Foreign Affairs Minister Anita Anand is visiting Japan and Malaysia this week as the Canadian government expands efforts to shift trade relations away from the United States – this time to Asia.
Prime Minister Mark Carney last month signed a security pact with the European Union and announced negotiations to deepen economic relations with the 27-member bloc on digital trade, agriculture, energy, labour mobility and critical minerals.
He promised during the spring election campaign ‐ which took place during the beginning of a bitter and damaging trade war with the United States ‐ to find new markets for Canada.
Canada’s new trade diversification strategy will expand to Asia this fall. Ottawa is rebuilding relations with India and China after serious ruptures but in the near term will focus on deepening trade with other like-minded allies in the region such as Japan, South Korea, Singapore, Australia and New Zealand, a senior Canadian official said. Priorities would include critical minerals but also quantum technology and artificial intelligence.
The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
Ms. Anand’s trip will help lay the groundwork for travel by Mr. Carney to Asia this fall, including likely to the Asia-Pacific Economic Cooperation Forum and the Association of Southeast Asian Nations (ASEAN) summit where he will meet Asian leaders, the Canadian official said.
The Indo-Pacific region is Canada’s second-largest regional export market and trading partner after the United States. More than 10.5 per cent of Canada’s total merchandise exports in 2022 were to the Indo-Pacific region, according to the federal government.
In Tokyo, Ms. Anand will meet with Japan’s Minister for Foreign Affairs Iwaya Takeshi to strengthen Canada’s trade and defence cooperation.
Vina Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation, expects Canada and Japan will sign a Security of Information Agreement, a precursor to a deal allowing the transfer of defence technology.
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Ms. Nadjibulla said Canada can’t shift trade away from the United States without selling more to fast-growing Asian economies. “It’s not enough just for us to look for partners in Europe,” she said, adding, “there is no diversification or reduction of overreliance on the United States market without the big Asian markets.”
After Japan, Ms. Anand will fly to Kuala Lumpur, Malaysia, for an ASEAN conference and later speak at a regional ASEAN forum. Canada is in the process of negotiating a free-trade deal with ASEAN. The economies of the 10-country bloc as a group would comprise Canada’s sixth-largest trading partner, but it already has access to four ASEAN members – Brunei, Malaysia, Singapore and Vietnam – through a trade pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
At the ASEAN forum on July 11, Ms. Anand will discuss regional and global security challenges, such as the crisis in Myanmar, tensions in the East and South China Seas, North Korea-Russia military co-operation and growing insecurity in the Middle East. “She will also reaffirm Canada’s steadfast commitment to ASEAN as a reliable, engaged and enduring security partner in the region,” the Department of Global Affairs said in a statement.
Canadian exporters increasingly shift from U.S. to overseas markets
Goldy Hyder, president of the Business Council of Canada, said only time will tell whether Canada succeeds in shifting trade away from the United States. He pointed out that over time the share of Canadian exports headed south has dropped to 76 per cent from 85 per cent.
He said another benefit of diversification is driving up demand for Canadian goods ‐ to get U.S. buyers to pay “full price for the things that they’ve been getting a bargain on.” A more diverse customer base means a bigger price tag for American customers because “the Japanese are offering me an extra buck on the barrel.”
Mr. Hyder said the fact that numerous Canadian companies have succeeded in Asia “before there was a diversification strategy” means they can shed light for newcomers on how to thrive in these overseas markets. “You go anywhere in these countries, you will see Manulife signs, you will see Sunlife signs, or Hatch or Brookfield, so we have a foundation on which to build.”
