A CCCE report says Canada’s federal government has fumbled lucrative economic opportunities in China and the rest of Asia: it will need to work hard to catch up.
October 19, 2011
by CANADIAN PRESS
OTTAWA: The federal government has fumbled and even damaged lucrative economic opportunities in China and the rest of Asia and will need to work hard to play catch-up, says a new, critical report by a leading economist.
The paper, commissioned by the Canadian Council of Chief Executives (CCCE) and the Canada China Business Council, says Ottawa has succeeded in building strong bilateral relations in the region, including with China, in the past. But not of late, says the report, written by Wendy Dobson of the University of Toronto’s Rotman School of Management. Instead Canada’s dealings in the region have been ad hoc and scattered.
The former federal Finance Department official and president of the C.D. Howe Institute says Canadians now have a bad reputation in Asia of showing up but not following up, and of making demands out of proportion with their importance.
Howe says it’s astounding that as yet Canada has no major comprehensive trade deals or investment agreements with any country in Asia, and is “absent” from key international forums that have become a way of doing business in the region.
“The fact is, right now, looking at Canada’s presence in the region, we’re not there, other than some large firms,” she said. “I’m talking about a region which will become 50% of the world economy in the middle of the century and we have no FTAs (free trade agreements). In the last 20 years, we haven’t had much interest or commitment to how the region evolves.”
Dobson’s 27-page report does not specifically criticize the Conservative government, but she makes clear in her comments that she believes Prime Minister Stephen Harper erred in his early antagonism to the nominally communist country.
“The Australians and the Americans are tough on human rights issues to the Chinese, but you don’t do it in public,” she said. “You don’t do that in Asia, people lose face. And we have done it in Asia in the past … I haven’t noticed it recently.”
She said the early attitude of the Harper government was characterized by “ignorance and mistrust, but I don’t see them operating now,” she added.
That’s because the Harper government now recognizes the necessity of dealing with China, particularly after his visit in December 2009 when the Chinese prime minister chided him for ignoring the emerging giant.
Still, she said Canada has yet to join two of the most important international groupings in the region, the Trans-Pacific Partnership and the East Asia Summit, both of which include the US.
The prime minister is believed to be looking for an opportunity to make a second visit to China later this year, but there has been no confirmation whether the trip will come off.
Trade Minister Ed Fast, who just completed a seven-day visit to the country extolling the business opportunities, said the two countries were close to finally inking an investment protection agreement that has been in the works since 1994.
Dobson said perseverance and personal contacts at the political level are critical in making inroads in the region.
Canada has had successes at the corporate level and some misses. Major Canadian companies such as industrial giant Bombardier, insurers Manulife and Sun Life and the big banks operate in China and have been growing their businesses there for years. But some Canadian stock market-listed companies such as logging operator Sino-Forest and gold miner Silvercorp have been accused of accounting fraud related to their operations in China.
Overall, while bilateral trade and investment with the region is on the upswing, particularly in China, Canada is still a minor player in the region.
Canada’s bilateral trade with China is only one-tenth that with the US and China enjoys a massive trade surplus with Canada.
Canada’s next two biggest trading partners in Asia are Japan and South Korea, with India and Indonesia lagging far behind.
Still, Canada’s exports to China, India and Indonesia have grown at double-digit increments over the past five years as exports to the US and Europe have stagnated, the report points out.
Dobson said the Canadian government needs a comprehensive, “generational” strategy with the region, involving provinces and industry, much like Australia launched more than 20 years ago.
The strategy should involve rebuilding high-level political relationships and developing a “Canada brand” for trade and investment.
She said Canada should also seek to diversify economic links beyond exporting of natural resources. And it says Canada should paint itself as an “Asian location” for Asian students and even as headquarters in the Americas for Asian multinationals.
© 2011 The Canadian Press