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○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ CANADA’S TRADE WITH ASIA (C $BILLIONS) 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 8 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 defined by the terms of the Canada-US Free Trade Agreement and its successor, the North American Free Trade Agreement (NAFTA). These free-trade deals have been a boon to Canadian manufacturing and finance in promoting the rationalization needed to succeed in the most competitive market in the world. However, concentration on the US has left us economically vulnerable because of dependence on a single, if gigantic, market. Success in the US has been achieved at the expense of developing economic links with other regions, especially Asia, which has been the fastest growing part of the global economy in the last two decades of the century. The result is that Canada’s share of Asia’s major markets has slipped from about 2.7% before the free-trade agreement came into force, to 1.4% in 1998, and to less than 1% in the early months of 1999 as our exports to Asia continued to shrink. 1 At the same time, our share of the US market has risen from 17.7% to 20%. While the US will always be our biggest customer and supplier, we may have put too many eggs in the US basket for the long-term security of the Canadian economy. With our economies so closely linked, and following the same business cycles, any downturn in the US will compound the inevitably similar slump of the Canadian economy. We will also miss out on the full benefits of the likely faster growth in Asia. Concentration on the US, therefore, does not provide Canada or Canadian business with any hedge against global economic fluctuations. We must develop more alternatives to the US market. Responsibility for our overly heavy reliance on the US does not lie with individual companies, nor with the private sector as a whole. Under the free-market system in which we operate, the private sector has a responsibility to shareholders to maximize profits. For most Canadian companies acting quite properly in their own self-interest, expansion into the US, whether for export or investment, will yield the quickest, largest and easiest return on capital. In fact, business has only been following the policy pointers that the federal government provided by negotiating the free-trade deals. When the issue is national interest or national economic security, it is the responsibility of government to set priorities through its policies. It is at a policy level that Canada has failed to move resolutely to diversify its economic links now that the US relationship is entrenched. To its credit, Ottawa has in recent years — through the various high-profile Team Canada missions — provided signals that it believes business should become more active in trade
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ NINE-MONTH TRADE COMPARISON (C $BILLIONS) 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 1998 1999 Canadian Exports to Asia Canadian Imports from Asia Sources: Adapted from Statistics Canada, Exports by Country, various issues 1989-1999 (Cat. No. 65-003) and Imports by Country, various issues 1989-1999 (Cat. No. 65-006). 9 with Asia. However, as argued in Chapter 3, Looking for a New Model, in the globalized economy, a greater return would likely have come from promoting Canadian direct investment in Asia, rather than devoting so much effort to winning export contracts. Canada’s active participation in the Asia Pacific Economic Cooperation (APEC) forum is another area where the government is trying to encourage business by opening doors into Asia (and parts of Latin America) for Canadian trade and investment. However, despite Ottawa’s best efforts to give greater direction to the organization, the APEC process is diffuse and quite long-term — the target date for removal of all trade barriers is 2020. Many observers believe the process of removing formal barriers to trade and investment (as opposed to less formal regulatory impediments) has already run out of steam. There is another, more direct, approach that Ottawa could take. While Canada is almost always committed to seeking multilateral solutions to any problems it identifies, trade and investment have a national basis, even in the globalized economy. Negotiation of bilateral treaties that enhance security for Canadian investment is one avenue Ottawa could follow to support the development of a stronger economic relationship with Asia. At present, Canada has investment protection treaties in place with only two Asian countries — the Philippines and Thailand — though there are non-binding memoranda of understanding with several others. A more promising approach was Ottawa’s move in 1994 toward developing a closer relationship with South Korea. It established a Special Partnership Working Group with Seoul to explore ways for the two countries to increase bilateral economic ties and to work together in third-country markets. In 1996, this yielded the Canada-Korea Arrangement on Industrial and Technological Co-operation, to help build Canada’s role in Korea’s growing services and advanced technology sectors, and last year a treaty on investment in the telecommunications sector. Because of the Asian crisis, however, there has been little progress in broadening this relationship until recently, when dialogue resumed. There are some indications that Ottawa is considering developing a similar relationship or even negotiating a free-trade agreement with Japan. Though difficult to envisage, if achieved it would provide the strongest possible signal to the private sector to look beyond North America for trade and investment. And it would bring 82% of Canada’s global trade into a free-trade environment.
Page 1 and 2: asia pacific foundation of canada 1
Page 3 and 4: ○ ○ ○ ○ ○ ○ ○ ○ ○
Page 5 and 6: October 2000, we will hold the firs
Page 7: OVERVIEW 1 asia in convalescence 7
Page 11 and 12: GRADE ‘98 Inward Investment C- In
Page 13 and 14: THE CHALLENGE OF GLOBALIZATION Unde
Page 15 and 16: The largest pool of investable Cana
Page 17 and 18: enabled Canada to take a stronger r
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
Page 67 and 68:
CANADIAN EDUCATION CENTRE NETWORK T
Page 69 and 70:
NOTES CHAPTER 1 1. Based on markets
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NOTES 5. Research by Tamim Bayoumi
Page 73 and 74:
REFERENCES —. Statistics Canada.
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REFERENCES United Nations Conferenc
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STATISTICAL APPENDIX ASIAN MOTHER T
Page 79:
STATISTICAL APPENDIX CANADA’S TRA
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