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Federal Support Needed for Gateway to Shine
Published: November 12, 2009
Abstract
Ottawa’s Asia $1 billion Pacific Gateway and Corridor Initiative is developing according to plan and British Columbia has an opportunity to finally realize its own ambitious Asia Pacific vision.
Op-Ed
Ottawa's Asia Pacific Gateway and Corridor Initiative is developing according to plan and British Columbia has an opportunity to finally realize its own ambitious Asia Pacific vision. The $1-billion investment in infrastructure upgrades and expansion announced by the federal government in 2006 serves as a signal to both the Asia Pacific and other West Coast gateways that Canada is serious about capitalizing on the growing economic relationship between Asia and North America.
An increase in container traffic at northern BC's Prince Rupert at a time when all other West Coast ports have reported a steep decline in business is one early sign of success. However, the competition from US rivals is stiff and constantly evolving, making the road ahead far from certain.
The biggest challenge may be that BC's grand vision for the Asia Pacific Gateway cannot be accomplished on its own. It must bring others—including the federal government—on board to fulfill its goal of becoming more than just a transportation gateway.
The Asia Pacific Gateway means different things to different people. In BC, it is interpreted broadly to include people flows, development of service industries, marketing and branding efforts, bilateral and regional trade and investment opportunities, education and cultural exchange. These parts of the gateway are reflected in the province's Asia Pacific Initiative, whose pillars include developing a workforce with "Pacific Century Skills" and Asia Pacific Gateway culture. The vision is to build on geographic assets and APGCI investments to establish BC as Asia's gateway to North America and vice versa. These goals are both admirable and ambitious.
For starters, kinks in the APGCI transportation network still need to be resolved. The risk of labour unrest and other "inconveniences" remain a real concern to many shippers, threatening the competitiveness of the gateway and corridor strategy. Efforts to mitigate and address these risks will take both time and a tremendous amount of political goodwill among organized labour, employers and federal regulatory agencies.
Further, BC's quest to become more than just a transportation gateway will need the support and co-operation of all stakeholders, including other provinces, the federal government and industry. Success depends on regulatory frameworks that facilitate the flow of goods, people and capital through the gateway. Control over areas such as air services, foreign affairs and international trade agreements fall outside its jurisdiction and within the realm of the federal government, which must balance provincial and national interests.
For example, air services policy is overseen by Transport Canada. Some believe that Canada's restrictive air policy limits the ability of BC to grow as an air gateway for both transpacific air cargo and passengers. The cases of Singapore Airlines and Emirates Air, which have both been denied increased flights to Canada, have been widely reported in the media.
To advance a discussion on the gateway benefits of a more open-air services policy, BC, in partnership with Saskatchewan and Alberta, organized an Open Skies Conference in Vancouver in September to discuss opportunities and roadblocks. They invited representatives from major international airlines, the federal government, the local airline industry and tourism agencies and businesses. This was a commendable effort to raise awareness and facilitate a constructive dialogue; however, it remains to be seen if and how this will deliver a beneficial outcome for BC's gateway development.
BC has also proposed the creation of an Asia Pacific Gateway Authority to improve internal communications and planning between all gateway players across the Western provinces. The government noted in its throne speech that it would pursue the creation of this coordinating body with the federal government. However, Transport Canada is the lead department for the APGCI and the creation of the authority will ultimately need its blessing, participation and leadership.
These two examples show areas where the provincial government is willing to provide leadership to develop the gateway but has limited authority to make it happen. The challenge is to garner enough public and stakeholder support on key issues and to find common ground between its holistic conception of the gateway economy and the strictly transport-focused national view.
At the industry level, there appears to be a buzz about what the gateway means for Canada and BC. Most have a rudimentary knowledge of the gateway and understand that it represents opportunities for greater business and trade interactions with the Asia Pacific.
This optimism is not without reason. BC's relationship with Asia has grown stronger over the past few years, with at least 10 ministerial delegations and three visits by the premier to key Asian trading partners in two years. BC has also organized five major business missions and received almost 40 incoming delegations from China alone since 2008.
In trade terms, BC's exports to Asia as a proportion of total exports increased five percentage points between 2006 and 2008 while imports fell three percentage points in the same period. The Asian share of BC exports is up from 23 per cent in 2003 to over 30 per cent last year.
These statistics show promise but must be bolstered by foreign policy and international trade initiatives, such as strong bilateral relations and trade and investment agreements, to facilitate a greater flow of goods, capital and people through the Asia Pacific Gateway. BC can only do so much to realize its vision of becoming an Asia Pacific Gateway. It must bring about federal-provincial co-operation on some sticky issues to support its vision of becoming the preferred Asia Pacific Gateway in North America.
Alexandra Ho is a project manager at the Asia Pacific Foundation of Canada. An edited version of this article appeared in The Embassy on November 11, 2009.
Canada's Transactions in Services with Asia: Travel, Commercial, Transportation and Government, 2008
Total Services
Canada experienced a deficit in services trade with Asia in 2008, mainly the result of services imports from Japan, Hong Kong and China, Canada’s top Asian partners in services trade. In many other – though smaller – markets, Canada ran bilateral surpluses. In 2008, receipts from Japan made up about 18% of Canada’s receipts from Asia. Reciprocally, Canada purchased 16% of its Asian services from Japan, a decrease from the level in 2007. Canada experienced significant positive balances with Australia and South Korea. Data in recent years show slight increases in year-to-year international services transactions between Canada and Asia until 2003, when receipts from Asia and payments to Asia both declined. In 2004, this decline was reversed as both categories increased significantly: receipts from Asia by 16% and payments to Asia by 12%. In 2008, both receipts and increased. Canada-Asia services trade is still relatively small when compared to merchandise trade.
Total Services (C$ millions) | |||
| Economy | Receipts | Payments | Balance |
| Australia | 968 | 598 | 370 |
| China | 1,154 | 1,558 | -404 |
| Hong Kong, SAR | 1,039 | 2,779 | -1,740 |
| India | 355 | 589 | -234 |
| Indonesia | 149 | 87 | 62 |
| Japan | 1,266 | 1,637 | -371 |
| Malaysia | 170 | 416 | -246 |
| New Zealand | 163 | 104 | 59 |
| Pakistan | 107 | 52 | 55 |
| Philippines | 192 | 263 | -71 |
| Singapore | 379 | 1,120 | -741 |
| South Korea | 757 | 431 | 326 |
| Taiwan | 392 | 593 | -201 |
| Thailand | 85 | 180 | -95 |
| Vietnam | 55 | 45 | 10 |
| Total | 7,231 | 10,452 | -3,221 |
Source: Adapted from Statistics Canada, National Accounts 376-0036 http://cansim2.statcan.ca/cgi-win/cnsmcgi.pgm?Lang=E&RootDir=CII/&ARRAY_VREL=3760036&PortalID=3764&ResultTemplate=V3764 October 11, 2011.
Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy this material and/or re-disseminate the data, in an original or modified form, for commercial purposes, without the expressed permission of Statistics Canada. Information on the availability of the range of data from Statistics Canada can be obtained from Statistics Canada’s Regional Offices, its toll-free number 1-800-263-1136 and its website: www.statcan.ca.
Travel Services
Canada experienced a surplus in travel services trade with Asia in 2008. China is our top Asian partner in travel services trade – in 2008, receipts from China accounted for 18% of Canada’s receipts from Asia while Canada purchased 25% of its Asian travel services from China. Of note is Canada’s travel services trade relationship with South Korea: in 2008, Canada exported almost four times the value of travel services as it imported, primarily due to South Korean students attending short-term courses in Canada. Canada also experienced healthy surpluses with Japan, Hong Kong and Australia.
| Travel Services (C$ millions) | |||
| Economy | Receipts | Payments | Balance |
| Australia | 407 | 271 | 136 |
| China | 521 | 459 | 62 |
| Hong Kong, SAR | 398 | 222 | 176 |
| India | 185 | 90 | 95 |
| Indonesia | 61 | 38 | 23 |
| Japan | 399 | 172 | 227 |
| Malaysia | 118 | 32 | 86 |
| New Zealand | 85 | 63 | 22 |
| Pakistan | 61 | 9 | 52 |
| Philippines | 98 | 139 | -41 |
| Singapore | 80 | 44 | 36 |
| South Korea | 317 | 83 | 234 |
| Taiwan | 156 | 45 | 111 |
| Thailand | 44 | 144 | -100 |
| Vietnam | 18 | 35 | -17 |
| Total | 2,948 | 1,846 | 1,102 |
Source: Adapted from Statistics Canada, National Accounts 376-0036 http://cansim2.statcan.ca/cgi-win/cnsmcgi.pgm?Lang=E&RootDir=CII/&ARRAY_VREL=3760036&PortalID=3764&ResultTemplate=V3764 October 11, 2011.
Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy this material and/or re-disseminate the data, in an original or modified form, for commercial purposes, without the expressed permission of Statistics Canada. Information on the availability of the range of data from Statistics Canada can be obtained from Statistics Canada’s Regional Offices, its toll-free number 1-800-263-1136 and its website: www.statcan.ca.
Commercial Services
Canada experienced a deficit in commercial services trade with Asia in 2008 due to the magnitude of the negative balance with Japan, which is once again our top Asian partner in commercial services trade. In 2008, Japan accounted for 17% of Canada’s receipts from Asia while Canada purchased over 34% of its Asian commercial services from Japan. Of note is Canada’s commercial services trade relationship with Indonesia: in 2007, Canada exported about 10 times as many services as it imported. Canada also experienced a healthy surplus with Australia, South Korea and New Zealand. Other than Japan, Canada experienced negative balances with six other economies.
| Commercial Services (C$ millions) | |||
| Economy | Receipts | Payments | Balance |
| Australia | 315 | 221 | 94 |
| China | 243 | 322 | -79 |
| Hong Kong, SAR | 152 | 190 | -38 |
| India | 74 | 262 | -188 |
| Indonesia | 48 | 5 | 43 |
| Japan | 276 | 775 | -499 |
| Malaysia | 23 | 120 | -97 |
| New Zealand | 60 | 17 | 43 |
| Pakistan | 10 | 11 | -1 |
| Philippines | 36 | 24 | 12 |
| Singapore | 112 | 152 | -40 |
| South Korea | 140 | 49 | 91 |
| Taiwan | 115 | 78 | 37 |
| Thailand | 16 | 5 | 11 |
| Vietnam | 18 | 4 | 14 |
| Total | 1,638 | 2,235 | -597 |
Source: Adapted from Statistics Canada, National Accounts 376-0036 http://cansim2.statcan.ca/cgi-win/cnsmcgi.pgm?Lang=E&RootDir=CII/&ARRAY_VREL=3760036&PortalID=3764&ResultTemplate=V3764 October 11, 2011.
Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy this material and/or re-disseminate the data, in an original or modified form, for commercial purposes, without the expressed permission of Statistics Canada. Information on the availability of the range of data from Statistics Canada can be obtained from Statistics Canada’s Regional Offices, its toll-free number 1-800-263-1136 and its website: www.statcan.ca.
Transportation and Government Services
Canada experienced a substantial deficit in transportation and government services trade with Asia in 2008. Hong Kong is our top Asian partner in transportation and government services trade, accounting for 18% of Canada’s receipts from Asia while providing 37% of Canada’s transportation and government services imports from Asia. This is largely accounted for by transportation services. Japan is also prominent in this category, accounting for 22% of Canada’s receipts from Asia and providing about 11% of Canada’s transportation and government services imports from Asia. Canada also experienced significant negative balance with Singapore.
| Transportation and Government Services (C$ millions) | |||
| Economy | Receipts | Payments | Balance |
| Australia | 246 | 105 | 141 |
| China | 390 | 777 | -387 |
| Hong Kong, SAR | 489 | 2,367 | -1,878 |
| India | 96 | 237 | -141 |
| Indonesia | 40 | 43 | -3 |
| Japan | 590 | 690 | -100 |
| Malaysia | 29 | 263 | -234 |
| New Zealand | 18 | 24 | -6 |
| Pakistan | 35 | 33 | 2 |
| Philippines | 58 | 100 | -42 |
| Singapore | 187 | 925 | -738 |
| South Korea | 300 | 299 | 1 |
| Taiwan | 121 | 471 | -350 |
| Thailand | 26 | 31 | -5 |
| Vietnam | 19 | 5 | 14 |
| Total | 2,644 | 6,370 | -3,726 |
Source: Adapted from Statistics Canada, National Accounts 376-0036 http://cansim2.statcan.ca/cgi-win/cnsmcgi.pgm?Lang=E&RootDir=CII/&ARRAY_VREL=3760036&PortalID=3764&ResultTemplate=V3764 October 11, 2011.
Statistics Canada information is used with the permission of Statistics Canada. Users are forbidden to copy this material and/or re-disseminate the data, in an original or modified form, for commercial purposes, without the expressed permission of Statistics Canada. Information on the availability of the range of data from Statistics Canada can be obtained from Statistics Canada’s Regional Offices, its toll-free number 1-800-263-1136 and its website: www.statcan.ca.
Total Services
Canada's Market Share in Asia
Canada’s market share in Asia represents 0.9% of total imports in 2010.
Asia's Market Share in Canada
The Asia Pacific region’s share of Canadian import remained steady last year at 20.6% of the total. Overall, the East Asian region captured 16.9% of Canada’s total imports, more than the 15% share of Europe in 2010. Chinese imports to Canada, increased by $4.7 billion between 2009 and 2010, capturing half of all Canadian shipments from Asia. To some extent, the steady increase in Chinese imports is due to our other major Northeast Asian trading partners – South Korea, Taiwan and Japan – relocating their production facilities to China. Though the majority of Canadian imports are sourced from the United States, Asia as a region captures the largest proportion – 42% – of non-US Canadian imports.
| Asia’s Market Share in Canada in 2010 | |||
| 2009 Canadian Imports (C$millions) | 2010 Canadian Imports (C$millions) | 2010 Proportions of Total Canadian Imports (%) | |
| Australia | 1,625 | 1,616 | 0.40 |
| Bangladesh | 808 | 835 | 0.21 |
| China | 39,655 | 44,405 | 11.03 |
| Hong Kong, SAR | 363 | 369 | 0.09 |
| India | 2,003 | 2,123 | 0.53 |
| Indonesia | 1,009 | 1,259 | 0.31 |
| Japan | 12,350 | 13,394 | 3.33 |
| Malaysia | 2,314 | 2,275 | 0.56 |
| New Zealand | 454 | 447 | 0.11 |
| Pakistan | 242 | 271 | 0.07 |
| Philippines | 736 | 889 | 0.22 |
| Singapore | 1,148 | 1,136 | 0.28 |
| South Korea | 5,931 | 6,143 | 1.53 |
| Sri Lanka | 116 | 128 | 0.03 |
| Taiwan | 3,344 | 3,985 | 0.99 |
| Thailand | 2,299 | 2,406 | 0.60 |
| Vietnam | 1,054 | 1,172 | 0.29 |
| Total | 75,451 | 82,853 | 20.57 |
Source: Trade Data Online. Industry Canada. 10 March 2011. http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home
Reproduced with the permission of the Minister of Public Works and Government Services Canada.
Canada's Merchandise Trade with Asia Pacific
The composition of Canada’s imports from Asia is essentially similar to Canada’s imports from the rest of the world, concentrated in the automotive and electronics sectors. Our exports to Asia feature a higher degree of concentration, and they are more heavily commodity-based, than are our exports to the rest of the world. Coal, oils, metals and wood and woodpulp items dominate, followed by agriculture products.
| Canada’s Merchandise Trade with Asia Pacific, 2010 | ||||
| Canadian Imports from Asia | Canadian Exports to Asia | |||
| Merchandise Classification | % | Merchandise Classification | % | |
| 1 | Electrical machinery and equipment | 21.44 | Mineral fuels, oils | 11.88 |
| 2 | Boilers, mechanical appliances, etc. | 17.27 | Woodpulp; paper or paperboard scraps | 9.51 |
| 3 | Motor vehicles, trailers, bicycles, motorcycles | 11.00 | Ores, slag and ash | 7.42 |
| 4 | Furniture and stuffed furnishings | 4.03 | Oil seeds and misc. fruit, grain, etc. | 7.35 |
| 5 | Toys, games, sports equipment | 3.98 | Wood and wood articles, charcoal | 5.68 |
| 6 | Knitted or crocheted apparel | 3.90 | Boilers, mechanical appliances, etc. | 5.63 |
| 7 | Woven clothing and apparel articles | 3.61 | Cereals | 4.35 |
| 8 | Iron or steel articles | 3.38 | Meat and edible meat offal | 4.25 |
| 9 | Optical, medical, scientific, technical instrumentation | 2.71 | Fertilizers | 3.84 |
| 10 | Plastic and plastic articles | 2.29 | Nickel and nickel articles | 3.59 |
| Top 10 as % of total from Asia | 73.59 | Top 10 as % of total to Asia | 63.50 | |
| Asian Imports as % of Cdn Total | 15.24 | Asian Exports as % of Cdn Total | 6.45 | |
Source: Trade Data Online. Industry Canada. 12 April 2011. http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home
Reproduced with the permission of the Minister of Public Works and Government Services Canada.
Notes:
1. The table is based on Harmonised System (HS) codes at the 6-digit level. Commodities are assigned these codes in order that accurate trade records can be kept, tariffs collected appropriately, customs procedures followed, and so forth. The HS system of codes, at its most disaggregated, assigns a 10-digit code to a given item. As the degree of aggregation increases, the number of digits in the code decreases. Thus, for example, the 6-digit HS code assigned to a motor vehicle with a spark-type ignition and a cylinder capacity of more than 3000 cc is 870323. The 2-digit HS code (in this case it is 87) includes not only this type of vehicle, but also many other types of vehicles and a wide variety of vehicle accessories and parts. To learn more about the HS Code system used by Statistics Canada go to http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/h_00048.html.
2. For the purposes of this table, Asia is defined as: Australia, Bangladesh, Bhutan, Brunei, Cambodia, China, East Timor, Hong Kong SAR, India, Indonesia, Japan, Macau, Malaysia, Maldives, Mongolia, Myanmar, Nepal, New Zealand, North Korea, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam.
The composition of Canada’s imports from Asia is essentially similar to Canada’s imports from the rest of the world, concentrated in the automotive and electronics sectors.
Canada's Bilateral Trade with Asia Pacific, Latest Year-to-Date
In the first nine months of 2011, Canada’s trade with the 17 major economies in Asia increased 13.4% over the same period in 2010.