By Carlo Dade
In the Vancouver Sun

Dec. 23, 2014


 

The most important impact of the Canada-South Korea trade agreement signed this year arguably will be in Asia, not here at home, and that is not a bad thing.

Given the trouble that Canada has had in opening itself to Asian investment, in moving food across the Pacific or even in simply building the infrastructure to get the commodities that Asia wants from us out of the ground, finally signing an agreement with an Asian economy — and especially the fourth-largest economy — may well be enough to change the channel for Canada in those markets.

The agreement, which takes effect Jan. 1, 2015, sends a signal that Canada may not be a lost cause after all.

Ecuador is the only remaining country touching this side of the Pacific Ocean without at least one trade agreement with an Asian economy — a distinction it once shared with Canada.

Other countries are further advanced. Chile has seven agreements across the Pacific, Peru has five and the U.S. three. Worse, a major competitor for Asian markets, Australia, has a dozen agreements in place with Asian economies and will add Japan and China soon. There is a vivid message in the fact that all our competitors, major and minor, have multiple agreements across the Pacific.

Building trade with Asia is difficult. Willingly ceding advantages like lower tariffs on commodities, easier movement of business people and investment to our competitors makes matters worse. Simply regaining a level playing field for Canadian exporters in Korea is an immediate win for all of Canada.

But that is only part of the story.

It is significant, and a coup for the federal government, that it was able to move the agreement through Parliament in one sitting, without the histrionics and cheap political theatre that slowed previous agreements. Those previous battles gave Canada a bad reputation in foreign capitals and trade centres — a point that is missed by the peanut gallery in parts of our country who claim that it is only Canada’s lack of interest in the United Nations that has tarnished the country’s reputation abroad. Especially in Asia, a willingness to do business matters, too.

The opposition’s helpful proposed amendments on this treaty, and the fact that our legislators passed the agreement with Korea faster than the U.S. did, reinforce the message that Canada is serious about trade.

All this has been a long time coming.

How much being late to the game will cost is difficult to tell. In areas such as beef and pork exports, it will likely cost us dearly. With a year’s head start, the Americans are well entrenched. Australia would have been too, if their agreement, which they ratified in September, had not got stuck behind debates in the Korean Congress over the April sinking of the MV Sewol passenger ferry. That prolonged debate caused a backup of 92 bills.

Such luck is not an ideal strategy to avoid falling further behind. Canada would do well to reallocate negotiating resources away from trade talks that have gone nowhere with the Caribbean common market, the Dominican Republic and Central America and focus instead on Asia and countries that matter for our prosperity.

Once we sign agreements, more resources for trade promotion and to support small and medium businesses to export are also needed. The government will have to spend real money to match what our competitors are investing to take advantage of their new agreements. This has been a crucial missing ingredient in what has otherwise been a good trade strategy. It is a mistake that can be corrected here along the lines of other steps the government has recently taken, such as improving co-ordination among trade promotion agencies.

The government has invested resources in trade-related infrastructure with the replenishment and extension of the National Building Canada Fund. The leaders of the three westernmost provinces also met Nov. 4 with heads of industry to discuss infrastructure investments needed to move products to Asia. The state of our trade infrastructure, while not great, is still arguably better than most of our competitors. Continuing to build on this advantage will be important for success in Asia.

So, while this is a moment for congratulations, it is no time for complacency.

Carlo Dade is the director of trade and investment policy at the Canada West Foundation.