By Carlo Dade
In the Financial Post
March 14, 2014
Canada’s landing of its first Asian trade agreement is rightly being cheered in western Canada, especially amongst those worried that the Canada-Honduras trade deal was going to be the only news out of Ottawa this spring.
The agreement with South Korea will immediately level the playing field for Canadian firms in the booming Korean market. The U.S. got a head start by striking a trade agreement two years ago, and it will take time and effort to win back market share in beef and other sectors. But the Canada-Korea agreement announced this week prevents the same thing happening with Australia, which just signed an agreement with Korea in December 2013.
Given the damage done to Canadian exports by the Americans and with the Australia-Korea agreement threatening to double the damage, Canada had no choice but to conclude negotiations quickly. This is something critics of the agreement conveniently missed, but the government grasped keenly.
Canada was going to get more or less the same deal as Australia, months or years of additional negotiations would not change this; it would only allow Australia to pull further ahead.
The agreement is, however, only the first step of a journey that will be many kilometres of hard work and persistent effort.
The next step is to make sure we do not fall further behind the U.S. and especially Australia, which has a bit faster and easier route to implementing the agreement than does Canada.
The Canadian government will have to move quickly to publish the text of the agreement to give the government opposition and all Canadians time to peruse the fine print. The Australians were able to publish all 1,800 pages of their agreement with Korea roughly two months after signing; that should be our goal. This will soften a major criticism from the deal’s opponents about paucity of information and delays in the release of details. Regardless of whether the criticism is valid, early release of the full text and supporting analysis and research can only help expedite things.
The opposition, on the other hand, will have to be cognizant of the ticking clock that has the Americans becoming further entrenched in the market and Australians digging in with them. Yes, tough questions will have to be asked, but using parliamentary hearings to bring in every single critic from every union hall in every riding to give the opposition political cover is too high a price to pay. It also sends the wrong signal to the rest of Asia. Tough questions are fine and necessary, but having the same questions asked five or six times each in both official languages is not.
There is also a need for a “Korea strategy.” How do we marshal the resources that we have to shoulder our way back into the market? On this point, the government has a mandate to do the convening.
Governments sign trade agreements but success or failure rests on the private sector. Governments negotiate; business trades.
For the agreement to be successful, business has to not only fight to get back market share but also seek out the new opportunities that will arise. Governments can help by providing more and better information to those businesses that are not already trading. This is especially true in a market that is far away enough not to have a strong Canadian presence but well known enough for us to make assumptions.
And there are clearly opportunities for western Canada in this market.
Beyond the obvious agriculture and eventual energy plays, an analysis of Canada-Korea trade by the Korean Institute for International Economic Policy using trade specialization indices noted that there is a natural complementarity in the range of secondary manufactured goods that Korea exports and the range of natural resources and specialized manufactured goods, that Canada exports, especially in aviation and rail and also agricultural related bio-tech. Autos were never an issue in this equation and have always been a red herring, that sub-compact sailed, or pulled out of the parking lot, ages ago.
Plenty of other items are viable trade possibilities for all of Canada not just the west. But, for the West, a lot of what we can sell abroad are also things that the Americans and, more troubling, the Australians also export.
So, congratulations to the government for reaching the deal. Now, the hard work begins.
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.