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Cracks in the Liberal International Order

By CIGI Graduate Fellows, Balsillie School of International Affairs

Potential Opportunities for Canada?

A policy brief recently published by the Balsillie School of International Affairs in Waterloo Canada reports that in a survey by the Canada China Business Council, 74 percent of respondents were aware of the BRI, and 44 percent of respondents see opportunities available for them within the BRI (Kutulakos et al. 2017, 41). This same survey outlines respondent-identified opportunities with the BRI, including:

“Using Chinese distribution network to spread Canadian products through Chinese hubs.

  • Explore opportunities in Northwestern part of China where Canadian products still have large room to grow from agriculture technologies to clean energy.
  • It might help decrease the fees related to exporting [Canadian] products.
  • Cross-border investment work between China and other [BRI] countries.
  • Infrastructure
  • Technology
  • Services
  • [Canada is] a provider of minerals and products that will be essential to construct the One Belt One Road infrastructure.
  • More business activities in [British Columbia] with China, as Pacific Gateway of China to North and South Americas.
  • Satellite communications networks are key infrastructural elements of their build out.
  • Providing specialised technologies and services for infrastructure development.
  • Environment protection around the Silk Road area.” (ibid.)


The policy brief, by Michael Fleet, notes that beyond business opportunities, the BRI provides Canada with a means to become better connected economically, as well as politically, through increased interactions with BRI states. As Association of Southeast Asian Nations (ASEAN) states such as Singapore look to increasing their infrastructure capacity through the BRI (BDO Singapore 2015), Canadian infrastructure and engineering expertise can assist in obtaining contracts in the region. Furthermore, several European states, and the European Union (EU) itself, are looking to become potentially involved with various projects with the BRI; as Canada enters into a free trade agreement with the EU, BRI projects may provide opportunities for Canadian businesses to cooperate with EU businesses. Although the United States is currently Canada’s leading trading partner, it is critically important to pay attention to the potential for economic growth in Asia, as it will overtake the United States as the fastest growing centre of global trade. Canada needs to diversify its trading partners and establish its presence in Asia to further connect its economy and relations to other global partners.

Effective policy making can nurture Canadian small- and medium-sized enterprises (SMEs) for global scalability and the BRI opens doors for many Canadian businesses. Through a careful tuning of already existing policies and funds, such as the Innovative Solutions Canada fund and the Venture Capital Action Plan, the Canadian government can work with SMEs to assist with global scalability (Bergen 2017). Examples such as Bombardier Inc.’s announcement in 2016 of building 80 high-speed trains for Turkey, as well as a CDN$100 million technology transfer investment in Turkey’s high-speed network, are illustrative of opportunities presented by the BRI (Kirkham 2016). Indeed, Bombardier Inc. is already looking to grow (Lampert 2017), and the increased demand for infrastructure projects within BRI is most opportune.

Canada is currently involved in several economic initiatives in the region: from free trade agreement talks with China and India, to the Asian Development Bank and the AIIB. But beyond its dealings with China, Canada is also interested in advancing its economic goals in Southeast Asia, and involvement in BRI projects could signal Canada’s commitment to further relations with ASEAN member states. A key Canadian objective is to become a member of the ASEAN Defence Ministers Meeting plus (ADMM+). The ADMM+ is of Canadian interest as it allows Canada to have a voice in watching how relevant states interact concerning the ruling from The Hague on the South China Sea.

Recommendations

Lobby in the AIIB for a fair tendering process in contracts for Canadian companies with the BRI, as well as push for a more transparent and sustainability aware tendering process.

Encourage Canadian businesses’ competitive advantage in fields such as transportation services and its engineering skills in BRI projects, which will allow Canadian companies the business opportunities and access to capital financing from groups such as the AIIB to scale up globally. Canadian initiatives such as the Innovative Solutions Canada fund and the Venture Capital Action Plan can help SMEs grow and gain access to both capital and customers on the global market, with the BRI as a source of projects. Furthermore, by becoming involved in the BRI’s early stages, Canadian companies can build relationships to obtain more contracts in the future. Canada should also do a thorough assessment of the vulnerability of its different economic sectors, and learn from its domestic assessments from the current China–Canada free trade agreement.

Integrate BRI business projects with Canadian development aid with entities like the Asian Development Bank in relevant states to develop a supporting role between infrastructure development with the BRI and environmentally sustainable programs, development of the clean energy industry, social infrastructure and maximization of poverty reduction. This approach would also align with Canada’s commitment to the Paris Climate Agreement and the United Nations Sustainable Development Goals, an important marker for Canada’s objectives in obtaining a Security Council seat in the United Nations.

Establish further connections with relevant states and increased dialogue with China through embassies and missions, as well as through non-governmental organizations and businesses to explore further opportunities with the BRI and establish greater security and risk-evaluation sharing. This will increase people-to-people relations at various levels for increased Canadian presence in the region. As Canada and China expand their economic dialogue, Canada should further its presence with partners in the region through track one and track 1.5 diplomacy.

Geo-strategically, Canada must continue to seek a seat at the ADMM+. By working with the BRI and consulting with relevant states on a political and business level, Canada can begin building stronger relationships with partners in the region to assure its commitment and presence, which will assist in its application to the ADMM+. Here, Canada can lend its voice to the security of the South China Sea while monitoring the precedent-setting rulings of the United Nations Convention on the Law of the Sea, which are important considering the Canadian North and potential legal issues in the future. As arctic ice recedes from climate change, more routes will become accessible. The result will be more shipping moving through these waters in the Canadian north. Being able to watch and promote law-abiding norms for UNCLOS will help to ensure legal passage and rules for these new routes in the Canadian north.

Please click to read the full report.

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