Opinion: To counter China, Canada needs to go beyond an Indo-Pacific strategy

Opinion: To counter China, Canada needs to go beyond an Indo-Pacific strategy

If Canada needs to pivot from its dependent trade relationship with China, why not try the Americas?ANDRES VALLE/Getty Images

Kevin Lynch was clerk of the Privy Council and vice-chair of BMO Financial Group. Paul Deegan was a public affairs executive at BMO and CN, and served in the Clinton White House.

With China becoming increasingly a geopolitical and security concern, Canada’s release of an Indo-Pacific Strategy is timely. The strategy is primarily a reset of how Canada views China in the Xi Jinping era, pivoting away from what has become a dangerously dependent trade relationship. Worthy objectives, but it raises the question: Shouldn’t we have a comprehensive economic strategy for our own Western Hemisphere?

The unequivocal answer is yes.

The geopolitical calculus is twofold, not only in diversifying away from China but also in helping others in such diversification.

Over the past two decades, China has emerged as a much bigger player in Latin America and the Caribbean, courting influence with concessional finance and loans with long strings attached while locking in long-term natural resource supplies. By more actively and purposefully engaging the region, Canada can help counter China’s influence and draw these countries more fully into the Western orbit.

And ultimately, a hemispheric strategy is about zeroing in on untapped potentials and securing our economic future.

We can thank former prime minister Brian Mulroney for making free-trade agreements a core element of the Canadian trade-policy tool kit.

Since the North American free-trade agreement, we have concluded bilateral trade agreements in our hemisphere with Chile, Colombia, Costa Rica, Honduras, Panama and Peru. Today, Canada’s merchandise trade with the rest of the hemisphere, excluding Mexico and the United States, totals nearly $30-billion, and trade in services totals another $15.4-billion. With over one billion people, the Americas are an attractive market.

In particular, Canada’s trade with Brazil goes back to Confederation. We were an early foreign investor in the country with Brazilian Traction, Light and Power Co. a century ago. In a 1947 article for Maclean’s magazine, Charles Lynch and Pierre Berton described it as “a sort of Brazilian version of Bell Telephone, Ontario Hydro and Toronto Transportation Commission rolled into one.” It was later known as Brascan, which eventually became part of Brookfield Asset Management. Today, Brazil is our third-largest trading partner in the Americas after the U.S. and Mexico, with bilateral merchandise trade totalling close to $10-billion with another $1-billion in services trade.

We have been in free-trade negotiations with the Mercosur trading bloc, which includes not only Brazil, but Argentina, Paraguay and Uruguay, since 2018. With Donald Trump wannabe Brazilian President Jair Bolsonaro on his way out and the Embraer irritant with Brazil now gone, it’s time for Canada to conclude a trade agreement with Mercosur, which has a population of nearly 300 million.

This could be a gamechanger and could be the spark to ignite ambitious new thinking about a free-trade area of the Americas – an idea that was first mooted at the Miami Summit of the Americas in December, 1994, and has been dormant for decades.

Closer ties to the hemisphere would also help solve other economic problems. Canada aims to welcome 500,000 new permanent residents by 2025. These immigrants are badly needed, given our aging population and shortage of workers. Last year, despite the geographic proximity and historical links, only Brazil was a top-10 source of new permanent residents to Canada from the hemisphere, excluding the United States. This is a missed opportunity – we should look to the region as a source of new Canadians.

To help facilitate this, we could dramatically increase student flows to Canadian universities from the region, which would help to offset the loss of Chinese students given the chilling of relations with China. There is also enormous potential to increase two-way tourism flows with a targeted and well-delivered tourist visa program.

We live in a highly uncertain and volatile world, with rising geopolitical tensions. To expand our economy, to diversify our export markets, and to make supply chains more resilient, we have an opportunity for massive gains here in our hemisphere. We share time zones, we do not come with a scary reputation, and we have world-leading expertise in financial services, agriculture, freight rail transportation, hydroelectricity, telecommunications, and extractive industries.

And it is timely: an opportunity to demonstrate that Canada is a committed long-term partner to Latin America and the Caribbean and possibly be the catalyst to bring the dream of a free-trade area of the Americas to reality.

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