The Provinces Reach Out To Asia

Close to 12 percent of Canada’s exports have been shipped across the Pacific to various Asian markets in 2013, up from 6.6 percent in 2006. More than 40 years after Pierre Trudeau’s Liberal Government proposed the “Third Option,” the 2008 financial crisis finally accelerated trade diversification away from the United States and towards emerging market economies. And with China and India being the largest emerging markets, it has come as no surprise that the federal government has now started to pay more attention to the Asian region.

The rationale for such a “pivot” is considerable. Rapid growth in Asia over the last few decades has brought hundreds of millions of citizens into a new middle class, which is expected to reach more than three billion people (66 percent of the global middle class) by 2030. The Asian region is already accounting for 32 percent of total global imports and 37 percent of the global gross domestic product. With the emergence of a new middle class in Asia with rising purchasing power the global pattern of trade and consumption will inevitably be changed and business opportunities will grow throughout Asia.

However, with major economic, social, and demographic differences between each province and territory, the opportunities offered by a rising Asia, vary significantly across Canada. For instance, Asia now absorbs close to 45 percent of British Columbia’s merchandise, up from 24.7 percent in 2000, while New Brunswick exported only 3.2 percent of its merchandise, down from 4.2 percent in 2000. Nevertheless, throughout the country, Asia has become an increasingly important destination for many Canadian products. For example, last year Asian countries bought 82 percent of Saskatchewan peas, 87 percent of Newfoundland’s iron and ores, and 99 percent of Nunavut tanned fur skins.

Canada’s demographic landscape is also being redefined by immigration from Asia. Asians represent about 13 percent of Canada’s population and they are the fastest growing minority group in Canada. While the number of Canadians of Asian descent remains lower in the Atlantic region and in Quebec, it now exceeds the national average and reaches impressive numbers in Ontario (17.4 percent) and British Columbia (23.8 percent).

Taking into account that each Canadian region has specific interests and priorities in Asia, provinces have started to independently craft their own Asia strategy and pursue actions on their own. While Canadian provinces have traditionally focused on foreign policies related to immigration, agriculture, and the environment, in recent years their activities and concerns have extended considerably to other foreign and economic interests. Heightened provincial attention to global affairs is in part due to international trade negotiations increasingly touching on matters that fall within provincial jurisdictions. Furthermore, the evolution of Canadian federalism, has given provincial governments a stronger role and a higher degree of legitimacy on the world stage. Finally, in view of the unfolding opportunities, provinces are coming to the conclusion that they need to play a more robust role in international trade promotion.

As a result, over the last few years, many provinces have developed their own international strategies – some have even articulated a China-specific strategy. The policy tools available to the provinces to pursue economic diplomacy are almost as diverse as those of the federal government with notable exceptions, such as signing economic and trade agreements, which remains a prerogative of the federal government. Provinces and territories are, however, playing a more meaningful role in these trade negotiations, as it was seen in the negotiations leading to the conclusion of the Canada-European Union Economic and Trade Agreement. If it has been argued that this may not lead to significant change in the negotiations of future trade agreements, the scope and depth of provincial inclusion in the CETA negotiations has nonetheless been unprecedented.

With respect to Asia, some provinces have taken important steps to strengthen the relations they hold with the region. For example, on her recent trip to Asia, British Columbia’s Premier Christy Clark met with Malaysian Prime Minister Najib Razak to promote B.C.’s attractiveness as an LNG exporting hub, Alberta has open three new trade offices in Asia to provide on-the-ground resources and to better connect Alberta and Asian companies, and has signed specific agreements with two Indian provinces. Saskatchewan recently created an Asia Advisory Council to help them develop their own strategy, and Robert Ghiz, Prince Edward Island’s Premier led a trade mission in North East Asia in an effort to build business relationships and educational partnerships.

As a group, at the 2011 Council of the Federation meeting in Vancouver, the provinces asked the federal government to codify their involvement in international trade negotiations and called for the planning of a joint federal-provincial trade mission to China. They articulated their own vision of a strategic approach for Canada’s foreign economic engagement with Asia, asking the federal government to “set up a new, ambitious trade and investment liberalization agenda […] to guide Canada’s engagement with Asian countries,” and called on the federal government to enhance access for goods, services and citizens between Canada and Asian markets. More recently, the New West Partnership, (British Columbia, Alberta, and Saskatchewan) has released a statement on engagement with Asia, which focuses on joint work in the areas of trade and investment agreements, foreign direct investment, trade promotion and international education.

The role of the provincial government in Canada’s overall growing relations with the Asian region has been overlooked, even though the province’s contribution has been identified as an important component of a future Canada’s Asia policy. Provinces have a major role to play in targeting and stimulating businesses to go abroad, in attracting investment in their jurisdiction, in raising awareness of the economic benefits of trade with Asia, and in supporting initiatives from the education sector aiming at increasing Asian competency.

As Canada increases its ties with the region, greater attention on how provinces engage with this region will be essential for a better understanding of Canada’s overall relationship. Canadians are more than ever aware of the importance of Asia but they are still unsure about the real impact it both has – and is set to have – on their lives. An increased focus on the provincial level would help to fill the gap and it would also help Canadians to better understand how Asia matters to them.

In response to the growing trend of provincial engagement in Asia, the Asia Pacific Foundation of Canada (APF Canada) has developed an interactive website, The Asia Factor, which seeks to fill a gap in public knowledge about the growing economic, political, and cultural importance of Asia and what it means for the daily lives of Canadians.