Stewart Beck is president and CEO of the Asia Pacific Foundation of Canada, and former Canadian high commissioner to India. He has served abroad in the United States, Taiwan, and China.
This week, the annual meeting of the Asia Pacific Economic Co-operation forum – APEC – will be held in Manila. Newly elected Prime Minister Justin Trudeau could not ask for a better opportunity to refresh Canada's relationship with Asia than this high-profile meeting of regional leaders.
Despite being a "Pacific nation," with about 60 per cent of all new immigration originating in Asia and approximately $150-billion in annual trade tied to the region, Canada has not realized its potential and, in particular, has not committed to a full engagement with China.
In attending APEC during his international debut, Mr. Trudeau can use the opportunity to signal Canada's commitment to becoming a relevant and important partner to Asia, and acknowledge that Canada's future economic prosperity is linked to Asia's growth.
As Mr. Trudeau highlighted on the campaign trail, being engaged on the international stage is crucial to creating prosperity and economic growth for all Canadians. APEC, a forum for 21 Pacific Rim member economies, is a critical tool to achieve this goal and expand Canadian businesses. It will allow the Prime Minister to network with Asian leaders, assess the priority issues at play in the region, assemble the right team to take action on these issues and identify key countries in the region with which to partner.
By attending APEC, Mr. Trudeau can also highlight the government's commitment to re-establishing the strategic importance of multilateral relations and, in particular, how they can promote Canadian engagement in Asia. To lay the groundwork for some early gains, the Prime Minister should consider pursuing these three key objectives:
First involves support for micro-, small- and medium-sized enterprises (MSMEs). The vast majority of Canadian businesses are MSMEs, representing approximately 70 per cent of Canada's private labour force. The new government's platform emphasizes the need to support MSMEs to innovate and become world leaders. APEC is designing pathways to do exactly this – to internationalize MSMEs; to increase their access to financing, mentorship and capacity building; to integrate them into global value chains; and to support their innovation activities. APEC provides a perfect venue for the Prime Minister to highlight this objective.
Second is to use the meeting to determine the benefits of the Trans-Pacific Partnership. The TPP is a milestone trade agreement for a new era defined by a rising Asia. More important, it also provides a pathway towards a free-trade area of the Asia-Pacific (FTAAP), something APEC members have been working toward over the past decade. Considering that, according to the most recent numbers from 2012, the 21 economies that make up APEC represent approximately 2.8 billion people, 57 per cent of the world's GDP and 47 per cent of world trade, it becomes clear that membership in an APEC-driven FTAAP would have its privileges. Studies have forecast that the gains from an FTAAP would be eight times that realized by the TPP. The FTAAP is where the real payoff happens for Canada, with potential gains in output and exports in some sectors forecast to increase by as much as 18 per cent.
Third, and final, is to determine the importance of a bilateral free-trade agreement with China. APEC provides a forum for frank and open exchanges of ideas and the strengthening of partnerships, old and new. The Prime Minister should use the meeting to seek the views and advice of our Commonwealth friends, Australia and New Zealand, about their reasons for signing a free-trade agreement with China and how they interpret the long-term benefits for their economies. He has to keep in mind, however, that Australia is our major resource competitor in the Chinese market and the response will likely be somewhat nuanced.
The Asia-Pacific region has become an increasingly significant player in the global economy and will continue to rise in importance over the next 15 years. By 2020, Asia will represent 44 per cent of the world's GDP and 54 per cent of the world's middle class. A Canada that is fully engaged in Asia – that actively participates in this new reality – is a Canada that will prosper as a valued and influential player on the global stage.