Asian Trade is Key to Saskatchewan's Future

As Canada's new growth leader, Saskatchewan is witnessing an economic boom unlike any it has experienced in the postwar period. The province topped the GDP growth charts in 2011, and is expected to retain the top spot this year and next on the back of strong agriculture, mining and energy exports, and from robust investment and consumer spending.

A major reason for Saskatchewan's economic renaissance is Asia. The province's exports to Asia have nearly doubled in the past five years, with sales to China - valued at $1.7 billion in 2011 - leading the way. Saskatchewan accounts for less than five per cent of Canada's total output, yet produces 10 per cent of the country's total exports to China.

Saskatchewan's trade with India is even more remarkable, accounting for 35 per cent of Canada's exports to the country - well ahead of other provinces. Even in the case of Japan, which has had sluggish growth for the better part of two decades, Saskatchewan exports have expanded by 66 per cent in the past five years.

Indeed, Asian countries occupy four of the top five export destinations for the province (Indonesia is No. 5).

It goes without saying that Saskatchewan has the natural resources that Asia needs. Potash, wheat, canola, and pulses are prime examples. Energy is another Asia export opportunity that has barely been tapped. The recent signing of nuclear agreements with India and China open the door for uranium sales that could be worth billions of dollars.

But the importance of Asia for Saskatchewan goes well beyond the export of commodities. There is growing Asian investment interest in the province, not only to mine natural resources but to tap into the broader expertise this province has developed, especially in agriculture and agri-food, as well as in energy and mining technology.

Recent deals have included Mitsui's stake in a canola plant in Yorkton, the acquisition of a digital communications firm by India-based Kavveri Telecom, uranium-related investments by Mitsubishi and Japan Oil, Gas and Metals National Corporation, and an agreement with the China National Petroleum Corporation to develop natural gas and clean energy in Saskatchewan.

A major challenge facing the province is the need for skilled workers. After years of population decline, Saskatchewan is experiencing a steady increase in its workforce, driven by immigration. More than half of the province's new immigrants since 2008 are from Asia. Even so, the share of Saskatchewan residents of Asian ethnic background is well under one per cent, significantly lower than the national average.

Deep and growing institutional links exist between Saskatchewan and Asian countries. In October 2011, the University of Regina celebrated 30-years of partnership with Chinese counterparts. The University of Saskatchewan has been working with Chinese counterparts on clean coal technology, and recently announced graduate study opportunities for PhD students from six leading Chinese universities. There is also ongoing co-operation between Indian and Canadian researchers on synchrotron science.

But, even more can be done. If Saskatchewan is to avoid the pitfalls of many resource export-dependent jurisdictions, it has to foster economic activities that create higher value-added products and services that are not captive to commodity prices and which have a diversified customer base.

The current economic boom is an excellent time to begin this effort.

Rather than simply focus on the export of resources, Saskatchewan can justifiably tout its expertise in the development, management, technology, servicing, and oversight of resource industries as a whole, and turn these skills into globally competitive assets. By building a cluster of expertise around the themes of food security and energy security, Saskatchewan can get the attention of Asian powers in a way that few other jurisdictions can.

As ties between Saskatchewan and Asia grow deeper, it will be essential for the province to invest in greater Asia knowledge and capacity. This means more emphasis on teaching about Asia and Asian languages in the school system. It means building further cultural connections with Asia from the growing numbers of immigrants from Asian countries.

And it means a political commitment from all parties to engage with Asian counterparts on a consistent, long-term basis, and for leaders from all sectors across the province to develop their own Asia strategies.

Saskatchewan is on the rise. So is Asia. By fully understanding and exploiting the linkages between the two, the people of Saskatchewan will forge an even brighter future for themselves and for their province.

Yuen Pau Woo is President and CEO, Asia Pacific Foundation of Canada and Len Edwards is a Distinguished Fellow, Asia Pacific Foundation of Canada and formerly Deputy Minister of Foreign Affairs, Department of Foreign Affairs and International Trade Canada.

This Op-Ed originally appeared in the Saskatoon Star Phoenix on March 8, 2012.

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