Canada and ASEAN

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These Asian countries have formed a tight-knit web. Why is Canada still outside?

Special to The Globe and Mail, Wednesday, Aug. 21 2013

It doesn’t get a lot of attention but ASEAN – the Association of Southeast Asian Nations – is like the little engine that could. Its growing appeal as a launching pad into the rest of Asia is fuelled by its aggregate population of more than 600 million and estimated GDP of US$2.2 trillion.

This week International Trade Minister Ed Fast will meet in Brunei with ASEAN Economic ministers to promote Canadian trade and investment.

The ten nations – Brunei, Burma, Cambodia, Laos, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam – just celebrated their 46th anniversary. Created initially as a bulwark against communism, it has become an Asian model for regional economic cooperation. Four of its members – Singapore, Brunei, Malaysia and Vietnam – are also in the Trans-Pacific Partnership (TPP) negotiations.

ASEAN’s goal is to develop an Economic Community with free flow of goods, services and investments by the end of 2015. ASEAN nations are working on improving competition policy, increasing foreign equity in services industries, mutual recognition of professional qualifications – the kinds of things we should do more of within the Canadian federation.

Canada has had a formal relationship with ASEAN since 1977. In recent years we have upped our regional commitment with the 2009 appointment of an ASEAN ambassador, 2010 accession to their regional peace treaty, and the 2011 joint declaration on trade and investment.

In addition to our contributions through the Asian Development Bank, CIDA invests more than $130 million focusing on human rights and disaster risk.

After nearly a decade of few high level visits, Governor General Johnston and Prime Minister Harper have recently made official visits, with recurring missions by Ministers Baird and Fast.

‘Face’ and sustained relationship-building matters in Asia and our record has been weak on both counts. We need to sustain high-level engagement, especially if we are to gain admission to the security-focused East Asia Summit.

ASEAN nations represent Canada’s 7th largest trading partner. Our investment in the region is greater than in China and India combined. ASEAN investment in Canada grew over four-fold during the last five years, including the acquisition of Progress Energy by Malaysia’s Petronas.

While our focus is on trade, sustaining the relationship requires a commitment to regional security as well as the socio-cultural. The people-to-people ties are growing. Nearly ten thousand students from ASEAN countries study each year in Canada. Last year we admitted more than 37,000 permanent residents and there are nearly 18,000 temporary foreign workers from the region.

Created in 2012, the membership of the Singapore-based Canada-ASEAN Business Council numbers twenty-one companies, representing our financial, mining, manufacturing and engineering industries.

In proclaiming Canada to be an Asia-Pacific nation at last week’s ASEAN reception at Ottawa City Hall, Foreign Minister John Baird underlined the importance of ties with ASEAN promising that “we will continue to increase our engagement to its fullest potential.”

We have work to do.

ASEAN has free trade area agreements with Korea, India and China and a comprehensive economic partnership with Japan. The ASEAN-Australia New Zealand Free Trade Area eliminated tariffs on incoming ASEAN products last year and restrictions in both directions will end by 2020.

The US-ASEAN Expanded Economic Engagement Initiative is ambitious and results-oriented. It includes simplified customs procedures and joint development of investment principles along the level of ambition set by the Trans Pacific Partnership. The US-ASEAN Business Council is highly developed and has offices throughout the region.

The European Union is the largest foreign investor in the region. ASEAN is the EU’s third largest trading partner after the USA and China. The EU is in FTA negotiations with Malaysia, Vietnam and Thailand. Their long-term goal is a EU-ASEAN FTA.

The Europeans finished negotiating a free trade agreement with Singapore last year. The US-Singapore FTA was concluded in 2004. Our own FTA negotiations with Singapore (like those with Korea) stalled.

We risk developing a reputation as a country that can’t close a deal.

A recent report, prepared for Canadian business looked at six sectors aerospace, agrifood, automobile, clean tech, ICT, oil and gas arguing that Canadians wanting to get into the market need to identify their niche and then determine the best entry point. It warned that Singapore aside, the biggest impediments to doing business in ASEAN are corruption, infrastructure and inept bureaucracy.

Connectivity is the mantra of ASEAN. Their ‘master plan’ envisages huge investments in infrastructure and technology including upgrades to roads and rail, and megaprojects like a high-speed rail line from Singapore to China. We have the capacity to get a piece of the action.

If we are serious about ASEAN we need to sustain our embrace. Ministers have to make regular visits across the Pacific. Deliverables – regional and country-by-country – need to be realistically defined and priorized. For obvious strategic reasons, Indonesia, whose Foreign Minister is in Canada this week, requires special attention.

We are playing catch-up with the competition in ASEAN but the rewards will be worth the effort.

A former diplomat, Colin Robertson is vice president of the Canadian Defence and Foreign Affairs Institute and a senior strategic advisor to McKenna, Long and Aldridge LLP.

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