Canada’s engagement with Asia is shaped by its expanding trade ties with China toward the end of the 2000s. Apart from being Canada’s largest trading partner in Asia (third largest overall after the U.S. and EU), China also far superseded its Japanese and Korean counterparts in terms of their overall trade values with the Great White North in 2019. Given China’s significance to Canadian trade abroad, it is not an exaggeration to claim that Canada’s Asia strategy is, in fact, a China-plus strategy.
But with Canada-China relations still stinging from the long-time detainment of Michael Spavor and Michael Kovrig, there is an urgent need to rethink this strategy for Asia. As argued by Ethan Lou in a CBC opinion piece, the pandemic offered an opportunity for Canada to diversify its trade away from the Chinese market and, as such, reduce its exposure to a range of political-economic-public health risks that Ottawa experienced before and during the pandemic. The Association of Southeast Asian Nations (ASEAN) offers that opportunity and Canada has punched below its weight in recent years with less than significant engagements in this vibrant region.
Current bilateral co-operation
Canada is not new to ASEAN. Being a dialogue partner to the grouping since 1977, Canada-ASEAN ties have largely been characterized by standard development assistance and modest economic engagements from both sides.
As a donor, Canada has provided a list of standard development assistance that is critical to ASEAN’s long-term progress. As specified within the plan of action to implement the joint declaration on ASEAN-Canada Enhanced Partnership (2021-2025), the Canadian government is a partner for women’s and children’s issues and it also supported the development of ASEAN small-and-medium enterprises (SMEs) through the Canada-OECD project for ASEAN SMEs. Similarly, the Canada-ASEAN Scholarships and Educational Exchanges for Development (SEED) program, a hallmark of Canada’s deepening engagement with ASEAN, has also been established to reduce poverty in the Southeast Asian member countries and to help realize the UN 2030 Agenda for Sustainable Development.
That said, Canada-ASEAN economic engagement is modest at best. As of 2019, Canada was ASEAN’s ninth-ranked merchandise trading partner with a total trade value of US $17.1 billion. The Southeast Asian grouping, meanwhile, was Canada’s sixth largest merchandise trade partner in 2018, with values of US $20.7 billion that year. As for investment and educational exchanges, Canada is ASEAN’s eighth most important source (US$ 3.2 billion) of foreign direct investment (FDI) in 2019 while more than 35,000 Southeast Asian students had chosen Canada as their educational destination before 2018. Should a comprehensive economic partnership deal be sealed in the near future, the room for growth in these economic areas will be colossal for both Canada and ASEAN.
Synergizing Canada-ASEAN relations
Notwithstanding the two facets of bilateral co-operation, Canada and ASEAN have yet to reap substantial benefits from the current Asian strategy as pursued by the Canadian government. Instead of continuing the China-plus strategy for Asia, it is timely for Canada to come out with an ASEAN strategy that will synergize bilateral relations through an adjustment of the two facets of co-operation.
Above all, an ASEAN strategy should deviate from the standard developmental assistance approach that is practised by Canada today. Instead of treating ASEAN as yet another developing region and focusing its assistance on poverty reduction and the realization of the 2030 Agenda, Canada should concentrate on the areas the Southeast Asian region urgently needs.
Drawing from its SEED program’s success, the Trudeau government can conceptualize and implement a single hallmark program in aiding Southeast Asia within the three areas of sustainable development: gender equality, public health and food security. In particular, public health co-operation could be readily kick-started between both sides, considering the ongoing COVID-19 wave in Southeast Asia and Canada’s vaccine reserves, which could be donated to needy ASEAN countries in the short-term. Even the SEED program itself can be revamped to include hosting young ASEAN bureaucrats, policy-makers and researchers with fellowships in Canada with the aim of increasing elite exchanges between these future Southeast Asian leaders and their Canadian counterparts.
In addition, an ASEAN strategy should use Canada’s sectoral advantages in its exploratory economic partnership with the Southeast Asian region. While a comprehensive economic partnership deal with ASEAN is on Canada’s radar, any conclusion of such a deal in the near future should focus on selling high-quality Canadian goods and services to the burgeoning middle class in ASEAN. As highlighted by the ASEAN Advantage Report back in 2017, five sectors have been identified for Canada’s new economic co-operation with the Southeast Asian grouping: agriculture, natural resources and products; industrial machinery and equipment; infrastructure; transport and aerospace; as well as services.
The services sector has shown its resilience and potential even as ASEAN countries have been battling the pandemic. Despite national lockdowns that impacted many sectors, Southeast Asia’s e-commerce market continued to expand at a rate of 36 per cent regionally. As highlighted by the e-Conomy Report 2020 published by Google, Temasek and Bain, Indonesia and Vietnam are the two most promising e-commerce markets that have expanded above the regional rate, at 37 per cent and 41 per cent respectively. As such, aspiring Canadian e-businesses should explore co-operation in the three areas relevant to the e-commerce market: ICT, financing and transport services.
By adjusting the two facets of co-operation, Canada and ASEAN will achieve a much-needed synergy that will improve bilateral ties. This strategy will not only consolidate Canada’s donor position vis-à-vis ASEAN, but will also benefit its economic fortunes in the post-pandemic era.
An alumnus of the University of Manitoba, Chee Leong Lee (Karl) is currently the collaborative fellow with Anbound Malaysia, an independent think-tank based in Kuala Lumpur. He holds a PhD from Monash University in Australia.