Remarks to the Standing Committee on International Trade’s Study on Trade Opportunities for Canadian business in the Indo-Pacific.
Madam Chair, committee members, thank you for the invitation to take part in your meeting on trade opportunities in the Indo-Pacific.
Canada is an Indo-Pacific nation by virtue of Its geography, history, and strong people-to-people, as well as business and trade ties. We must recognize that the Indo-Pacific region is critical to Canada’s future economic growth, its economic security, and its role as an advanced nation that is home to a range of leading international firms.
Given how important trade is, we are pleased that the committee has undertaken this study on the Indo-Pacific region.
Most of the world’s economic growth over the next several decades is projected to take place within the Indo-Pacific. The McKinsey Global Institute estimates that by 2040 Asia will account for 50 per cent of the global economy and become home to most of the world’s middle-class consumers. Canada and Canadian companies cannot risk missing out on this enormous growth opportunity.
Economic resiliency is a growing concern around the world. In some countries, this has given rise to calls for protectionism and nearshoring or onshoring. For a trading nation such as Canada, resiliency means something else entirely. Other than in a few critical areas, self-reliance, is not a viable strategy for Canada. Our country must become more, not less, globally engaged with likeminded and fast-growing partners, including in the Indo-Pacific.
Canadian companies have a successful track record beyond our borders, especially in the United States. The United States will undoubtedly remain an attractive place to invest, but like Canada its share of the global economy could shrink over the coming decades. It is worth questioning, therefore, whether continued success in America will be sufficient to be considered a global leader in the 21st century. Canada, and Canadian companies, must work harder to establish a meaningful presence where growth is occurring: in the Indo-Pacific.
One way for Canada to advance its regional interests is to release an Indo-Pacific strategy, which should include a significant focus on trade and economic ties.
Within that strategy, trade negotiations can help play an important role in building a bridge between Canada and Indo-Pacific markets.
The CPTPP It has been a beneficial agreement for Canadian exporters, and we believe it can deliver even more opportunities though its expansion. We support ongoing accession talks to bring the UK into the framework, and support addition accession for any economy that can meet the high standards. Considering the potential value of new members, we see South Korea as a particularly important addition.
In our 2017 report, the ASEAN Advantage, which we developed in partnership with the Canada-ASEAN Business Council and Asia Pacific Foundation, modelling showed that a deal would result in significant trade growth and position Canadian firms to complete in this lucrative market of nearly 700 million. We welcome progress toward this goal.
Indonesia will be one of the largest economies as well as most populous countries within a few decades. However, for now, it is an underdeveloped relationship. Just last week we met with representatives of the Indonesian business community, KADIN. Both business communities are optimistic about the opportunities and believe a bilateral deal can enhance our growing relationship.
India CEPA and EPTA
With growth exceeding 8 per cent this year, India is projected to be one of the fasted growing economies in the world. While it has been a challenge to advance trade talks in the past, India has recently shown openness toward different approaches in pursuing deals with other advanced economies such as Australia, the UK, and the EU.
To ensure Canada has an advantage in the market, we welcomed the agreement to relaunch CEPA talks, and to considering an Early Progress Trade Agreement to unlock opportunities in the near term.
Canada should closely monitor and assess if its participation in other frameworks could be beneficial, such as the Regional Comprehensive Economic Partnership.
Canada should also closely follow the forthcoming US-led Indo-Pacific Economic Framework. We understand this initial framework will not include Canada, or Mexico, which are both Pacific nations and were part of the original TPP with the United States, as well as part of USMCA. There could be a risk for Canada to remain on the sidelines of this potentially important regional economic framework which will include key partners in the region, including many CPTPP countries, and our most important trade partner, the United States.
The Business Council of Canada supports a comprehensive Indo-Pacific policy, with an ambitious trade agenda. It is critical that our country moves quickly and in partnership with industry, and other stakeholders, to ensure we do not miss out on opportunities. Thank you and I look forward to answering your questions.