The Ottawa Citizen | July 18, 2012
Canada’s path to trade with Asia goes through Europe
By Len Edwards
As another round of CETA negotiations takes place in Brussels this week, the Canadian government must know that an early and good trade agreement with Europe is crucial to Canada’s new economic and trade agenda in Asia.
The news from the margins of last month’s Los Cabos G20 Summit, that Canada was joining the increasingly crowded negotiating table of the Trans-Pacific Partnership, and closing in on the launch of economic and trade negotiations with China, indicates that Prime Minister Stephen Harper’s government is quite properly focusing its trade agenda on the region of the world to which Canada’s growth prospects are now most closely tied.
Canada’s trade and investment performance is not keeping pace with the opportunities represented by the emerging world, especially in Asia. Every year we fall further behind the competition. Our exports to emerging economies represent less than 10 per cent of our total exports, and only four per cent of our outward investment goes to these markets.
This cannot continue.
Unless we grow these percentages substantially, and tie our businesses more extensively into the dynamic global supply chains involving the emerging economies, especially in Asia, we will find ourselves increasingly on the outside looking in.
But turning our attention more to Asia means we must complete the unfinished major negotiations underway on a Comprehensive Economic and Trade Agreement (CETA) with Europe.
Our inability until recently to conclude negotiations over the last decade, even with smaller players, has seen Canada relegated to the trade world equivalent of the minor leagues.
A strong finish for the CETA will be critical to our being taken seriously at the negotiating table by the major Asian players — China, India and Japan — and to finishing up the delayed talks with Korea.
In addition, good outcomes from a successful CETA negotiation can situate Canada well as it goes into the most important set of trade and economic negotiations, headlined by those with China, since the Free Trade Agreement with the United States 25 years ago.
The estimated $12-billion gain from the effects of new trade and investment arising from the CETA will be important in Canada.
But our new negotiating partners in the Pacific are more likely to appreciate the strategic alignment Canada has created with the European Union as strengthening our value as an economic partner, and at least for now creating a unique advantage not available with the United States.
While specific outcomes are still being determined, many of them will be helpful in strengthening our positions in our Asian negotiations.
For example, any benefits that the CETA brings in strengthening Canada’s “innovation culture” and technology-intensive businesses will enhance Canada’s attractiveness to Asia.
It will improve our ability to negotiate terms that facilitate more diversified and longer-term business success in areas outside the commodities sectors, where we will continue to do well.
Stronger intellectual property protection in Canada’s pharmaceuticals industry would situate Canada on stronger ground for the tough negotiations on IP generally with China and India, where IP protections and enforcement need major improvement. It would also head off demands likely to come from Japan for enhanced protection in Canada and improves our position in the TPP negotiations.
Canadian manufacturers, financial and other service providers should find themselves in a stronger position after the CETA concludes, and ready to take their case to Asia.
Success on our agricultural demands covering beef, pork, grains and oil seeds, would help set up the discussions we will want to have in Asia, where demand for Canadian protein and other food products will grow.
Finally, we must conclude the CETA soon for the most practical of reasons: to free up the scarce experienced negotiating resources that are now tied down on the Canada-Europe discussions.
The CETA will, like all negotiations, bring a balance of overall advantages to Canada, while resulting in some areas where concessions and adjustment will be needed.
But in a way not foreseen when these talks were launched, CETA’s outcomes will be important, not just in their own right, but in the way they position Canada for the demanding and critical negotiations we must now undertake with Asian countries.
Signs are that the federal government wants to get this job done in the next few months, as do the Europeans.
This is good. Asia waits.
Len Edwards is a former deputy minister of international trade for Canada, and ambassador to Japan and the Republic of Korea. He is a strategic adviser at Gowling Lafleur Henderson LLP and a distinguished fellow of the Asia Pacific Foundation of Canada.