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outflow of capital would have no perceptible impact on domestic interest rates, which Ottawa has opted to tie to rates set in Washington, and have little to do with the availability of capital in Canadian markets. And in the long run it would have no negative impact on Canadian exchange rates as funds invested offshore would lead to an increased inflow of profits and dividends, improving the balance of payments and supporting the value of the Canadian dollar. (After all, if the rate of return on the funds is greater in Canada than overseas, the funds will remain in Canada). 16 Trade and other treaties that help bring to Canada-Asia business the same advantages enjoyed by Canada-US business, and tax reforms that remove artificial restrictions preventing business from seeking out the best location for investments globally, are legitimate intrusions by government into areas that affect business decisionmaking. Policy innovation in these areas would do no more than provide business with a more level plane on which to base its decisions. We are confident Canadian businesses would take advantage of the opportunity to increase their stake in the growth markets of Asia. REPORT CARD For the third consecutive year, the Asia Pacific Foundation has graded Canada’s performance in ten different areas of its relationship with Asia, based on the latest available data. Our overall grade this year is just above a C+, marginally better than last year, but still a reflection of the shallowness of our ties with the region. The slight improvement is largely a result of a considerable increase in Canadian direct investment interest in Asia, as discussed above, and our enhanced security involvement. Events during 1999 involved. Of course, within China or any WTO member, there will be losers to the liberalization process, but they are victims of a domestic policy decision. In other areas, such as macro-economic policy, national options are implicitly limited. Countries that continue to deviate too far from the norm in areas like national debt, inflation or taxation levels will find themselves bypassed by foreign private investment. However, unlike WTO rules, none of these norms are absolutes. Governments have the freedom to trade off some aspects of macro policy against others. For example, a high rate of growth can offset high inflation, or high productivity can compensate for relatively high tax rates. The art of government has always involved balancing competing policy objectives, whether domestic or international. In the globalized world, the distinction between domestic and international economic policies has become blurred and the balancing act covers a broader range of policies. Today globalization shapes our daily lives: whether it is a Wall Street fund manager using a made-in- Taiwan computer to send buy messages to a stockbrokerage in Kuala Lumpur; a group of villagers in northern India gathered around a TV set to watch MTV rock videos transmitted by satellite; or middleclass Thais living in California-style condominium developments. Ironically, most of the demonstrators protesting in Seattle against the role of the WTO in globalization during its December Ministerial Meeting could not have been in the city nor organized their activities without the globalization of transport and communications. And while few of those on Seattle streets would likely acknowledge it, the collapse of despotic and inefficient governments under the pressure of globalization has given democracy its greatest boost since the American Revolution.
enabled Canada to take a stronger role in advancing its policy of promoting security and cooperation in Asia. The most important event was our participation in the East Timor independence process. Canada assisted in the transition by providing personnel to the United Nations to help supervise the elections in the summer, then contributed more than 600 military personnel to the UN-sanctioned peacekeeping forces in the newly independent territory. Aiding Canada’s performance in this area was its role as an elected member of the UN Security Council during 1999-2000 and its continued involvement in informal “Track II” security initiatives in both North and Southeast Asia. The only other area where we felt able to award a slightly improved grade was in the category of education, which has been redefined from last year (when it also included “culture,” now part of Canada’s Image in Asia). Asian student interest in Canada is recovering from the downturn of the Asian crisis. The number of applications for student visas was up considerably from countries which suffered most during the meltdown. Even more impressive was the increase in the number of visas granted. China alone posted a staggering 206% growth in the number of visas granted between the first nine months of 1998 and the similar period of 1999. 17 Offsetting these improvements was a disappointing performance, and hence lower grade, in the important area of trade. Our performance deteriorated by almost any measure — exports, total trade, marketshare (the proportion of Canadian products in total Asian imports), or the proportion of manufactured goods in our exports. The value of exports during the first nine months of 1999 was down 7% from the same period of 1998. Over the period of the Asian crisis Canada’s exports to Asia Pacific have fallen proportionately much more than those of the US or Australia. Our marketshare with our top ten Asian customers continued to decline steadily, to less than 1% in the first quarter of 1999 compared with 1.4% in the same months of 1998 and 1.36% for all of 1998. The proportion of commodities and unprocessed products in the mix edged above 70% for 1999. There was insufficient improvement or deterioration in the six other rated areas of our relationship to vary the grades from last year’s levels. Three categories are the subjective areas of “awareness,” “image” and “projection of values.” Canadian awareness of Asia can be most readily measured by examining media coverage of the region, so our category this year has been redefined to reflect this. While the quantity of coverage last year matched the increased volume of the past few years, it still appears to be driven by sensational developments in Asia rather than any reassessment of the importance of the region. Coverage continued to be sporadic, as the focus of crisis or calamity moved from country to country, rarely providing continuing news to place the events in context. The exceptions were Indonesia and East Timor. Building on the detailed coverage of Suharto’s fall in 1998 (which media had been able to tie in to the domestic Canadian saga of the APEC inquiry), coverage, including first-hand reporting by Canadian journalists, was extensive. As the East Timor crisis came to a head, the dispatch of Canadian peacekeepers provided the domestic interest to keep media attention focused. Overall, however, there was no real change from the quantity or style of coverage of the previous year, so the grade remains unchanged.
Page 1 and 2: asia pacific foundation of canada 1
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Page 5 and 6: October 2000, we will hold the firs
Page 7 and 8: OVERVIEW 1 asia in convalescence 7
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Page 11 and 12: GRADE ‘98 Inward Investment C- In
Page 13 and 14: THE CHALLENGE OF GLOBALIZATION Unde
Page 15: The largest pool of investable Cana
Page 19 and 20: emoval. However, most of the change
Page 21 and 22: MAJOR EVENTS 2 a year in review 21
Page 23 and 24: stock markets were climbing. As the
Page 25 and 26: six-fold in Thailand. With the exce
Page 27 and 28: the past played a very small role i
Page 29 and 30: it had allowed in recent years. A m
Page 31 and 32: SECURITY BACKTRACK While economic c
Page 33 and 34: Outbreaks of violence in other part
Page 35 and 36: ECONOMIC RELATIONS 3 looking for a
Page 37 and 38: TODAY’S DELAY IS TOMORROW’S LOS
Page 39 and 40: ○ ○ ○ ○ ○ ○ ○ ○ ○
Page 41 and 42: to achieve operating efficiencies t
Page 43 and 44: Finally, foreign investment by Cana
Page 45 and 46: NORTH AMERICAN INTEGRATION 4 too mu
Page 47 and 48: similar to that with the US with on
Page 49 and 50: British Columbia provides a recent
Page 51 and 52: part of US-assembled goods bound fo
Page 53 and 54: ASIAN EXPERTISE 5 hidden advantage
Page 55 and 56: cautioned that “not every Asian C
Page 57 and 58: usiness skills to enhance Canada-As
Page 59 and 60: 6 DEVELOPMENT ASSISTANCE ODA for a
Page 61 and 62: the term “development assistance
Page 63 and 64: The report emphasizes the need to
Page 65 and 66: ASIA PACIFIC FOUNDATION OF CANADA 7
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CANADIAN EDUCATION CENTRE NETWORK T
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NOTES CHAPTER 1 1. Based on markets
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NOTES 5. Research by Tamim Bayoumi
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REFERENCES —. Statistics Canada.
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REFERENCES United Nations Conferenc
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STATISTICAL APPENDIX ASIAN MOTHER T
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STATISTICAL APPENDIX CANADA’S TRA
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