Aggressive Action Needed to Promote Canada's Trade Relations with Asia

Authors: Peter Barnes, Paul Lee, Isabelle Courville

2010 is a milestone year and government leaders will be pressed to present a new vision at this month’s APEC Summit in Japan. In 1994, Canada was among the 18 economies that established the Bogor Goals, a bold vision to achieve free and open trade and investment in the Asia Pacific. The target was 2010 for industrialized economies and 2020 for developing nations. As a founding member, Canada was seen as an engaged Asia Pacific player.

Fast-forward 16 years and Canada is no longer in that privileged position. APEC’s dominance as the premier Asia Pacific trade and investment forum is challenged by emerging regional platforms of which Canada is not a participant. Examples include the Transpacific Partnership (TPP), a trade agreement being expanded to include the U.S. and Australia, and the East Asian Summit, a group of 16 including India, which has opened its doors to the U.S. and Russia.

The TPP has potential to develop into a Free Trade Area of the Asia Pacific (FTAAP), envisioned as an arrangement between 21 APEC economies. A consensus on the need for FTAAP to defend and facilitate open and deeper economic ties has evolved amid the recession and threats of global protectionism. The TPP is seen as a real building block towards FTAAP and in addition to Canada, Japan, China and the Philippines have expressed interest in joining the partnership before negotiations conclude next year.

Major shifts are happening and Canada must act strategically. As representatives appointed by the prime minister to the APEC Business Advisory Council (ABAC), a group established to provide private sector perspectives to APEC, we feel that Canada must invest deeply in its Asia Pacific future, specifically by maximizing participation in APEC.

It is in Canada’s interest to ensure that any new vision will boost APEC’s efficiency and effectiveness as a forum for trade and investment facilitation and liberalization. The Bogor Goals continue to be relevant but more needs to be done in light of changes in the global economy since 1994. Tariffs are no longer the only barrier to greater trade and investment. Non-tariff concerns including services and capital-flow restrictions, operating and supply management and provisions such as Buy America challenge efforts to promote deeper regional economic linkages.

Moving forward, Canada should take an active role in shaping the components of the new vision.

First, Canada should continue to push aggressively for FTAAP, a potential vehicle to reduce regional barriers to the flow of goods, services, capital and people. Canada does not have a free trade agreement in Asia and entering a multi-party arrangement could allow us to leapfrog ahead. APEC is the only transpacific forum of which Canada is a member and leaders have instructed APEC officials to explore how FTAAP can be implemented.

Second, ensuring energy security throughout the region is an initiative gaining prominence. Canada has a strong interest in this issue which includes energy exports and the trade of environmental goods and services. We should use APEC and its channels to share our expertise and resources to ensure that Canada’s interest are represented.

Lastly, Canada must honour its commitments and show colleagues that it is interested in building linkages with Asia. An example is the APEC Business Travel Card (ABTC), a trusted traveler program similar to Nexus that facilitates regional business travel. Canada announced its participation in 2008. ABTC fast lanes have been introduced at Canadian airports but the cards are not yet available for Canadian business persons.

APEC and ABAC provide an avenue to build relationships and shape the regional agenda but we need to think both constructively and concretely on what our aims and objectives are in Asia, and how government and business can work together to collectively strengthen Canada’s Asia presence.

Peter Barnes, former President and CEO, Canadian Wireless Telecommunications Association, Isabelle Courville, President, HydroQuebec TransEnergie, and Paul Lee, Managing Partner, VanEdge Capital are Canada's ABAC representatives. The Asia Pacific Foundation of Canada is the ABAC Canada Secretariat. www.asiapacific.ca

This was published in the Financial Post on November 9, 2010.

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