In case nobody noticed, Asia is now the fastest-growing region in the world. It produces one-quarter of global exports and accounts for more than 35% of the world’s GDP. That number is expected to rise to 43% by 2020, according to Leading the Way: Canadian Business Strategies in Asia, a new report from the Asia Pacific Foundation of Canada.
Canada has long enjoyed a mutually beneficial trading relationship with Asia. But contrary to its jaunty title, Leading the Way shows that Canada is, in fact, losing economic ground fast in this critical market. The country’s share of the overall Asian market is now less than 1%, down from 1.72% in 1995 and 2.51% in 1984. Meanwhile, China’s exports to Canada grew by almost 550% over the past 10 years, topping $29.5 billion in 2005. That same year, Canada, by contrast, exported a paltry $7.1 billion in goods the other way.
To facilitate this booming trade, the federal government is plowing $491 million into its Asia-Pacific Gateway and Corridor Initiative. This infrastructure investment, matched by the private sector, is intended to create a new network of transportation linking B.C. ports by expanded rail services to Western Canada and on to Chicago. It includes a new port terminal in Prince Rupert, which officially opened for business on Sept. 12. The new terminal is expected to process 300,000 containers in its first year of operations, with that projected to grow to one million a year by 2012.
All well and good. But there’s one slight problem. The effort stops at the coast. As one high-ranking government official pointed out in conversation recently after a seminar explaining the initiative, the Gateway doesn’t include any plan to facilitate Canadian exports to Asia beyond Canada’s borders. Meanwhile, the federal government quietly closed two consulates in Japan earlier this year.
In light of Canada’s shrinking trade balance with the fastest-growing economic region on earth, such a massive investment of public money in an initiative with such a narrow scope is not the best strategy. This government might want to, at the very least, reopen those consulates in Japan. Putting some resources toward negotiating a few bilateral free trade agreements in the region wouldn’t hurt either. In a world where China has passed Canada as the United States’ top source of imports, thinking local on trade just isn’t enough.