One of Canada’s paramount foreign trade priorities should be opening access to key markets in Asia and Latin America for the country’s financial services sector, says a new report the C.D. Howe Institute.
The report entitled “Opening up New Trade Routes for Financial Services: Canada’s Priorities” identifies and ranks five key potential markets for Canadian financial services firms, said Daniel Schwanen, vice-president of research at the institute and one of the authors of the report.
“One thing that Canadians don’t know in general and the world doesn’t know about Canada is that our competitive strengths lie very often in the areas of services,” said Schwanen. “And one of the areas of increasing strength for Canada is in the area of financial services.”
(click here to listen to the full interview with Daniel Schwanen)
ListenAreas of strength
Canadian financial institutions weathered very well the economic crisis of 2008-2009 and are very well positioned to enter key rapidly developing markets, Schwanen said.
Authors of the report, which also included Dan Ciuriak and Jeremy Kronick tried to look at what would be the most promising avenues for Canada to try to remove trade barriers that prevent Canadian companies from accessing potentially lucrative foreign markets, Schwanen said.
The study looked at what are the markets that are likely to grow faster, where is there need for better financial services, and in which markets would Canadian institutions be particularly competitive, Schwanen said.
Based on these criteria, the authors identified five key trade deals Canada should be part of.
Key markets
Number one on that list is the ratification of the Trans-Pacific Partnership, signed by the previous Conservative government of Stephen Harper.
There are a lot of markets in that 12-country trade block that are very appealing to Canada because they either don’t have a very developed financial services industry or are very fast developing economies, such as Vietnam or Malaysia, said Schwanen.
Second on the list is China.
“China is very puzzling from our perspective because the country has offered to Canada to negotiate a bilateral trade agreement,” said Schwanen. “And so far Canada has not picked up on that.”
Despite the recent economic slowdown China remains a huge market and Canada’s competitors such as Australia already have a head start there, he said.
The third key area is Latin America. Although Canada has a bilateral free trade agreement with Mexico, Peru, Chile and Columbia, it should seek to join the Pacific Alliance group in order to benefit from any deeper trade liberalization within this important economic grouping, said Schwanen.
Number four on the priority list is India and number five is a group of rapidly growing East Asian countries including Indonesia, the Philippines and Thailand.
The benefits of liberalization of trade in financial services with all these countries far outweigh any potential drawbacks, said Schwanen.
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