Canada unveiled its new $2.3-billion Indo-Pacific Strategy at the end of November, and the immediate focus centred on the decoupling of Canada and China. It also brought with it the possibility of transformational investments across trade, investment, agriculture, defence and security in a region with 40 countries, including five major G20 economies (China, Japan, India, South Korea and Australia) with a combined GDP of US$29 trillion.
Now it’s time to focus on what’s next.
The regional strategy speaks to Canada’s ambitions as a middle power, alongside commercial opportunities for the country’s businesses. Canada’s international trade policies and patterns — both current and proposed — reflect and drive our foreign policy agenda. The strategy’s vision for increasing and diversifying trade in a region with 65 per cent of the world’s population is as bold as it is necessary to ensure we succeed in highly competitive global markets.
Growth in Canada is expected to slow in the second half of the year, according to the International Monetary Fund’s (IMF) latest estimates released in October, registering 3.3 per cent on average in 2022 compared with July’s forecast of 3.4 per cent. Growth for 2023 is predicted to come in at 1.5 per cent, down from an earlier forecast of 1.8 per cent. Meanwhile, with continued resolute monetary policy tightening, foreign exchange and interest rate volatility, inflation is expected to continue slowing, reaching the two per cent target by the end of 2024.
Moving forward, Canada needs a new international export and investment strategy that maps out its global trade and foreign direct investment (FDI) priorities. This must include an executable playbook on how to win the best export deals, attract FDI and capital investment, promote economic diversification and expand local non-oil exports.
The Golden State Warriors of the National Basketball Association epitomize how to cultivate and run a winning team built for both current and future success. The Warriors have won four championships in the past eight years by bringing in new leadership that understood how to win, designed a strategy, and then executed that strategy with top-tier talent. After a couple of tough years, the Warriors pivoted dramatically and are now the most valuable team in the NBA.
Canada can follow its example. Against competitors such as the United States, China, United Kingdom and Germany, it’s unrealistic to assume that Canada can increase its exports to emerging markets and attract FDI if it simply runs a few plays, no matter how well designed. Instead, we need to be ready to adapt and employ a variety of trade, geopolitical, foreign policy and security considerations as we engage with both new and existing trading partners.
Below are some of the key plays to strengthen Canadian trade:
1. Put points on the board
A team can hold the ball longer than its opponent and have more big plays, but none of that matters if it doesn’t score more points and win the game. We need more interchange assignments between government and industry. This includes emulating our competition by assigning a mix of leaders from the private sector to Canada’s international trade portfolio, as well as multilateral development banks and international financial institutions such as the Asian Development Bank, among others.
2. Screen offence
Success or failure on the court is often a matter of making sure that players are in the right position to succeed before a play starts. Similarly, global trade and commercial diplomacy require a long-term view and approach that isn’t based on quick wins. For instance, we need to be more aggressive and leverage more government-to-government arrangements with foreign buyers. This is a strategic procurement vehicle that can help secure more Canadian export deals in key sectors such as aerospace, agriculture, clean technology, defence, power, infrastructure and health care across the Americas, the Middle East, Sub-Saharan Africa, the Gulf Cooperation Council and Indo-Pacific markets.
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3. Spend wisely, not blindly
To make a competitive leap, teams will often increase their payroll to sign the free agents needed to make a championship run. For Canadian companies to compete on an even playing field, we need to enhance trade creation tools like strategic pull strategies. That will help Canadian businesses take on foreign players operating with government-backed financing and terms and guarantees Canada simply can’t match. Government participation in project or corporate lending and export financing facilities will help create trade opportunities for Canadian exporters with targeted foreign buyers.
For Canada to remain a resilient trading nation with influence on the world stage, we need to go on the offence to increase trade, investment and strengthen innovation collaboration with trusted partners. We also need a defence that is nimble and agile enough to counter nations presenting threats to our national security, infrastructure, economy, businesses and people.
Outlining a new international trade strategy will put Canada on the map. But we need solid execution and follow through to keep us in the game and winning.
Omar Allam is managing director and leader of Deloitte Canada’s global trade and investment practice.