Canada’s three western provinces are creating a unified body aimed at increasing trade with Asia Pacific countries, underscoring the West’s growing frustration with Ottawa’s failure to court Asia’s emerging economic might.
British Columbia, Alberta and Saskatchewan will announce an economic partnership agreement Friday designed to boost trade and investment with countries including China, Japan and Korea, sources familiar with the plan said.
The deal, which will be unveiled in Regina, would position western Canada as a major trade and investment hub.
Rich in resources including oil, coal, wood products and potash, the western provinces believe that by combining to create a larger economic entity, they will gain more attention and influence with Asian governments and companies. The provincial governments hope to create more opportunities for Western Canadian firms to win business in the Asia Pacific region, a market worth more than $500-billion, by some estimates.
A senior official with British Columbia’s provincial government described the three-way deal as an “economic agreement,” that will help the West market itself as a business friendly destination for Asian trade and investment. Premiers from all three provinces will travel to China and Japan in May to promote the new pact.
The credit crisis and subsequent collapse of the American economy last year highlighted the need for Canadian business to look beyond the U.S. border for trade partners. At the same time, many Asian countries, particularly China, have emerged from the crisis relatively unscathed and have been leading the global economy out of the downturn.
Canada, however, accounts for less than 1 per cent of imports to Asia. The federal government has been criticized in some circles – particularly by Western business interests – for not focusing enough on increasing trade ties with the region.
Prime Minister Stephen Harper’s was publicly scolded by Chinese premier Wen Jiabao in December for taking nearly five years to visit China. And while the government has recently signed trade deals with countries in the Americas and Caribbean, it has yet to secure a free trade agreement with any country in Asia.
Choosing to protect its dairy farmers from cheap imports, Canada is also being left out of talks to form the Trans-Pacific Partnership, a group that could form the basis of a free trade deal for all of Asia.
Yuen Pau Woo, the head of the Asia Pacific Foundation of Canada, said a potential deal between the three western provinces could boost tourism from Asia and increase efficiencies in terms of trade promotion and business development. However, he said a national effort to increase Canada’s recognition in China and other Asian markets would be more effective.
“Clearly we are seeing leadership on relations with Asia come from sources other than the federal government. The provinces, led by B.C., are picking up that responsibility,” he said.
With its Pacific coastline and ports it promotes as an economic gateway, British Columbia has long been focused on doing business with Asia. It exported $9.3-billion worth of goods to Asia in 2009, far more than any other province.
China is B.C.’s second largest trading partner and exports reached $2.6-billion in 2009, a 243 per cent increase from export levels in 2000. B.C. imported $16.1-billion worth of goods from Asia in 2009, a total higher than its imports from the U.S.
Alberta, meanwhile, exports more goods and commodities to Asia than Ontario, and the Western province’s exports to the region totaled $6.2-billion in last year.
An Alberta government official described the pending agreement as a “joint marketing strategy” that would provide the western provinces the “critical mass” needed to both win business abroad and woo investment to Canada.
“B.C. and Alberta are already a pretty formidable market, and adding Saskatchewan to the mix brings them into it as well,” the official said. “They’ve got oil, gas, potash, agriculture. We don’t have potash, but we have coal, oil, gas, agriculture and technology. B.C. has got all that and more.”
“It just makes sense to reach out to new markets, and Asia Pacific is a huge emerging market.”
The official said Saskatchewan is not expected to sign on to the Trade, Industry and Labour Mobility Agreement that B.C. and Alberta have already created.
“I don’t expect them to be signing that exact agreement,” the official said.
The agreement also will not result in any dramatic steps to lower barriers to outside investment in the three provinces, the official said.
