Creating Winning Conditions:

Michael Holden | Canada West Foundation | May 2011

What governments can do to advance economic relations with China and India

Presentation Overview

1. Current State of Trade and Investment

2. Recent Policy Initiatives

3. Additional Policy Considerations

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

-5

0

5

10

15 12.9 14.0

3.6

-3.9

7.78.5

3.5

0.5

-1.1

3.5

Average Annual Growth in Merchandise Trade

(2005-2010)Exports

Imports

%

Canada’s trade relationship with China and India is expanding rapidly…

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Source: CWF calculations using Statistics Canada data

-202468

10

5.3

8.4

2.8

-0.2

3.4

Average Annual Growth in Merchandise Trade

(2005-2010)Exports

Imports

%

…as is Alberta’s.

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Source: CWF calculations using Statistics Canada data

China is a far more significant trading partner, both nationally…

0

2

4

6

8

10

12Canadian Trade with China and India

Exports to ChinaImports from ChinaExports to IndiaImports from India

17.5% of western Canada’s exports in 2009.

2010 Trade

To China:

Exports: $13.2 bImports: $44.5 b

To India:

Exports: $2.1 bImports: $2.1 b

Source: CWF calculations using Statistics Canada data

as a % of total trade worldwide

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

…and provincially.

Source: CWF calculations using Statistics Canada data

ChinaJapan

S. KoreaAustralia

TaiwanSingaporeIndonesia

BangladeshHong Kong

PakistanSri Lanka

New ZealandIndia

Alberta’s Exports to Major Asia-Pacific Destin-ations, 2010

$2.79 billion

$150 million

$165 million

$184 million

$293 million

$547 million

$1.48 billion

$108 million

$140 million

$70.9 mil-lion

$72.1 mil-lion

$86.2 mil-lion

$141 million

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Even in China, however, Canada is running to stand still.

Source: CWF calculations using data from the National Bureau of Statistics of China and the Indian Department of Commerce

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090.00.20.40.60.81.01.21.41.61.8

Chinese and Indian Imports from Canada(as a % of total imports)

IndiaChina

%

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Both China and India are emerging as major sources of FDI into Canada.

02,0004,0006,0008,000

10,00012,00014,00016,000

Foreign Direct Investment in Canada

China

India

$ billions

FDI into Canada (2010):

China:

• Total FDI: $14.1 billion

• 7th-largest source of FDI into Canada

India:

• Total FDI: $6.6 billion

• 11th-largest source of FDI into Canada

Source: Statistics Canada

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Presentation Overview

1. Current State of Trade and Investment

2. Recent Policy Initiatives

3. Additional Policy Considerations

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Federal Government Initiatives:

1. Global Commerce Strategy

China and India identified as priority markets

DFAIT: China and India “present enormous business opportunities and…are key links to global value chains.”

India Engagement Strategy

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Federal Government Initiatives:

2. Key initiatives/developments:

Free trade negotiations with India (November 2010) Canada granted Approved Destination Status by

China (2010)

Canada-China Science and Technology Agreement (2007)

BIT agreement with India (completed June 2007) Canada-India Science and Technology Agreement

(2005) BIT negotiations with China (ongoing since 2004) Asia-Pacific Gateway and Corridor InitiativeCreating Winning Conditions: What governments can do to advance economic relations with China and India | Michael

Holden | May 2011

Provincial Government Initiatives:

1. Fewer policy tools available for provincial governments

Power to sign international treaties falls under federal jurisdiction

2. Key initiatives/developments:

Frequent government-led trade missions Establishment of overseas offices New West Partnership: AB, BC, SK to cooperate

on trade and investment developmentCreating Winning Conditions: What governments can do to advance economic relations with China and India | Michael

Holden | May 2011

Presentation Overview

1. Current State of Trade and Investment

2. Recent Policy Initiatives

3. Additional Policy Considerations

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Federal Government:

1. Sustained policy commitment and focus are required

Global Commerce Strategy: 13 “priority markets” include more than 90 countries

Consistent and adequate funding Will a majority government improve policy

efforts?

2. Domestic transportation issues need to be addressed

Are APGCI investments sufficient? West coast pipeline issues and related energy

policies

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Federal Government:

3. Foreign direct investment rules need to be clarified

China and India are becoming major investors in energy and other “strategic” Canadian assets

Concerns over foreign (state-owned) control of Canadian resources

Recent high-profile rejections call into question the transparency and predictability of the investment review process Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael

Holden | May 2011

Federal/Provincial Governments:

1. Improve government engagement and visibility overseas

Commercial relations and government-to-government ties are closely connected in many Asia-Pacific markets

Frequent visits by government leaders send an important signal about their commitment to building commercial ties

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Provincial Government:

1. Continue cooperative efforts through the New West Partnership

Helps to ensure consistency of messaging Presents a united front overseas Better use of available resources and market

intelligence

2. Develop education- and tourism-specific strategies

Service sector opportunities should not be overlooked

Canada has lagged Australia and others in exploiting opportunities in education services

ADS could be a boon to Alberta

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

Final Thoughts:

1. China and India hold enormous market potential for Alberta and Canada

2. Many policy options for improving economic ties with China and India

3. Most important determinant of success is a sustained and concerted policy effort

Creating Winning Conditions: What governments can do to advance economic relations with China and India | Michael Holden | May 2011

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