To diversify successfully, Canadian firms require a full understanding of how international business works today and where the opportunities lie. Nimble exporting businesses and innovative policy-makers know that the traditional model of selling commodities and manufactured goods to foreign buyers has evolved – into a more modern and sophisticated approach to international business. Trade today is an integrative process, involving many elements, including: exports; imports used as inputs to create exports; foreign investment flows both into Canada and abroad; sales from foreign affiliates; exports of services as well as goods; rapidly expanding digital trade; and success breaking into global and regional value chains.
Asia-Pacific countries offer another special opportunity, thanks to robust growth across much of the region, a rapidly growing middle class and increasing regional economic integration. Japan is a key regional player and home to some of the most innovative global firms. Real per capita incomes in Japan are high and rising, making it an attractive trade and investment partner even if its potential growth is weak owing to a now-shrinking population base.
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), or TPP 11, is a massive new opportunity for Canadian firms. This agreement will give Canadian exporters improved and preferred market access in Japan, Australia, New Zealand and other Pacific Rim countries. With the United States currently outside the CPTPP, Canadian exporters will have better access than their U.S. competitors.
China and India are the global growth leaders among large economies, each projected to grow at around 6 per cent in 2018. However, there are limitations that constrain their performance, notably aging demographics and rising debt in China, and growing policy shortcomings in India. Freer trade with China and India would be complicated to deliver. Free-trade negotiations with India have moved very slowly; labour mobility is a major sticking point. Engaging more deeply with China is an important over-arching trade policy objective for Canada, but it will not be easy to separate commercial interests from political forces.
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