Diana Carney

Issues: Rising to meet the Asia challenge

April 3, 2012

Asia’s growing importance is undisputed. It is not only in economic, but also in cultural and political/security spheres, that the region is rising. China, in particular, is playing an increasing role in the definition of the global architecture. For all these reasons, Canada needs to up the ante in Asia.

Having been missing in action for several years, Canada – and the federal government in particular – has now rekindled its interest in Asia and appears to be acting with some urgency.  The current emphasis seems to be very much on bilateral trade agreements, with some efforts to enter multilateral bodies such as the Trans Pacific Partnership. Energy exports are being dangled as the main prize and there is a flurry of activity around the Northern Gateway pipeline.

It is, however, not yet clear that Canada has a broader, unifying strategy for the region. Such a strategy will be an important element in persuading Canadian companies and educational establishments of the merits of refocusing their efforts on the growth economies of Asia and in achieving success in this highly competitive area.

Current status

Canada’s trade with Asia has been growing rapidly but still accounts for only about 15% of total trade. Exports are dominated by natural resources (around 60% of our exports to China). Lumber products (wood, pulp and paper) account for about 25% of our exports to both India and China.

Trade talks are currently ongoing with: China, India, Japan, Singapore, Korea, Philippines, Thailand and Vietnam.

Cultural and educational links with Asia are generally ad hoc and institution-dependent.

Key issues

  • We need to find a way to bring Canada to the top of the Asia mind. We are entering a very competitive sphere: what are the key elements of an effective Asia strategy? Are different strategies required for the different countries?
  • To what extent should we prioritize Asia as a trading partner? Will better relations with Asia jeopardize our relations with the US? If so, is it worth it?
  • Many of our trade deals with Asia are stalled due to protectionist lobbies at home (auto, agricultural) and/or concerns about human rights. Can a path between conflicting interests and values be found? How much compromise should we accept?
  • Everyone agrees that an effective Asia strategy will need to go beyond conventional trade agreements. But how broad should it be? Are all elements equally important?
  • How important are energy exports (and resource exports, more generally) to our relationship with Asia? How can we ensure that we maximize the value we gain from our finite resources and use them to deepen and extend our overall relationships with Asian countries? Would the establishment of a sovereign wealth fund help? Should we be doing more processing in Canada to capture greater value?
  • There are enormous sensitivities around foreign investment in strategic resources. Chinese investment is viewed with particular concern. Is this merited?
  • What is Canada’s international narrative? How do we bring Canadian public opinion along?

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