Asia is Canada’s new trade frontier

Canada is eyeing a free trade deal with the ASEAN bloc, as US president Donald Trump continues to threaten to tear up the North American Free Trade Agreement (NAFTA).

A deal with the ASEAN bloc, which includes Thailand, Malaysia, Singapore, Indonesia, Philippines, Brunei, Vietnam, Laos, Burma and Cambodia, would give Canada access to 650 million consumers.

“Expanding into the Southeast Asia region will help Canadian-owned businesses access one the world’s fastest-growing markets,’’ Trade Minister Jim Carr said as he headed out to Thailand and Singapore for “exploratory’’ talks.

Ottawa is also eying free trade with Argentina, Brazil, Paraguay and Uruguay, which form the Mercosur bloc, and has suggested a trade deal with China is also in the works, which if successful would make Canada the first Western nation to do reach a free trade deal with Beijing.

Canada and the EU provisionally entered into a free trade pact last September, as NAFTA appeared to falter and the US exited from the Trans Pacific Partnership.

Canada is also trying to revive its trade deal talks with India.

India is one of the world’s fastest-growing economies, displacing France for sixth place among the world’s nations last year, yet trade with Canada remains sluggish. In 2012, the former Conservative government set a goal of increasing two-way trade to $15 billion by 2015. In 2017, it was about $8.4 billion.

For eight years, Canadian and Indian officials have been in talks to work towards a free trade agreement. The Conservative government said in 2011 it hoped to conclude an economic partnership agreement with India in 2013. Five years later, there is still no agreement in place.

Stewart Beck, president and CEO of the Asia Pacific Foundation of Canada told Mata Press Service: “With one billion new middle-class consumers, major infrastructure investments, continued economic growth, and unprecedented regional economic integration, Asia is on track to becoming a global powerhouse.”

“The growing significance of the region – combined with the uncertainty we’ve been seeing in the global trading system thanks in large part to the Trump administration – underscores the need for Canada to strategically deepen and diversify its partnerships in the region, of which ASEAN is a critical part,” said Beck, who was the former Canadian High Commissioner to India.

“As a group, ASEAN is the seventh-largest economy in the world and Canada’s sixth-largest merchandise trading partner. The region represents more than 640 million people with a combined economy of C$2.6 trillion. So, the economic potential for Canada is clear. What’s not so clear is Canadians’ willingness to grasp the opportunity.”

“At the Asia Pacific Foundation of Canada, our national opinion polling indicates that Canadians are increasingly aware of the importance of trade and investment relationships with Southeast Asia. Our 2018 NOP found that Canadians show strong and growing support for a potential free trade agreement with ASEAN, with 63% showing support compared with less than 40% in 2014. That’s higher than the support for a potential FTA with China, already our second-largest trading partner, at 59%.”

Beck said he is encouraged by Minister Carr’s overtures to ASEAN.

“I think it signals to Asia, and to stakeholders here in Canada, that the government is committed to deeper and wider strategic engagement in a region that is going to be critical to Canada’s future economic prosperity.”

Meanwhile, the Canada-ASEAN Business Council (CABC) has release The Canada Advantage, a report highlighting the benefits for ASEAN businesses through increased economic engagement with Canada.

The Canada Advantage is a collaboration between the CABC, the University of British Columbia (UBC) and the National University of Singapore (NUS). The report seeks to address how ASEAN-based companies can benefit from the Canada trade opportunity, and specifically from the implementation of an ASEAN-Canada Free Trade Agreement (FTA).

The report builds on the momentum of The ASEAN Advantage, an earlier CABC joint report, which estimated that an ASEAN-Canada FTA can add an additional CAD$11 billion to ASEAN-Canada bilateral trade by 2027, compared to the baseline case.

The Canada Advantage features an analysis of eight priority sectors in which Canada offers strategic advantages to ASEAN firms that may be looking to expand or invest abroad: Automotive, Oil and Gas, Cleantech, ICT, Agri-food, Banking and Finance, Aerospace and Aviation, and Biopharmaceuticals.

The report highlights that Canada offers a business climate with low business costs and more robust investor protections relative to most other G7 economies; this presents attractive opportunities for ASEAN-based firms looking for a gateway to the North American market.

According to the report, Canada has the strongest cost advantage relative to the US among G7 countries. It has ranked 2nd best in the G7/G20 for favourable business environment over 5 years. It also offers high level of investor protection, ranking 2nd in the G7 and 7th out of 127 countries.

The Canada Advantage report goes beyond the two-way economic benefits and examines fascinating stories of how ASEAN businesses from various industries are already engaging with Canada, and how an ASEAN-Canada FTA would meaningfully grow opportunities further.

Wayne Farmer, president of the CABC, said, “There has never been a more important time for ASEAN and Canada to seize the moment.”

“The foundation for the trade relationship is solid—ASEAN and Canada are two trade-dependent regions with complimentary economies and deep people-to-people ties,” he said.

Key ASEAN-Canada trade facts:

• Canada is forecasted to have the highest real GDP growth in the G7 in 2017-2019.

• Canada has the highest level of R&D investment in Higher Education across the G7.

• ASEAN remains a strategic trading partner for Canada – ASEAN is Canada’s sixth-largest trading partner.

• ASEAN-Canada trade relations continue to grow: In 2017, ASEAN-Canada trade stood at CAD$23.2 billion, increasing from CAD$21.6 in 2016.

• Canada has diplomatic representation in all ten ASEAN nations, including a dedicated Canadian Ambassador to ASEAN, based in Jakarta.