Click here to access the report, Global Markets Action Plan: The Blueprint for Creating Jobs and Opportunities for Canadians through Trade.
The announcement on November 27 by Trade Minister Fast of a new Global Markets Action Plan marks a further positive move by the Harper Government to update, strengthen and focus its efforts in promoting Canada’s economic and trade objectives abroad in the light of changing global circumstances.
Predictably, it has been welcomed by most of the country’s business associations some of whose representatives, such as John Manley of the Canadian Council of Chief Executives and Perrin Beatty of the Canadian Chamber of Commerce, participated in the business advisory panel on the Action Plan. The engagement of these associations should result in a stepped up effort by business itself to work with the Plan and drive the private sector towards the same priorities and objectives.
The new Plan responds to a widely shared view both outside and inside government over the past year (including by Mark Carney the former Governor of the Bank of Canada), that Canada’s external economic strategy needs to be more focused and priority-driven.
The Plan reflects several of the themes in the Gowlings-sponsored report in June 2012 “Winning in a Changing World: Canada and Emerging Markets” which its authors (Derek Burney, Fen Hampson, Tom d’Aquino and Len Edwards) presented to the Prime Minister in June 2012. Among other things it argued that Canadian governments and business needed to focus on the emerging markets, particularly in Asia, which would be driving the global economy in the 21st century.
Among the Plan’s elements, several stand out for comment.
The Plan sets out three sets of priority markets. The first set consists of 20 high growth emerging countries, some of which were singled out in the Gowlings-sponsored report. They include major countries such China, India, Brazil, Turkey, and Indonesia but also others such as Malaysia, Peru, Israel and Saudi Arabia. With these 20 countries, the government is on the right track.
A second set of priorities adds a further 22 countries, so-called “emerging markets with specific opportunities” in areas such as investment, resource development, and something the Plan calls “first mover advantage”. It includes Myanmar (which the government still prefers to call Burma), Mongolia and Brunei in Asia, Ukraine and Kazakhstan in Eurasia, 4 countries in Latin America (no Caribbean states make the list), 2 in the Middle East and 2 from the Maghreb, and a surprising total of 11 countries from sub-Saharan Africa: a sure sign that the government sees Africa as a new frontier, with the extractive resource sector driving much of the selection process.
While this is already a long list of “priorities”, the third set of countries returns to the tried and true traditional markets ” and adds another 36 states! The Plan says that Canadian industry has been “clear” that “while emerging markets are increasingly important Canada needs to continue building on existing relationships with our traditional international partners”. It includes predictably (and wisely) the United States, Japan, Australia and New Zealand. However, rather than just identify the European Union, with which we are finalizing a Comprehensive Economic and Trade Agreement (CETA), it goes on to enumerate 28 members of the EU as priority markets.
All told, the government’s “priorities” cover a total of 78 countries, demonstrating once again how difficult it has always been in government to set a limited number of country priorities. It also complicates the allocation of effort and resources, if traditional markets contribute no re-allocations to the government’s need to work in emerging markets where government efforts are even more important.
“Entrenching Economic Diplomacy”
The Global Markets Action Plan has created some public controversy with the government’s statement that “all diplomatic assets of the Government of Canada will be marshaled on behalf of the private sector to achieve the stated objectives within key foreign markets”. While, for the purposes of sending a political message, this is a stronger statement than previous governments have used, there has long been a trend in this direction on which the Harper government can and will certainly build.
Ever since the trade functions of old Industry Trade and Commerce were integrated into External Affairs in 1982, trade promotion and economic priorities have been increasingly important activities for Canada’s foreign missions. Indeed, our Trade Commissioners Service has become a main recruiting ground for bilateral ambassadors and high commissioners abroad. Whatever their background, Canada’s heads of bilateral diplomatic missions are deeply engaged in directly supporting our trade and economic objectives and the private sector abroad, drawing in non-economic staff when necessary. Political relationships are leveraged, and cultural events are often used innovatively to help send economic messages and advance commercial interests, including those of the artists and others involved. The Action Plan is simply saying it will do more of the same.
The Action Plan also talks about establishing bilateral business groups with some key relationships. This will be a challenge. As important as they can be for “relationship building”, especially in Asia, these groups have come and gone with the generally lower interest among Canadian companies for “business diplomacy”, and with the ups and downs of enthusiasm for particular markets. Usually long term success has rested on a senior business leader taking ownership of a particular relationship and ensuring the business group remains active, such as the Desmarais family of Power Corp has done in the case of the Canada-China Business Council.
There is no question that an inherent strength in this Plan is the new commitment by the government to engaging and listening to the private sector. It will be important that business reciprocates that enthusiasm.
The Plan identifies 22 priority sectors for the new approach. Again this is a large number and indicative of the difficulty faced by all governments in picking and choosing the main areas of opportunity, for fear of being accused of deciding winners and losers. For instance, major sectors such as agriculture (a leading and under appreciated emerging market opportunity), financial services, oil and gas and professional services sit along side smaller ones such as consumer products (politically untouchable), ocean technologies and wine, beer and spirits.
It does single out, however, three sectors illustratively where strategies are to be developed (all of which were featured in the Gowlings-sponsored report): education, the extractive sector, and defense procurement as an export-builder for Canada. The education sector has been an on-again off-again area of emphasis for 2 decades. Perhaps now we will see some long term serious coordinated approach nation-wide. Not surprisingly the Association of Universities and Colleges of Canada has warmly welcomed the Action Plan.
Small and Medium Sized Enterprises
One theme that stands out in this Strategy, as it has in past ones, is the concern that our SME’s should be more active outside the US market. Governments have wrestled with this challenge before of finding ways to draw our most innovative and entrepreneurial smaller companies into the international market place. The strategy sets a 2018 target of 21,000 SME”s being active in emerging markets, up from 11,000 today. A post-announcement Conference Board commentary has wisely suggested that preparing SMEs in terms of quality to compete in these markets should be given as much or more emphasis than the quantity of companies as a target.
The Plan sets out a number of areas where Canada’s Trade Commissioners Service and others will continue to assist Canadian businesses, including helping them again access to sources of innovation and financing. While it contains little that is new, it underlines again how fortunate Canada is to have one of the most envied institutions globally for promoting trade and supporting the private sector. And all at no charge.
Attention is paid to the number of agreements that the Harper government has completed or is negotiating in the trade and economic areas. There are no new announcements. The negotiating plate is already very full.
This Global Markets Action Plan is a continuation of the Harper government’s gradual endorsement of the international trade and economic agenda since it came to power in 2006. It takes it to a new level. External economic policy and trade promotion have now achieved the same profile and importance to the Harper government as the Canada-US FTA, NAFTA, and Uruguay Round negotiations and promotion activities were to the Mulroney government in the late1980”s.
Just as the 1980”s opened a new and necessary chapter in our external economic strategies to take advantage of the United States economic engine and build a powerful North American economic base, so this new thrust is now critical for Canada’s future in face of the new global economic circumstances created by the rise of the emerging market world.