Those same tougher U.S. immigration policies bring a threat: American employers may try to hire more Canadians who can easily cross the border to meet the demand for high skills.
As it contemplates the possibility of a modernized NAFTA, Canada should seek to improve labour mobility throughout North America to address skill shortages in Canada.
The narrative around the Trump regime focuses on Canada's increased advantage in attracting skilled international workers. But those same tougher U.S. immigration policies bring a threat: American employers may try to hire more Canadians who can easily cross the border to meet the demand for high skills.
As a result of rapid technological changes, employers' needs for high-skilled workers grow every year. Since the North American free-trade agreement came into force more than 20 years ago, new occupations have been created. The Canadian market faces a labour shortage for many of these new jobs.
Thus, the inflow of foreign workers with modern technical and professional skills is vital to driving innovation and for businesses to start up and scale up.
Increased international labour mobility opens more doors and opportunities for workers who are willing to cross borders, and helps employers find the right talent to fill jobs more quickly. Thus, it improves productivity and drives economic growth.
Despite its positive effects on the receiving economy, greater unrestricted labour mobility can lead to higher job-vacancy rates in the sending country.
In order to gain from labour mobility under a trade agreement and avoid brain drain, countries should build comparative advantages at attracting talents.
Under NAFTA, citizens of Canada, the United States and Mexico are able to cross the borders with relatively little red tape to work at any of the 63 professional occupations covered by the agreement, such as engineers, management consultants and scientific technicians and technologists. Statistics show that Canada has larger labour mobility with the United States than Mexico through this trade treaty: The number of NAFTA visas issued by Canada in 2016 for Americans is more than 25 times higher than for Mexicans.
Considerably fewer Americans (17,602) obtained a NAFTA work permit to take up a job opportunity in Canada.
Labour-mobility imbalance between Canada and the United States is a result of plentiful job opportunities with higher wage rates in the United States.
The average wage rate is generally higher in the United States than in Canada, although it varies between professions.
Critically, however, engineering and computer science are among the highest-paid jobs in the United States, while that is not the case in Canada.
About one-third (34 per cent) of Canadian employers had difficulty filling jobs last year, according to the latest ManpowerGroup Talent Shortage Survey. The flow of Canadian graduates to the United States in certain fields such as mathematics, computer and information science, engineering and related technologies is high, according to a Canadian study.
Any expansion of labour mobility with the United States under NAFTA should take into account the need to ease the inflow of high-skilled workers to meet Canada's skills shortages. In order to do so, we can deploy other tools that complement trade agreements.
Canada allows entry of eligible foreign workers through various channels. These pathways are generally divided into two broad programs: the Temporary Foreign Worker Program (TFWP) and the International Mobility Program (IMP). Employers who wish to hire foreign workers under the TFWP are usually required to obtain a Labor Market Impact Assessment, a document that proves the existence of skills shortages in the category they want to hire.
Under NAFTA and all other trade treaties, employers are exempted from that requirement.
Ottawa could also facilitate the inflow of U.S. workers in certain occupations through the TFWP. Canada, however NAFTA talks turn out, needs to focus on reducing the bureaucratic challenges to Canadian companies that are unable to meet their skills needs through the domestic labour market.
Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute.
Published in the Globe and Mail