This article was originally published in BIV Magazine's Gateway issue.
As the country’s Asia-Pacific gateway, B.C. has been a leader in chasing trade opportunities between Canada and the Far East.
But as the province looks to kick-start its economic rebound post-pandemic, the plan to diversify B.C. trade appears to have shifted course.
Since the start earlier this year of an earnest easing of COVID-19 restrictions, the provincial minister responsible for trade and economic recovery has made two trips abroad – but neither has been to a traditional East Asian trade partner.
Provincial Minister of Jobs, Economic Recovery and Innovation Ravi Kahlon recently concluded a two-week trade mission to Europe, where he met with partners in the U.K., Germany, the Netherlands, Ireland and Finland to promote B.C.’s new environmental, social and governance (ESG) standards.
This comes after Kahlon visited the United States in April – specifically, the west coast cities of San Francisco and Portland – to push B.C.’s timber, agritech, cleantech and innovation sectors.
The decision to go to these markets first, provincial officials say, was not based on geography; rather, they went where values – not just in economic matters, but in areas like the environmental and social issues – are aligned with where B.C. is heading.
“The U.K. and the European Union (EU) are really prioritizing the need to address climate change and have the ESG veins in the economic growth of their jurisdictions,” Kahlon said from London during his visit to the EU in late May. “What we’ve heard clearly here and in the meetings that we’ve had is not only do they really respect and appreciate our efforts that we are making... but they also really respect and appreciate the ‘S’ in the ESG – and our work when it comes to working with Indigenous communities and advancing reconciliation.”
The shift towards a heavier consideration of social, environmental and governance values matches when pursuing new trade partners was hinted at within the province’s StrongerBC Economic Plan – where trade diversification was emphasized as a result of current situations around the globe.
“A distinct shift is underway in the world affected by geopolitical circumstances, the COVID pandemic and new international trade agreements,” reads the plan document. “We will continue to take full advantage of our competitive edge as a trade and investment jurisdiction renowned for our [ESG] values. Opportunities to cultivate the participation of more diverse and under-represented groups in international trade will be a priority.”
Despite previous diversification efforts, and a more diversified trade mix than other parts of Canada, B.C. is still – like other Canadian jurisdictions – heavily reliant on a select few trade markets, namely the United States, China and Japan.
Canada’s relationship with its top two trade partners has been particularly problematic in recent years. Despite being two years past the controversial administration of former president Donald Trump, Washington, D.C. continues to pursue trade policies with an increasing protectionist slant. Meanwhile, relations with China – despite an increase in bilateral trade numbers to new highs in 2022 – has been rocky given Beijing’s harsh zero-COVID policies, a concerning human rights record and ideological friction with Western countries.
“There is the ongoing uncertainty about where our trade with China is going to take us because of the way the Chinese are weaponizing trade, particularly with the Australians,” says Hugh Stephens, principal of Trans-Pacific Connections and a distinguished fellow at the Asia Pacific Foundation of Canada. “And now they are unhappy with us over 5G and [banning] Huawei. So it’s a question of spreading your risk.
“The Chinese market is important and will continue to be important,” Stephens adds. “But it is very sensible to ensure we don’t have all our eggs in that basket, particularly in a basket where the bottom could fall out.”
He added B.C.’s decision to look towards the U.K. is particularly smart timing, given that London is in the process of forging new trade ties after severing its union with the EU. Stephens also notes that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) pact offers a number of markets where B.C. could see more opportunities, although he did add that Canada has its own protectionism (in the form of supply management in dairy and chicken) that could be challenging to overcome in growing new relationships.
The province, for its part, is already looking in that direction. During the same month Kahlon visited the U.S., his office announced that B.C. was opening a new forestry innovation investment office in Vietnam – a fellow CPTPP member and a fast-rising star in terms of new Asian destinations for Canadian trade and investment dollars.
Kahlon says the goal is to have the new office facilitate B.C. being “the preferred supplier of sustainable and certified softwood lumber products” in Vietnam. He says the optics of officials shifting away from Asia is a coincidence.
“We are working on a trade diversification strategy right now, and we hope to have it launch this fall,” Kahlon says. “We of course have historic relationships with the U.S., China, Japan and South Korea.... We really appreciate and respect those relationships. But this strategy isn’t about doing less business with our key partners – it’s about finding more partners in new, emerging jurisdictions.”
Omar Allam, a former Canadian diplomat who now heads Deloitte Canada’s Global Trade & Investment advisory group, says there is interest even beyond those aforementioned regions. He notes that markets like the Middle East, India and even sub-Saharan Africa have seen some very strong growth, and the appetite to do more business (through either investment or trade) appears to be present.
The key issue, Allam says, has always been the actual implementation of a concrete plan from the Canadian side. The tendency is to fall back on well-established partnerships, such as those between Canada and the U.S., Europe and East Asia, without putting pen to paper on what is possible with other emerging markets, and how Ottawa and Victoria can facilitate those links.
“I think we need to do a better job to showcase to the world what we can offer,” Allam says. “We are lacking in [understanding] where Canada can actually play a role; what capabilities we have to facilitate both trade and investment opportunities.
“An economic partnership arrangement will facilitate trade. But then you need resources there in the markets [we are growing] to actually provide market access and opportunities, and then engage in the supply and demand,” he says. “We have to take risks. That’s what we did during COVID. We have to take calculated risks and be willing to make mistakes... for longer-term robustness.”