Authors: David Luke & Phil Rourke.
The arrival of President-elect Donald Trump threw the Liberal Government’s trade strategy off balance. The recent reshuffling of Cabinet and the now laser-like focus on the United States, Canada’s most important commercial relationship, confirmed the need for a reboot.
The first casualty of the change in strategy is likely the government’s “progressive trade agenda,” particularly with respect to the developing world. As newly-confirmed Trade Minister Francois-Philippe Champagne considers his options, Africa is the best rationale to keep this agenda on his priority list.
The continent’s GDP has now surpassed the US$ 3 trillion mark. Its population has reached one billion and is expected to surpass two billion in the next 30 years. By that time, Africa’s population is expected to be larger than China and India’s combined.
The middle class in Africa now represents almost a third of Africa’s current population and is growing. According to a recent McKinsey Report, Africa’s strong household consumption and business spending will offer companies US$5.6 trillion in opportunities by 2025.
African countries are taking positive steps toward improved industrial development and structural change. Trade is essential to this effort. Intra-African trade is already significantly more diversified than continental trade with the rest of the world according to research carried out by the African Trade Policy Centre of the UN Economic Commission for Africa.
Poverty remains the main challenge for Africa. The Millennium Development Goal of halving poverty was met for all developing regions except Africa. The World Bank Group estimates that even though the share of extremely poor Africans declined from 57 percent in 1990 to 43 percent in 2012, the number increased by more than 100 million. They also project that the world’s extreme poor will be increasingly concentrated in Africa.
A focus on traditional markets for Canadian goods and services is not an effective long term strategy. Economic growth in the developed world has essentially flatlined. This has become the new normal. Canada’s economic future is in the developing world.
This is where the mandates of Trade Minister Champagne and International Development Minister Marie-Claude Bibeau intersect.
Africa represents the largest share of Canadian international development assistance. Under the umbrella of sustainable economic growth – the overarching theme of a progressive trade agenda, Canada has made significant investments in SME development, governance, greater and more inclusive public participation, women’s empowerment, and the environment.
Canada is already at the forefront of Africa’s trade and development agenda. Canada is working with the UN Economic Commission for Africa to support African efforts for a Continental Free Trade Area (CFTA) that would eliminate tariffs, streamline border-related issues, address non-tariff barriers and achieve common rules on investment and services.
This is the best entry point for Canada for further engagement. The issue is how Canada will use this opportunity: according to OECD data, Canada’s contributions to aid-for-trade initiatives is declining as its commitment to Official Development Assistance (ODA) also declines.
Africa has a Brexit challenge: the UK and Europe will be consumed for years with redefining all aspects of their relationship. Trade and investment relations with Africa is way down the list of priorities.
Canada should fill this engagement vacuum through the Commonwealth and la Francophonie. A comprehensive trade and development strategy with these members, launched at the WTO Ministerial in December, would provide a blueprint.
A services trade and investment focus should be emphasized. Tertiary education, clean energy development, technological cooperation on climate change mitigation strategies, and agricultural productivity services improvements are all priority areas for expansion in Africa. These priorities also address directly Canadian goals for improved women’s empowerment, increased inclusive growth and more broadly-based support for development.
Canada’s cooperation model with mining companies for improved corporate social responsibility provides lessons for deeper engagement in Africa. Lessons learned – both good and bad – can help develop new bilateral trade and investment relationships.
We also need a change in perspective. The criticism of the limits of globalization in addressing social and other developmental objectives is leading to a “Made in Canada” approach for goods and services. The reality is that we have mutual interests in creating value together, across national borders. A “Made WITH Canada” trade and development niche strategy based on sound business and development principles and some connection support from Canada is, in our mind, the only way to go.
About the Authors:
David Luke is Coordinator of the Africa Trade Policy Centre at the UN Economic Commission for Africa in Addis Ababa, Ethiopia. Phil Rourke is Executive Director of the Centre for Trade Policy and Law at Carleton University and the University of Ottawa.