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Government called on to help push into emerging markets

|Written By Jennifer Brown
Government called on to help push into emerging markets
Len Edwards, Gowling Lafleur Henderson LLP

The future prosperity of Canadian business is threatened if all levels of government fail to work with the private sector to aid its expansion into emerging markets, according to a report presented to the prime minister last week.

“Canada has relied heavily on traditional western markets, but these are now the low-growth areas in the world,” says Len Edwards, a strategic adviser at Gowling Lafleur Henderson LLP in Ottawa and former deputy minister for foreign affairs from 2007 to 2010.

“Unless we switch gears and strategically tackle the new emerging markets with intelligence and good sense and with a joined partnership between government and the private sector, we’re going to miss the boat.”

“Winning in a Changing World: Canada and Emerging Markets,” the Gowlings-sponsored report released June 26, argued it’s time for Canada to strengthen its relationships with the world’s emerging markets or risk falling behind. The report was delivered to Prime Minister Stephen Harper during a private meeting with the report’s authors, which included Edwards.

The report will also be shared with opposition leaders, premiers, and territorial leaders.The report, co-sponsored by SNC-Lavalin, Barrick Gold Corp., AGF Management Ltd., CGI Group Inc., Enbridge Inc., the Centre for International Governance Innovation, CIBC, and iPolitics, was initiated following a meeting held in late 2011 with Canadian business leaders. Research was conducted across Canada through the Norman Paterson School of International Affairs at Carleton University.

Edwards says the conclusion was that Canadians in general needed “a wake-up call and an awareness to be brought forward on the seriousness of the change going on in the global economy and the nature of the challenge Canada is facing.”

Canadians are minor players in high-growth countries such as China, India, Brazil, Colombia, Mexico, Korea, Turkey, Vietnam, Indonesia, and South Africa with less than 10 per cent of Canadian exports and less than four per cent of outward investment going to these emerging markets.

At a conference held last fall in Toronto on the future of Canada’s food sector, experts also spoke to this problem. Countries like China and India have seen 10-per-cent increases in personal income over the last few years that have created a growing desire for protein products. That demand should be fuelling Canadian investment in providing resources such as grain to fulfil those needs.

“We have a high opportunity to grow the export market but we’re not doing a good job of this,” said Larry Martin, a senior research fellow with the George Morris Centre, Canada’s only independent agri-food think-tank, who spoke at that conference. “What have we done to get access to the Asian market? Nothing. We don’t have access to markets where meat consumption is growing.”

Edwards says few Canadians see the opportunity abroad for sectors like agriculture.

“I find the awareness within Canada of the agri-food sector, which represents about eight per cent of our GDP, is just not recognized by Canadians. Very few see the importance of the sector in any way that compares with how they look at energy, oil and gas, and mining,” says Edwards.

While agricultural companies like Agrium Inc. and Viterra Inc. have been active in China and farmers’ organizations have been interested in these new markets, Edwards says they’re formidable and expensive to break into.

“I do think there is awareness of the importance but like all Canadian businesses they tend to go where the earnings are easiest to make and that means the traditional markets,” he says.

“We need government to step up to the plate and negotiate agreements with these dynamic new markets that will assure long-term access and profitability for Canadian products.”

Key findings of the report include:

• Emerging economies in China, India, Brazil, Colombia, Mexico, Korea, Turkey, Vietnam, Indonesia, and South Africa are expanding at more than twice the rate of Canada’s more traditional markets.

• By 2015, emerging economies are expected to account for more than half the world’s production and consumption of goods and services. By mid-century, emerging markets will be home to 70 per cent of the world’s wealth and 60 per cent of global trade.

• Canadians are minor players in these markets: less than 10 per cent of Canadian exports and less than four per cent of outward investment go to these emerging markets.