Asia Won't Wait
Western Canadians increasingly see the almost explosive growth of Asian economies as the solution to waning export prospects in our traditional American market. The combination of growing Asian demand for natural resources and the vast resource base in western Canada is seen as the key to sustained prosperity. However, it may be a difficult key to turn.
Faced with what is likely to be a prolonged economic downturn in the US, growing turmoil over pipeline access to continental markets (witness the recent postponement of the Keystone XL pipeline decision), a glut of shale gas and growing economic protectionism (often wrapped in the green flag of environmentalism), western Canadians, and indeed all Canadians, have every reason to be concerned about our singular reliance on American markets.
Relying on a single buyer is always a risky strategy and it becomes even more so when that buyer encounters the problems that Americans face. There is, then, a growing push for market diversification, and in the case of western Canadian resources, diversification means opening up markets in Asia. Our salvation will not be found in Europe, even though incremental increases in trade may be possible, and it will not be found in Russia or South America, which are far more likely to be fierce competitors. For western Canadians, Asia is really the only game in town.
And here, there is a strong sense of optimism across the region. In the face of rising Asian demand, western Canadians are quick to say that we have what the world wants—natural resources and food—and thus believe the world will beat a path to our door. When we put our huge resource base up against Asian demand that is growing almost exponentially, it is easy to assume that our future economic prosperity is assured.
However, the assumption that growing Asian demand will offset declining American demand ignores a host of troublesome realities.
At present, Asian markets are largely hypothetical because we have no way of moving much of our energy production to the west coast and beyond. There are no pipelines to carry oil sands production to the west coast, no natural gas pipelines from north eastern BC or Alberta and no liquefaction capacity on the west coast. We have bits and pieces of the needed energy infrastructure, but nothing of the scale needed if Asian markets are to replace waning American demand.
Nor have we come to grips with the distance of many Asian markets from western Canadian suppliers. India and China are not exactly close, and there are other natural resource suppliers that are closer. On geographic grounds alone, we will not be the supplier of first choice.
It is also not evident, and despite a large Asian Canadian population, that we are well equipped with the soft skills we will need to crack Asian markets. In many ways, Canadian exporters have been spoiled by our location next door to a huge American market that shares the same language, legal systems and cultural norms, and where many if not most exports take place within the same firm.
This experience does not equip us well to penetrate Asian markets where very significant language, cultural and legal barriers exist. We too easily assume that because “we” have what “they” want, we will be able to conduct any negotiations on our terms.
In short, we take a false sense of security from our vast asset base. We may have what the world wants and needs, and specifically what Asian markets want and need, but we do not have a monopoly on supply. Far from it.
All of this means that rather than counting on the world beating a path to our door, we will have to do much of the beating. We will have to figure out quickly how to get our natural resources to and off the west coast. And, we will have to do so within an environmental management system that is world class and that is seen by others to be world class.
Unfortunately, our inbred Canadian sense of complacency leads us to believe that there is no urgency, that we can move at our own leisurely pace and that Asian markets will wait for us. However, we ignore at our peril that other countries are queuing up to meet Asian demand and our window of opportunity will not remain open forever. Asia will not wait.
If you believe, as I do, that market diversification is essential for sustainable prosperity in western Canada, then there is no avoiding the conclusion that the routes to such diversification all lead through Asia. But, Asia will not come to us; we will have to go to Asia, and soon.
Dr. Roger Gibbins is the President and CEO of the Canada West Foundation. Canada West Foundation is the only think tank dedicated to being the objective, nonpartisan voice for issues of vital concern to Western Canadians.