- About the Council
- Updates from members
By John Manley, as originally published in iPolitics.
Regardless of their political orientation, most Canadians understand that trade – with the United States in particular – is a linchpin of our economy. They also recognize the risks inherent in Canada’s heavy dependence on the United States as the destination for almost three-quarters of our exports.
That’s why the Asia-Pacific region is vital to Canada’s economic future. Led by the meteoric rise of China, the region’s growth is the bright spot in an otherwise uncertain global economy. Asian incomes are climbing, which means Asian consumers are spending more on a wide variety of goods and services from around the world.
Canada should be trying to scoop up as much of this growing market as it can. The only question is how.
One way to deepen Canada’s engagement with Asia would be to negotiate an ambitious trade and investment pact with the Association of Southeast Asian Nations (ASEAN), a regional organization consisting of Indonesia, Thailand, the Philippines, Malaysia, Singapore and five other Southeast Asian states.
Combined, ASEAN member countries have a population of 625 million and USD $2.5 trillion in GDP. What’s more, economic growth among the ASEAN nations is running close to five percent – roughly twice Canada’s current pace.
According to a newly published report co-sponsored by the Asia Pacific Foundation of Canada, the Canada-ASEAN Business Council and the Business Council of Canada, a free trade agreement with ASEAN could generate between $4.8-billion and $10.9-billion in additional bilateral trade, benefiting a wide range of companies and many millions of workers on both sides of the Pacific.
ASEAN, however, is only one of several important markets for Canada in Asia. As the world’s second- and third-largest economies respectively, China and Japan represent two of the greatest growth opportunities for Canadian exporters. Together, their consumers purchase US$6 trillion a year in goods and services every year – a figure that is expected to grow by 50 per cent by the end of the decade.
These two markets could play a big role in diversifying Canada’s exports. Take softwood lumber. If it weren’t for the fact that Canadian producers have doubled their combined market share in China and Japan over the past decade, Canada’s lumber industry would be even more vulnerable than it already is to U.S. protectionism.
Last year the Business Council of Canada partnered with the Canada China Business Council to explore the potential benefits of a Canada-China FTA. The resulting report suggested that a free trade agreement between Canada and China would increase Canadian exports by some $7.7 billion by 2030, supporting 25,000 new Canadian jobs.
As for Japan, Canada has two options – both of which we should pursue. First, it’s time to relaunch negotiations toward a bilateral economic partnership. The original talks began in 2012 but were suspended in 2014 pending the outcome of the 12-nation Trans-Pacific Partnership (TPP) negotiations.
In one of his first acts after taking office, President Donald Trump seemingly put the kibosh on the TPP by withdrawing U.S. support for it. But now Japan is leading the push for a new TPP-style agreement that would not require Washington’s participation. Canada should get behind that process, even if it takes many years to complete.
India is another promising market for Canada. It boasts one of the fastest-growing economies in the world, and will soon overtake China to become the most populous. India is already the largest consumer of Canadian lentils and other pulses, and its middle class is growing by leaps and bounds. Canadian firms in other sectors, including energy and mining, would be well-positioned to benefit if they had the access and protection afforded by an economic partnership agreement.
India, China, ASEAN, Japan: each offers significant opportunities for Canadian exporters. And the good news is that we don’t need to choose among them. If we’re serious about ratcheting back our dependence on the U.S market, our trade strategy in Asian should be “all of the above”. And the time to get moving is now.
The Honourable John Manley is President and CEO of the Business Council of Canada, representing the chief executives and entrepreneurs of 150 leading Canadian companies.