B.C.’s Asian junkets haven’t moved trade needle: researcher

Minister notes shift in economy and types of exports will take time

Keith Head (left), professor at the University of British Columbia’s Sauder School of Business: “doing your own little ad hoc trade missions – that might serve your political interests in B.C. but it won’t have strong economic effects | Submitted photo.
Dan Baxter (right), director of policy development, government and stakeholder relations for the BC Chamber of Commerce: increasing trade to Asia remains a priority for the provincial government | Chung Chow

“Asia is the key to growing our economy.”

So claimed the BC Liberals’ 2013 campaign platform materials.

Since being elected, Premier Christy Clark has made multiple trips to Asian countries, including China, Japan, South Korea and India, hoping to increase B.C.’s trade across the Pacific Rim “by another 50% over the next five years.”

But between 2013 and 2016, B.C. trade with Asian countries fell as a proportion of total exports from the province. The percentage going to China and Japan dropped 4.04% and 2.66%, respectively, while the proportion to South Korea and India rose slightly (0.06% and 0.62%, respectively), according to the federal government’s Trade Data Online website. The United States remains B.C.’s largest trading partner, and the proportion of B.C. exports to the U.S. rose to 52.67% by the end of 2016 from 45.72% in 2013.

Teresa Wat, B.C.’s minister of international trade and responsible for Asia Pacific strategy, said the province has opened multiple offices in various Asian countries to build business ties abroad, which takes time. Wat also noted that B.C. exports to international markets totalled $39.4 billion in December 2016, an increase of 9.8% compared with the same time in 2015.

“Of course, there are ups and downs. You see the figures being down sometimes because of the economy in Asia.”

Wat added that B.C.’s long-term game plan is to reduce reliance on natural resource exports and increase more diversified international trade relationships.

“Sometimes the export volume might drop, but it’s not because we don’t try hard; it’s because of the external circumstances that we cannot control.”

Keith Head, a professor in the strategy and business economics division at the University of British Columbia’s Sauder School of Business, said trade data shows the only substantial change for B.C. exports since the last provincial election has been the increase in goods going to the U.S.

Head said several external factors that are largely out of the hands of the provincial government have affected B.C. trade, including a drop in energy prices starting in late 2014 and a sluggish global economy.

“It’s hard to think there’s been a lot of change,” he said. “There’s not a lot of manufacturing products, so, to the extent that we’re trying to diversify in that respect, that really hasn’t happened.”

Where the premier has done a good job, Head said, is in drumming up publicity at home for B.C. trade missions to Asian countries, even if the missions themselves have had negligible results overseas.

“Doing your own little ad hoc trade missions – that might serve your political interests in B.C. but it won’t have strong economic effects,” said Head, who has been studying the effects of trade missions for decades. “So the premier needs to decide what her priorities are, if she really wants to increase exports to Asia.”

Head noted the makeup of B.C.’s exports has also remained virtually unchanged since 2013. According to federal trade statistics, B.C.’s top five export groups have remained the same since the last provincial election: lumber on top, followed by coal, wood pulp, copper ore and liquefied petroleum.

Head said bilateral trade agreements are the only surefire way to increase trade with other countries. He noted that studies showing such deals can spark growth in trade between signatories by up to 60%.

He added that B.C. would have benefited greatly from the Trans-Pacific Partnership (TPP). While the deal was recently scuppered by U.S. President Donald Trump, the framework for bilateral agreements remains. 

“I keep telling this to anybody that will listen to me: we are sitting on an amazingly good free trade agreement from B.C.’s perspective,” he said.

If Canada were to pursue bilateral trade agreements with countries such as Japan using the TPP’s framework, it could profit B.C. and Canada immensely, given that many of the concessions within the TPP were to U.S. corporate interests, Head said.

“In other words, we don’t have U.S. competition if we get a free trade agreement. Any sort of advantage that we got through a new TPP the U.S. wouldn’t be able to replicate. So all our firms would be in a better position than the American firms.”

With recent growth in B.C. lumber exports to the U.S., one of the contentious issues for the province will be a new softwood lumber agreement. David Emerson, B.C.’s recently appointed special envoy to the U.S., met with American negotiators on March 8 to discuss softwood lumber in what he described as a good but “prickly” meeting. After the last softwood lumber agreement expired in October 2015, the United States International Trade Commission began investigating allegations by the U.S. Lumber Coalition of dumping by Canadian producers.

Dan Baxter, director of policy development, government and stakeholder relations for the BC Chamber of Commerce, said that as B.C. and Canada dig in for another round of what promise to be heated talks over softwood lumber, fostering increased trade with Asian markets might be a good way to soften the blow.

“The Americans are going to look to have another lumber war with our softwood products, so having that access to other markets like Asia helps,” Baxter said. “It still doesn’t mean it’s not going to have an impact on the economy and the forest industry. But having those other markets abroad definitely helps mitigate that impact.”