By Carlo Dade
In Embassy

Nov. 27, 2013


One interesting observation particular to Canada’s Asia focus is that for all the talk of diversification, a more cynical take is that what it really boils down to is a desire to replace, or balance, dependency on the United States with dependency on China.

But, to be clear, this observation is not to say that China is unimportant or that Canada should not focus significant attention and resources to that market. Hopefully that goes without saying.

The issue is whether Canada is focused too narrowly on one objective, China, and is missing other opportunities. There is also the question as to whether a narrow focus on Asia, defined as China, is in fact the best way to access the opportunities and markets that are key to Canada’s future long-term prosperity.

Those opportunities and advantages go beyond China and even beyond Asia. Given where Canada sits both geographically and within the network of trade agreements that it has already signed, as well its close, and in some ways unique, relations with Australia and New Zealand, the focus should logically be the wider Pacific.

After all, the biggest potential trade deal for Canada, and arguably globally, is the Trans-PACIFIC Partnership founded by Singapore, Brunei, New Zealand and Chile. This is, and has been since its inception, a Pacific agreement now being negotiated among 12 countries of which Canada has trade agreements with four; all of whom happen to be on this side of the Pacific, not the Asian side.

Then there is the example of the Pacific “pivot,” the 2011 revamping and refocusing of US foreign policy by then-secretary of state Hillary Clinton that continues to guide US foreign policy. The focus of the strategy is the US relationship with Asia, but at no point has the US defined its strategy as being solely that. It has always included the realization that this strategy, and the US, is grounded in the Pacific and that leveraging and incorporating the wider array of relationships on both sides of the ocean is crucial.

In seeking to reach out across the Pacific, Canada is late to the game. A quick glance down this side of the Pacific is illustrative. Every single country on this side of Pacific, with two exceptions, has at least one free trade agreement with an Asian country. The exceptions are Ecuador and Canada.

So there is obvious need to catch up. The urgency, though, is such that Canada, more so than others on this side of the ocean, needs to leverage all of its available resources and avenues. And that means looking to join successful regional Asian-focused initiatives like the Pacific Alliance, rather than watching from the sidelines.

Data on Canada’s trade in services makes this point. The four countries of the Pacific Alliance are a larger market for services than is China, and as a trade bloc the group has over half a dozen agreements with Asian economies.

It also means thinking about a Pacific strategy, a detailed and long-term description of priorities, how they will be achieved, and what resources will be applied.

In developing its Asia strategy, the Australian government produced a 320-page white paper. Given the current track record in Ottawa on developing foreign strategies of any sort—at least ones that are shared publicly through white papers or anything of substance—10 pages, let alone 300, may be asking too much.

There is thus need and room for the provinces to step up and step out to do more. With British Columbia Premier Christy Clark in the midst of a tour of Asia, Saskatchewan Premier Brad Wall and Alberta Premier Alison Redford having recently returned from similar trips, and Alberta Energy Minister Ken Hughes having just signed a sustainable energy pact with China, the Western provinces are giving Ottawa a run for its money on the foreign trade front.

What is not asking too much from the federal government is to focus the limited resources of the trade side of the Department of Foreign Affairs, Trade and Development. That means agreements with Asia, and building on the bilateral agreements that Canada has on this side of the ocean through joining the Pacific Alliance. It also means dropping agreements that will not matter, like the Dominican Republic, Central America and especially CARICOM.

For Western Canada particularly, the question is when we will start to see trade agreements that really matter. In any approach to the Pacific, a crucial element will be the demonstration of commitment and seriousness.

A small but important success of Canadian engagement with Asia has been the continued and persistent flow of research, convening of experts, and publications in Asian media by the Asia-Pacific Foundation of Canada. The investment in an institution guaranteed to survive changes in government and funding whims by federal bureaucracies has been a rare beacon of stability and seriousness in Canadian foreign policy.

The most crucial benefit of a Pacific strategy, however, is that it should force a revitalization of Canada’s most important trade and strategic relationship, North America and NAFTA. With the focus on Asia the importance of NAFTA is too often not present in the discussion or thinking. Yet, this really has to inform everything that Canada does, and a Pacific strategy, more so than an Asian strategy, should do that naturally.

Carlo Dade is the Director of the Centre for Trade & Investment at the Canada West Foundation. The Canada West Foundation is the only think tank with an exclusive focus on policies that shape the quality of life in western Canada.