Canada’s ‘Pivot’ to Asia Requires a Deeper Knowledge of the Region

Author: Stewart Beck

Canada has been fortunate to have traditional trade partners in North America and Europe as sources of growth and stability, and these partnerships must be maintained. But with the wave of deeply isolationist anti-trade rhetoric sweeping Europe and the U.S., the Asia Pacific ­­– with its fast-growing economies and expanding middle classes – makes more sense for Canada and Canadians with every new dispatch from @realDonaldTrump.

And so when I consider the forward-thinking, future-proofing recommendations for Canada contained within the latest bundle of bold ideas from Finance Minister Bill Morneau’s Advisory Council on Economic Growth, the most commonsensical is the foundational recommendation that Canada organize its economic policy around a pivot to Asia, more specifically as a central global trading hub bridging Asia and Europe.

This is a national policy ‘pivot’ that the Asia Pacific Foundation of Canada (APF Canada) has long supported, impressing upon Canadians – and Canadian businesses – the vast and growing opportunities in the established and emerging economies of Asia.

Morneau’s Council – led by Dominic Barton, the head of global consultancy McKinsey & Company and a member of APF Canada’s board – released its second salvo of recommendations on February 6. They focus on boosting innovation, trade, skills training, and developing specific sectors of the economy, including agriculture, renewables, mining, life sciences, advanced manufacturing, financial services, tourism, and education.

On the whole the Council’s recommendations will drive productivity, growth and inclusive prosperity, and support a Canada that is better equipped to participate fully and successfully in the evolving global economy in which legacy relationships are rocky, and future partnerships uncertain.

One of the specific policy directions the Council recommends, under the umbrella of “Positioning Canada as a Global Trading Hub,” is the creation of a mechanism it dubs, the “FutureSkills Lab.” Ostensibly, this arms-length organization would improve the “resilience” of Canada’s labour force and help it adapt to global competition and future technological change. Ambitious in its conception, the Lab would ultimately identify and co-finance training programs to help ‘upskill’ and ‘reskill’ Canadian workers to participate in the new economy. The Council recommends Ottawa earmark $100 million in each of the next five years for this endeavour.

But if the underlying objective of the Council’s “path to prosperity” is to truly position Canada as an effective trade bridge with Asia, the FutureSkills Lab must go one step further, and wholly support an ‘Asia Competence Centre of Excellence.’

This ‘Centre of Excellence’ would help Canada capitalize on the remarkable growth and transformation underway in the Asia Pacific and provide Canadians with the Asia-related skills and knowledge that will help us deepen our engagement with the region, and win support at home for much needed new policies and initiatives by all levels of governments.

By 2020, 1.7 billion people in Asia — or 54 per cent of the world's middle class — will represent 42 per cent of the world's total consumption. But the research and surveys conducted by APF Canada over the past 10 years indicate that there is a knowledge gap among Canadians regarding countries in Asia, and that few Canadians have been exposed to Asia or Asian business culture.

Our international competitors, including Australia, the U.K., New Zealand and the U.S., have strong domestic programs to support familiarity with the diversity of Asian cultures; knowledge about the region's economies, societies, and political systems; and, the ability to speak Asian languages. Canada’s proximity to the U.S. and cosy familiarity with European markets has left us at a critical disadvantage.

An ‘Asia Competence Centre of Excellence’ would help accelerate and solidify the pivot to Asia essential to Canada’s future economic prosperity. It would spearhead and support initiatives to help Canadians become more Asia competent, including:

  • introducing Canadian high-school and university students to the new career opportunities in Asia through curriculum enrichment and co-op/internship programs in Asia
  • providing federal and provincial government officials, Canadian corporations, and First Nations stakeholders with the skills and knowledge to effectively engage with partners in the Asia Pacific
  • encouraging Canadian businesses to take advantage of the Asian language and cultural skills of our Asian diaspora communities

In the first nine months of 2016, Canada’s trade with the 17 major economies in Asia increased by a mere 0.3% over the same period in 2015. In 2014, our market share in Asia represented just 0.9% of the region’s total imports (while roughly 22% of Canada’s total imports came from the Asia Pacific in 2015). Do these statistics paint a picture of a Canada-Asia engagement strategy on a growth trajectory?

We’ve also seen dramatic changes in our immigrant population over the last 25 years. Lead by China, India and the Philippines, our immigrant populations jumped by 318%, 265% and 358%, respectively, between 1990 and 2015. During that same period, incidentally, immigration from the U.K. dropped 12%. Are we successfully connecting with these natural allies, leveraging our diaspora communities to connect us economically and culturally to the new centres of global growth?

Certainly, as the Advisory Council on Economic Growth suggests, Canada must develop deeper trade links with the fast growing economies of Asia, invest in trade infrastructure to improve our access to global markets, support sectors were we have natural advantages, and assist our SMEs in scaling up and better engaging with Asia.

But to truly position Canada within the new global centre of gravity, we must first encourage and support a deeper knowledge and understanding of the region, its cultures, systems and politics. And that will demand the kind of focused and sustained initiatives that an Asia Competence Centre of Excellence can deliver.

This piece first appeared in The Globe and Mail on March 15, 2017.

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