements to come together. Once you know where you are living, with whom, how you will spend your time, what you are motivated to do etc., then the question arises: How am I going to pay for all of this? The analysis of your assets, liabilities, income sources and expenses are now put into the equation. The starting point for the discussion is the expenses because this defines what you need for your retirement. The income is the coverage of these expenses, with assets and liabilities translating into future income. The process of liquidating assets slowly to smooth out the cash flows would allow you to achieve your goals such as leaving an
inheritance, paying the tax authorities, and any other goals that you have.

Retirement is a new phase in someone’s life, similar to getting married, having children, starting a business or moving to a new city. Why not give it some thought?

Why is the Canadian Dollar Less Volatile Versus the US Dollar Over the Past Year?

Looking at the last year (November 2017 to November 2018), the Canadian dollar has ranged between 75 cents and 80 cents U.S. for 1 Canadian dollar.  Over the last 2 years, the Canadian dollar has ranged between 72 cents and 82 cents U.S. for 1 Canadian dollar. Going further back over the last 10 years, the Canadian dollar traded over par – 1 U.S. dollar for 95 cents Canadian and a low of close to 67 cents U.S. for 1 Canadian dollar.(4)

What are the drivers of the Canadian dollar exchange rate? Historically, the Canadian dollar would buy more American dollars with a rising crude oil price, rising commodity prices, positive debt developments (lower debt) and positive trade arrangements with the US since the US has historically been Canada’s most important trading partner.

Looking at crude oil prices, they have trended over $60 a barrel for West Texas Intermediate (WTI) crude for all of 2018 so far and the Canadian dollar has been in its current range of 75 cents to 80 cents over this time. In 2017, crude oil prices traded between $45 and $60 per barrel, but the Canadian dollar has been in a similar range. Going back from 2014 to 2017, crude oil prices ranged from $95 per barrel in 2014 to a low of $27 per barrel in 2016 and then recovered slightly to around $45 per barrel. The Canadian dollar started 2014 at 95 cents U.S. for 1 Canadian dollar. With the decline in oil prices, the Canadian dollar fell to 68 cents U.S. to 1 Canadian dollar and then rebounded to its current range. Crude oil however, tripled from its low, and the Canadian dollar rose only about 15% over the same time frame. I would expect the Canadian dollar to be trading over 80 cents with today’s crude oil prices. (5)

For other commodities like precious metals, base metals and soft commodities, these prices have not recovered in the same way as oil. These prices have gone down since 2015 and have not recovered. (7)

An interesting twist to the oil story is the Canadian oil discount. (4) World oil prices have risen over the last 2 years, but the price of Canadian oil on the world market has not gone up in price by the same amount. The world oil price has appreciated about 80% over the last 2 years, but the Canadian oil price has barely moved up at all. The explanation for this is that Canadian oil can be pumped out of the ground but cannot get to market due to lack of capacity in the pipeline system. The Canadian rail system is an alternative to pipelines, but so far has not been delivering the oil due to capacity adjustments being made with the rail companies.

In terms of the Canadian debt situation, it has been rising steadily over 2017 and 2018 and has been flat from 2012 to 2016. (1)(2)  The U.S. debt has been rising steadily over the past 6 years. (2) For interest rates, both countries have maintained record low rates since 2008. Even though Canadian debt is at record levels, debt in the U.S. is also at record levels and this is not affecting the exchange rate between the 2 countries. This is in stark contrast to the 1990’s when the Canadian debt was high and there was talk of lowering Canada’s credit rating due to excessive debt. This was remedied through spending cuts and higher tax revenues.  (6)

The last factor has been the NAFTA renegotiation into the new USMCA. The uncertainty surrounding the lack of a deal for most of 2018 would likely have meant a weaker Canadian dollar. Investors and markets generally do not like uncertainty and tend to flee towards more certain returns if given an option. The US dollar was strong versus many currencies (8), but the Canadian dollar has been relatively flat versus that U.S. dollar. When the NAFTA deal was successfully renegotiated, the Canadian dollar exchange rate barely responded to the news on October 2, 2018. (9)

What to take from all of this? While most of the events seem to correlate with the movement in the Canadian dollar versus the U.S. dollar, there is something that is not adding up with respect to the reaction to the NAFTA deal and the oil price movement. I would expect the Canadian dollar to be more volatile due to these 2 market events.

Source Links:




How Do You Perceive Value?

There are 2 components to value at work when making a decision to buy a product or service. They are summed up as how you feel and what you think. The battle between these elements is what determines how and what you buy. This battle can take place consciously but typically is very automatic and occurs “underground” or unconsciously.


Have you noticed that certain products or services attract people constantly even though they seem ridiculously priced? You may wonder why so many people are “into” this product. One of the key concepts that may arise is “I have a good experience”. What does this mean? The senses are elevated, bringing a higher state of joy or a better feeling than from a competitors’ product. How many advertisements have you seen that use the words “Oh, what a feeling!” or “It just feels right!”? If your product heightens someone’s senses, they will have a positive experience and want to buy the product regardless of the cost. This is the holy grail for packaging, advertising and branding. The other aspect of the feeling equation is covering the emotional state in general. Do I feel at ease buying this product? Do I feel taken care of? Do I feel more popular, more sophisticated, more self-deserving, worthy or loved if I have this product? If something makes you feel better in these ways, it will be a powerful incentive to purchase it.

The Logic

The thinking side of the equation asks the questions like “what am I getting for what I am paying?” This concept wants something it can analyze and measure – usually dollars and cents expended versus dollars and cents received. Dollars and cents for what? Some useful outcome that can be measured as a cost savings, higher output, time savings, longer life span (which is savings from buying less frequently), less repairs etc. This logic can be expanded to cover costs over the lifetime of the product such as less  hassles of repairs. Strangely enough, underlying this analysis is the same notion as the feeling state when it comes to the questions of feeling taken care of, sophisticated, self-deserving, worthy etc. The logical mind equates the questions with “I am better off because I saved more money, which equates to being better off or work more easily toward being better off.”

The Battle

These two concepts play out whenever a decision occurs to buy a product. Which side wins? It depends on who the person is, but judging by how the “feeling products” are selling versus the “thinking products”, the feeling side seems to win more often. Look at Starbucks coffee versus McDonalds coffee, the Apple iPhone versus other cellular phones, Coca-Cola versus another type of cola, etc. If the logic wins out, advertising with the emphasis on feeling would not do too well, and branding would not be very valuable, unless it is consistent with the logic.

The ideal scenario is to have both the feeling and thinking side in agreement when a product is purchased, but this does not occur as often as one side being emphasized versus the other. The common ground of feeling worthy, loved, deserving, popular and so on may be the secret to understanding the different methods of ascertaining how people make purchase decisions.

What Is Emotional Spending and Saving?

How you use your money is a reflection of your thoughts and emotions. Another way to say this is that you handle your money according to how you think and how you feel. When your thoughts and emotions are unbalanced or unhealthy, this will show up as unbalanced spending, addictive behaviour or irrational decision making.

How Does This Work?

If you have an emotional issue or a negative thoughtform, and you don’t know to resolve it, money will be used to “paper over” the issue until it goes into your subconscious mind – or you are not thinking or feeling it any more. An example is if you believe you are unworthy of having a good job, you will struggle along in your present job. You may be technically making enough money to make ends meet and to enjoy some of your time, but this thinking makes you feel off. You want to feel better at a given moment in time, so you buy yourself a “treat”. There is nothing wrong with doing this as long as the intentions are clear. If you buy yourself a treat all of the time instead of “fixing” the negative emotion, you will get into the habit of buying things all of the time. It may get to the point that you are not even enjoying the things you are buying – you are simply using the shopping as pain relief. If this happens often, you will start to run out of money and this will cause other issues.

What Is this Addictive Behaviour?

I use the word “addictive” to describe this situation because the pattern is similar to a drug or alcohol addiction. A trauma happens resulting in a negative emotion that cannot be resolved. The emotion stays in the body and resurfaces later on, causing negative feelings. Alcohol is consumed to soothe anger. Since the alcohol makes you feel better, it is consumed whenever the negative emotion comes up. This becomes a habit, and the alcohol is consumed regularly – and it becomes an association like “I am angry and I want to feel better.” The alcohol starts to make you ill because too much alcohol stresses your body and you become “an alcoholic” when you don’t have another way to feel better. Meanwhile, the original trauma and anger are still residing in the body.

For the alcoholic, the booze is the “hit” that makes you feel better. For money, buying things that gratify represents the “hit”. You will know it is a hit because the euphoria wears off quickly and the problem is still there the next day. It may even look worse because you feel guilty at having gotten drunk, stoned or broke, and still the bad feelings persist.

How Do I Resolve this?

Money is often spent unconsciously – this means that money is spent in reaction to a feeling or thought rather than a conscious decision. The solution involves bringing the unconscious into the conscious so you can change the reaction. How do you do this?

When you buy things, write down what you purchase so you can see it. For frequent and small purchases, as well as for infrequent purchases, recording the transactions will allow you to see how much you spend over a period of time and whether it is reasonable or not. You will likely forget how many times you made frequent or rare purchases.

Pay in cash. The act of taking cash out of your bank account, counting it at that time, holding the money in your hand and counting it when you buy something forces you to ask yourself why you are doing a transaction. Since it is now conscious, the cold light of reason or observation may change your decision. Paying with a debit card, credit card or other electronic means does not register in your conscious mind the same way and the “check and balance” of your mind is typically bypassed.

Ask yourself how you are feeling when you decide to buy something. If you are craving something, are moody, irritated, frustrated or angry, you are likely to buy more.  I speculate that you are forced to line up and wait for purchases or are put on hold when buying on the telephone to get you frustrated for this reason.

Don’t shop hungry, thirsty, distracted or emotional. If you are not happy or satisfied when you enter a store or web site, you are bound to want to feel good instantly, and this means buying things you really don’t need.

Man Versus Society

Unfortunately, handling money wisely and shopping because it is the best decision to make is discouraged. Consuming at all costs and for all reasons is encouraged. You are never asked if you need the item you are buying, whether you can afford it, whether you have better things to do with your money, whether you should maybe not shop at all or whether you should buy at a later time. The siren call of shopping as much as you can right now with debt if necessary is what you will constantly face from society. Since nobody will ask the questions, you will have to ask them yourself and provide your own balance to the insanity of spending blindly.

Emotional Saving

Is spending money bad? No, spending and saving are decisions that can be made for good or bad reasons. Can someone save too much money? The answer is a resounding yes. The frugal person may have their own demons to deal with which are: I don’t have enough money, I may need the money tomorrow, I want to make sure I survive etc. This person may never spend when they should be buying things. This person can also be hungry, thirsty, distracted or emotional and can make decisions to never shop because that keeping their money makes them feel better.


The key is all about balance. If you can balance your thought patterns and emotional states, your bank account will also be balanced. If you are buying things because they are valuable to you and you are getting a lot of joy from them, than these things are likely worthwhile. You will also have to dig deeply into where the feelings of lack, guilt, shame, rage and frustration come from. Once you realize that you are loveable, adequate, powerful and worthy, many of these addictions simply will not exist.

Recognizing Greed in Investing

The Initial Gamble

When people invest, they typically do not expect to make 1,000% or 10,000% returns on their investment. In the case of penny stocks, a new growth industry, a start-up, a massive recovery situation, a crisis, pure gambling or a brand new investment space, these returns are possible. The psychology of an investor may start out as “I will put a bit of money in this and see what happens.” As the returns start to accelerate, the thinking may not change much until the expectations shift. This shift happens when the thinking becomes “I didn’t expect much from this investment. I treated it more as a gamble, but now I have made 3 times my money and there is a real possibility that I can make more.” At the same time, the returns may be accelerating because more people are catching on to the merits of this investment and are buying more and more of it. Ever wonder why a chart of an investment becomes “parabolic”? Parabolic refers to a mathematical curve where the prices are moving up exponentially with time – or the rate of return is moving up faster and faster. This would translate into more people getting involved with the investment and more opinions about it.

Tug of War

As the game speeds up, at first not much has changed in the strategy. Inevitably, people will start taking profits and the charts will start to get volatile. There is a group of buyers who see giant upside in the investment and so will keep buying on dips. There is a second group of people who have made big gains and are start to sell because they either feel they have made enough money, or are seeing some fundamental reason to sell. In some cases, there may be another lucrative investment and money is transferred to that instead. The volatility represents the tug of war between the opinions of both groups as the investment accelerates in price.

Something to Lose

Up until now, investors may have downplayed expectations and not known how high the return could be, or may have put stop losses in place to guard against problems. Since they had “nothing to lose” there was not much attention given to the investment. Now that the returns have increased multiple times, there is something to lose. The upside and downside risks are not as clear as they were in the beginning. In the rare case that you are buying an investment and know when you will sell it, you can ride out the volatility knowing that you have a definite target to act upon. In most cases, the future is highly unknown and the selling price is more along the lines of “we will see what happens”.

Greed and Expectations

Where does the greed come in? It starts when the expectations flip from “I made 500% from nothing” to “I don’t want to lose the 500% gains”. At the same time, the possibility of 5,000% gains is also there. There may be a tug of war inside the investor to either hold or sell on dips. Pure greed may also be found where an investor “doubles down” on big gains, big losses or borrows money to invest after a big rise. The defensive idea is out the window and the investor is swinging for the fences – thinking about retirement, record returns, bragging rights or life changing gains. While these outcomes are possible, the balancing act of the likelihood of returns going up or down is skewed towards either going “all in” or getting very twitchy at the volatility and selling when the fear gets too high as opposed to the “buy and hold” and “ride out the price swings” mantras.

Collective Greed

The individual greed is summed up as per the prior paragraph, but collective greed is very similar. Volatility usually precedes changes in direction. Other evidence is large news coverage of the investment, or people who do not know about the investment who want to get in on it. This is where the “taxi cab driver or shoe shiner giving you financial advice” expression comes into play. This is translated as “if someone who does not normally invest, or who does not know a lot about an investment is giving you advice, it is time to get out.”

The Defence

How do you beat the greed? It is helpful to study manias by being in them and watching the emotional pulse of people through the stages of “It is only a small amount of money – why not?” to “hey, I have made some big gains” to “these are serious gains, it is time to get greedy”, and then “I am going all in” and then finally “the whole thing crashed and I lost my money, or I barely got out.” After going through a couple of these, you start to check your emotions and hedge against being too optimistic or too negative and being swept up in the emotional tide that manifests itself as volatility in the price charts. Another key to remember is that the media and commentators are a reflection of individual psychology. When times are good, nothing can go wrong and all of the positives are talked about. When times are bad, everything is wrong and all of the negatives are talked about. Neither of these views is expressing the whole story, so it is up to the investor to balance out the missing pieces. These are the greed and fear states that are referred to many legendary traders and investors. Nimble traders will identify these “switch points” and move in and out of the market. Disciplined investors will ride out the storm and sell at a later date. Other people may take some profits and retain their capital instead of swinging for the home run. Which option depends on your knowledge or conviction for the investment, discipline in trading and experience with manias.

Is Cancelling NAFTA Bad for Canada?

The spectre of NAFTA being cancelled is on many people’s minds since the election of President Donald Trump. Washington has pulled out of the TPP and wants a better deal for the U.S. in the NAFTA agreement. The recent possible tariffs coming from the Trump administration is also heightening trade concerns. Is cancelling NAFTA a bad thing for Canada? There are 2 ways to examine this question.

The Current State

The first approach is looking at how things currently are and what is likely to happen using this assumption. Canada is the U.S.’s second largest trading partner and the U.S. is Canada’s largest trading partner by a large margin. The U.S. is Canada’s closest trading partner by physical location. Much of the infrastructure that is already in place caters to shipping goods across the Canada-U.S. border seamlessly – bridges, railways, sea ports, shared production facilities etc. The culture of the U.S. is similar enough to Canada that doing trade is fairly easy. There are no language barriers, religion barriers, or culture barriers relative to other countries. Our currencies are closely aligned, making trade easier in terms of financing, terms of payment and currency exchange. It is fairly easy to obtain U.S. dollars anywhere in Canada. Comparing this to the Japanese Yen shows the contrast. Lastly, the assumption is that the U.S. will protect Canada militarily so Canada can focus on producing other goods.

Using this assumption, if NAFTA is cancelled, Canada may be a big loser in terms of trade. The fears are that Canada’s goods will not be exported and economic activity will suffer. We do not have any other trading partners as large or physically close by as the U.S. The infrastructure and financing advantages also do not exist with any countries. Even Mexico who is part of NAFTA has a different currency, language, culture and priorities than the U.S. with respect to trade. Cancelling NAFTA looks like a disaster.

What are the disadvantages of NAFTA or trade deals in general? First, trade deals encourage specialization of industries in the lowest cost / highest benefit production of goods and services. All other production is reduced and or ceased. If you want to develop a new industry, you will have a small chance of success since your trading partners may dominate the industry or limit you from competing. If this is not the case, you may develop the industry on someone else’s terms. Starting a business without free reign to experiment usually does not succeed because experimentation is necessary to optimize the market demand, efficiency and need for a given product. These limitations create a volatile economy based on a handful of sectors. In Canada, this means energy, commodities, banking and real estate. The second issue is negotiating power. Trade deals limit what you can negotiate after the deal is made, unless the entire deal is re-negotiated, which is what is happening today with NAFTA. This limits diversification of trading partners and new opportunities which may be present. Sometimes even within an established industry, different market conditions that would normally be taken advantage of would not be available because of the terms of the trade in a deal. As an example, the price of oil is fixed at $50 per barrel between two countries. The price of oil rises to $100 per barrel on world markets, but the seller will not benefit from this since they are selling the oil at $50. Should the price drop to $20, the seller would benefit, but then the question of “how often does this happen and is it worthwhile?” is going to come up. The last disadvantage is the negotiation itself. If you are negotiating with a much bigger, stronger trading partner, you will likely need them more than they need you. This means that they can argue for better terms of trade and if you want to make the deal, you will have to sacrifice more than you may realize. In the case of Canada and the U.S., the U.S. has a more developed economy than Canada, and much more influence on the world stage. If the U.S. wants to dump Canada and trade with someone else, they can do it more easily than Canada can for the U.S. This gives the U.S. more negotiating options than Canada – at least at the present time. The U.S. can offer more products for sale, more options for trade and more customized terms. Let’s say that Canada went to a trade negotiation and said “I will offer technology expertise.” Would that be possible? Not likely, but Canada can offer mining expertise. The U.S. can offer both.

The Opportunity

The second approach is assuming that cancelling NAFTA can be an opportunity, and changes can be made to benefit Canada more so than the current agreement. Why? Trade can be opened up to every country in the world and with open terms. Since the competition is much greater if all countries are available for trade, the opportunities may be greater. The flip side is that more competition may make it harder to trade for an advantage due to cheaper labour or better quality that may be available in other countries.

Cancelling NAFTA would make Canada more independent because we cannot rely on a specific trading partner to buy our goods. This will create more resourcefulness and entrepreneurialism among Canadians. When people have to find a way to survive, there is more effort expended. This effort will create more diversification among industries since we no longer can afford to specialize in certain sectors.

This scenario has started to play out with Canada negotiating more deals with Europe and Asia. Canadian firms have global expertise in certain sectors which gives them an advantage when creating terms of trade.