In the wake of growing debt and falling value of its currency, the United States is preparing to follow a more restricted trade policy. A few signs of this impending change can be seen in the recent budgetary proposals being contemplated by the Obama administration. The proposed imposition of $5.50 US passenger inspection fee and a 0.075-per-cent import duty, notwithstanding NAFTA, is an indication of the direction that the U.S. is likely to pursue in the future.
With close to 75 per cent of total Canadian exports going to the U.S. and more than 16 million Canadians visiting the U.S. by air in a year, these proposed fees and duties will have a significant impact on Canadian travellers and businesses. Doing business with the U.S. is becoming increasing difficult and cost ineffective. The U.S. economy is still caught in the mire of the 2008/09 recession and recovery is fragile. The country is losing its prosperity and leadership role in the world because of the poor management of both its economy and politics. Canada, as a major trade-and investment-dependent country, cannot afford to continue to bank on the U.S. markets alone. It is high time for both government and businesses in Canada to work together to find more diverse and long-term trading partners around the world. Over the past couple of years Canada has increased its direct engagement with China, the EU, a few Latin American countries, and more recently with Japan. This is the way forward, but much more needs to be done to further diversify Canada’s international trade and investments.
As the world’s economic powerhouses are rapidly shifting toward emerging markets like China, India, Brazil, ASEAN countries and Russia, Canada needs to continue exploring new markets. There is considerable scope to build on Canada’s existing bilateral political and economic relations with South Asia. Canada has been an important donor in Bangladesh, Pakistan, and Sri Lanka. It is currently playing an important role as a peacekeeper and donor in Afghanistan. It is home to a large and growing immigrant population from India, Pakistan, and Bangladesh. The current population projections show that immigration from Asia would be the driving force for population growth in Canada and in B.C. for many years to come.
After East Asia and Pacific, South Asia is the fastest growing region in the world. GDP growth rates for South Asian economies stood at six per cent in 2009 against -1.9 per cent for the world. Recent economic growth in South Asia has been based on strong demand, good performance of the good-producing sectors, and exports. Despite the worldwide recession, India’s GDP growth stood at 7.4 per cent in 2009 and Pakistan’s at 3.6 per cent. The World Bank forecasts strong economic growth of around eight per cent for South Asia during 2011-12.
Canada’s trade and investment ties with South Asia are weak. The share of South Asian countries in Canada’s Asia-Pacific exports is less than one per cent and is only three per cent in imports. India and Pakistan together accounted for only $3 billion Cdn trade in 2010 or 0.4 per cent of Canada’s merchandise trade. Although there has been some growth in recent years, yet Canadian direct foreign investment in South Asia is also quite modest.