Having already reached a free trade agreement with the European Union and a revised deal that preserved the three-party Nafta, Canada has shifted more attention across the Pacific as it pursues growth opportunities in what is the world’s largest, most populous and fastest–growing region.
While China’s economy still dominates in Asia, Japan has exhibited a fresh commitment to restart its stagnant economy and India looks set to eclipse those two economies in a few years.
“For the first time, there’s a genuine appreciation that the center of gravity has shifted from the Atlantic to the Indo-Pacific. Therefore, we must get it right in Asia,” Canada India Business Council President and CEO Kasi Rao said.
Amid the fast-changing landscape in global trade, Canada’s government wants to double its overseas exports by 2025.
“Asia is a key market in realizing these goals. Engaging with the different markets in Asia is a long-term commitment and we are investing heavily in terms of time, human resources and capital,” Canada’s Chief Trade Commissioner Ailish Campbell said.
Tasked to help Canadian companies access overseas markets, the Trade Commissioner Service (TCS) has made progress over several years. But, it still has much work to do in helping Canadian firms expand Canada’s trade with the rest of the world.
In 2000, the U.S. accounted for about 76% of Canada's trade activities, with Asia–Pacific accounting for only 10%. In 2018, the figure for the U.S. shrank to 63%, while that of Asia–Pacific grew to 17%.
Also, Canada’s trade with Asia-Pacific is expected to expand even more rapidly because of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has come into effect in Australia, Brunei, Canada, Japan, Malaysia, New Zealand, Singapore and Vietnam, among others. It also has a free trade agreement (FTA) with South Korea.
“Our research has shown that Canadian companies are much more confident in choosing a country if it is covered by a free trade agreement. It gives them a lot of comfort if there is an understanding of how trade will be done and how tariffs will be applied,” Export Development Canada CEO Mairead Lavery said.
Business Council of Canada Vice President for International Trade Brian Kingston agreed but further clarified, “These trade deals are not the be all and end all. Rather, they are the government’s measures that pave the way for Canadian companies and nudge them in the right direction. FTAs provide focus on opportunities in markets that Canadian companies otherwise might not have thought of.”
Canada also hopes that the CPTPP will attract more inward investment.
“Investors can secure preferential access to Canada’s network of 14 free trade agreements. This makes Canada an even more ideal location for a North American office,” Campbell said.
Within the vast country, Canada’s provinces present various opportunities that have drawn in certain investors. British Columbia and Nova Scotia remain the preferred destinations for Asian investors, particularly Chinese investors, while Saskatchewan attracts Indian business, which accounts for one-third of bilateral trade.
As the location of country’s political and financial capital, the province of Ontario is first-in-mind when it comes to investment, whether across the southern border or the Atlantic and Pacific oceans.
“Companies are naturally drawn to Ontario because of its steady pipeline of diverse talent, world-class universities and colleges and incubators,” said Todd Smith, who led Ontario's Ministry of Economic Development, Job Creation and Trade and organized several road shows across Asia to directly promote the province.
“The message is simple and clear: We are open for business,” Smith said.