Sign at the US/Canadian border

Although most boardrooms in Canada avoid partisanship, a growing theory considers the need for a public policy expert seat on boards to help navigate these uncertain times. (kuriputosu/Getty Images)

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How will the current state of Canada-U.S. relations impact the boardroom? We ask Gordon Giffin

While a looming trade war and threats of major changes to trade agreements affect business on a macro level, the shifting relationship may see itself play out in boardrooms across Canada, too

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Our neighbours to the south have long been one of our strongest allies. But changes in economic and social approaches have seen the relationship between Canada and the United States enter one of its most contentious periods in history.

During these uncertain times, boardrooms in Canada can better prepare to navigate the changing waters.

The two countries have long held different approaches to business. The U.S. foremost focuses on economic policy and then personal security, while Canada’s priority is social policy, notes Gordon Giffin, former U.S. ambassador to Canada from 1997 to 2001. To better understand this discrepancy and how it affects business, boards must become better informed.

Boards are comprised of experts from various fields, but are often missing is a policy expert. “I think boards today don’t adequately value people who can bring assessment of political risk,” said Giffin, at a CPA Canada forum on Canada-U.S. relations and its impact on boardrooms. “Political disruption means policy disruption, policy disruption means business disruption. Because if one thing’s for certain, business accords uncertainty.”

Although most boardrooms in Canada avoid partisanship, a growing theory considers the need for a public policy expert seat on boards to help navigate these uncertain times.

“I think boards of directors of companies that have an interest in U.S. markets…have to now start factoring in the political dimension to the relationship because there are risk factors,” says Lawrence Herman, who practices international trade, investment and public policy law, and is a former diplomat. “Boards are responsible for assessing risk. Risk factors will vary depending on the business, depending on the sector. But what we’ve seen is an increasingly risky trading environment, business environment, for foreign companies in the United States.”

Herman believes Canadian companies need to be on the offensive and match their U.S. counterparts in building expertise on global matters. “It’s not just a matter of some academic interest in global issues. It comes down to the ability of senior management and boards to assess risk,” he says.

Playing offense in this sense of the game may be extremely important to how business responds to future changes. Public policy expertise can be beneficial to anticipate future changes, as well as plotting strategies to deal with uncertain policy landscapes,” says Dan Bousfield, who teaches a course on Canadian-American Relations at Western University in London, Ont.

However, he also anticipates such changes and the importance of board preparedness will be largely determined by that business sector. “…difficult Canada-U.S. relations will only impact those areas that are export exposed, and even dramatic changes in tariffs or trade agreements are likely to remain relatively marginal,” he adds.

Whether or not a business is directly affected, boards have an important role of being risk adverse. Herman sees this as having the tools necessary to “make sure [boards] are fed the right information, to make sure they can do what boards are responsible for doing, and that is assessing risk.”

FOR MORE

Download CPA Canada’s Corporate Oversight & Governance Summary Resource Guide developed to support boards of directors. And watch Gordon Giffin’s in-depth talk, Canada-US Relations: The impact in the boardroom, for deeper insight.