Retooling Canada’s Asian trade strategy is a smart investment



by Eric Miller

The Globe and Mail
November 20, 2017

November has been a good month for Canadian engagement in Asia.

Prime Minister Justin Trudeau played a prominent role at the 21-country Asia-Pacific Economic Co-operation (APEC) summit in Vietnam and the 10-member Association of Southeast Asian Nations (ASEAN) summit in Manila.

His personal leadership resulted in an agreement on the "core elements" of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – the rebranded Trans-Pacific Partnership minus the United States. Canada can now carefully review the agreement to ensure that its specifics are in the national interest while concurrently promoting it to the public.

Seeking to expand Canadian trade with East and Southeast Asia is a smart investment. Combined, they represent 30 per cent of global GDP. Millions of people from these fast-growing economies are surging into the global middle class and Canada has much to offer these consumers.

Yet, to truly become a major economic player in Asia, Canada must look beyond a simple focus on free-trade agreements and retool its trade-development strategies. Start by learning from those truly succeeding in the region.

The grand masters of trade development in Asia are the Japanese.

Typically, Japan offers countries support in building physical and technological infrastructure. Using the Japanese International Co-operation Agency (JICA) as its delivery vehicle, Japan is funding everything from a subway system in Ho Chi Minh City to software systems that underpin the delivery of an array of government services across Southeast Asia. Japan even funded the purchase and installation of all of the traffic lights in Yangon, Myanmar.

Of course, this assistance is delivered with Japanese steel, Japanese engineering and Japanese technology. By offering low- to no-cost infrastructure, Japan has massive commercial pull in the region and an enormous store of political capital.

While the substantial support offered by the Trade Commissioner Service to Canadian companies seeking to enter Asian markets is crucially important, Canada should also consider experimenting with Japanese-style market-development approaches.

One promising area would seem to be cybersecurity.

It has been reported that Vietnam, for example, has been hit by repeated cyberattacks allegedly originating from their neighbours. And it is not alone.

Canada has a reputation as a trustworthy, even-handed player in many emerging markets. The time has come to convert this into commercial advantage.

The Government of Canada should put together a consortium of companies to market Canadian cyberexpertise as a coherent package. It would be led by a large firm – say, CGI Group Inc. or Open Text Corp. – and include innovative small and mid-size cybercompanies and leading cybercapable entities such as the Toronto Financial Services Alliance.

The market would be developed and payment guaranteed to the firms by virtue of the pot of money and contracts associated with a government-to-government arrangement negotiated by Canada. Export Development Canada would be the logical vehicle for providing financing. It is the clearest and safest way for smaller Canadian companies, which would otherwise have little hope of accessing foreign markets, to go global.

If properly executed, Canada could swiftly build a reputation across Asia as the go-to cybersecurity provider.

Another innovative model to study is Australia.

Each year, the country's embassy runs a multiweek "Taste of Australia" festival in cities throughout Vietnam. The emerging consumers in this country of 90 million are being introduced to Australian products and brands early on. It includes not only food and beverage, but also fashion and design.

Ten years from now, as incomes rise, many newly affluent Vietnamese will "Think Australia" before most other countries. Canada's farmers and fashion designers are just as talented as their Australian counterparts. Winning the pole position in this fast-growing market will depend in no small way on the right public and private support.

To succeed in Asia, where, broadly speaking, governments and leading businesses have a rather symbiotic relationship, Canadian firms need deep partnerships with their government.

The old saying tells us "when in Rome, do as the Romans do." Canada also should apply this same logic to its dealings in Tokyo, Seoul and Hanoi.

Eric Miller is President of Rideau Potomac Strategy Group and a Fellow with the Canadian Global Affairs Institute.

Image credit: Canadian Press

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