Middle power or muddling power? Canada's relations with emerging markets

Abstract

The introduction to this special issue on Canada and emerging markets introduces some of the key concepts and theoretical perspectives developed in the issue. The rise of emerging markets, especially the BRICS (Brazil, Russia, India, China and South Africa) poses serious challenges to the conduct of Canadian foreign and economic policy. In this special issue, we review Canada's record of relations with these countries (including the 2013 Global Markets Action Plan), and identify some of the main obstacles to improved relations. All of the authors argue that the response to this challenge to date has been inadequate, and that Canada is falling behind in the reshuffling global order. This introductory article describes changes in Canada's global economic position and identifies literature on institutions and cognitive commitments, global bricolage and the relationship between “old” and “new” middle powers which provide some guidance for evaluating the challenges and limitations of Canada's relations with emerging markets.

Résumé

L'introduction de cette édition spéciale sur le Canada et les marchés émergents présente certains des concepts clés et points de vue théoriques développés dans les pages suivantes. L'apparition des marchés émergents, en particulier des BRICS (Brésil, Russie, Inde, Chine et Afrique du Sud) représente de sérieuses difficultés pour la conduite de la politique étrangère et économique canadienne. Dans ce numéro spécial, nous dressons le bilan des relations du Canada avec ces pays (en incluant le Plan d'action sur les marchés mondiaux de 2013) et nous identifions certains des obstacles majeurs à l'amélioration de ces relations. Tous les auteurs avancent qu’à ce jour la riposte à ces difficultés a été inadéquate et que le Canada se fait distancer en ce qui concerne la redistribution de l'ordre mondial. Cet article d'introduction décrit les changements du positionnement du Canada dans l’économie mondiale et identifie la littérature sur les institutions et les engagements intellectuels, le bricolage mondial, et les relations entre les « vieilles » et les « nouvelles » puissances intermédiaires, qui fournit certaines orientations quant à l’évaluation des difficultés et des limites des relations du Canada avec les marchés émergents.

Keywords:

• emerging markets
• Global Markets Action Plan
• BRICS

Introduction

The shifting center of global affairs in the past quarter century poses serious challenges for Canada's economic and political prospects. Francis Fukuyama's (1989) triumphalist assertion that history had ended and Charles Krauthammer's (1990) declaration of a “unipolar moment” proved to represent a passing instant of liberal dominance under United States power. By the new millennium came a lurch toward what Fareed Zakaria (2008) called “The Post-American World”. Others characterize the current order as multipolar – or even an “age of nonpolarity” (Haass 2008; see also Ayres and Macdonald 2012). The “emerging powers,” particularly the BRICS (Brazil, Russia, India, China and South Africa),¹ represent a particularly significant phenomenon, according to Andrew Hurrell, because all fall outside, or on the margins of, the United States-led system of Western institutions and alliances constructed in the post-World War II period (see Ikenberry 2000). All of the BRICS have adopted conceptions of world order that challenge, to various extents, liberal norms espoused by the United States and its Western allies. In the wake of the financial crisis, the BRICS presented a note of hope in an otherwise gloomy economic picture, (Stuenkel 2015, p. 1).

Canada's economic prospects appear considerably bleaker. While weathering the global financial crisis without major dislocation thanks to its strong financial system, other aspects of Canada's economic performance were more troubling, with productivity levels, trade deficits² and manufacturing exports as particular concerns. The earlier choice of governments to pursue deeper economic integration with the United States at the expense of trade diversification proved problematic in an era of stagnation of the American economy and the rise of new economic powers. Canada faces not just an economic crisis but also a crisis of identity, as it confronts powerful new challengers to the global order that Canada contributed to establishing, as well as benefitted from.

The Global Markets Action Plan (GMAP) launched in 2013 represented an attempt by the Harper government to re-design Canada's foreign economic policy to respond to these changes utilizing the concept of “economic diplomacy.” The GMAP built on the earlier 2007 Global Commerce Strategy. Trade Minister Ed Fast described that strategy as “a comprehensive and strategic plan for expanding Canada's trade network, strengthening our competitive position in our traditional markets, and extending our reach to new emerging markets.” Fast pronounced it “a resounding success,” pointing to the signing of seven different free trade agreements (FTAs) with 37 countries. The GMAP was designed to promote “deeper trade and investment ties with many of the largest, most dynamic and fastest-growing markets in the world in order to enhance Canada's competitive edge in a global economy that is fiercely competitive.” (DFATD 2014). The plan lays out a strategy to target “markets that matter” through a series of actions designed to promote Canadian businesses divided into three categories:

• emerging markets with broad Canadian interests;

• emerging markets with specific opportunities for Canadian businesses; and

• established markets with broad Canadian interests.

The following countries are classified as of “broad Canadian interests” within each major world region:

Asia:

China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Thailand and Vietnam;

Latin America:

Brazil, Chile, Colombia and Peru;

North America:

Mexico;

Middle-East and Africa:

Israel, Saudi Arabia, South Africa and United Arab Emirates and Europe (Turkey).

Russia, previously identified as a priority market under the GMAP, was removed from the list when the Harper government imposed sanctions (DFATD 2014).

Tools identified to increase trade relations include FTAs, nuclear cooperation, air transport agreements, investment promotion and protection, an extractive-sector strategy, an international education plan and the launch of a defence procurement strategy with a clear export-oriented component. The Canadian sectors targeted by the plan include goods and services provided by key industries like the aerospace, agricultural, education, forestry, wines, mining, knowledge sectors and so on.

Canadian businesses had substantial input into the development of the GMAP. The plan identifies priority markets, with a focus on emerging markets. Laying out the concept of “economic diplomacy,” the plan declares that “all diplomatic assets of the Government of Canada will be marshaled on behalf of the private sector in order to achieve the stated objectives within key foreign markets” (DFATD 2014).

It focuses in particular on providing support to the small and medium enterprise (SME) sector. As the report states:

Of more than 1.09 million SMEs operating in Canada, just 41,000 are currently exporting. The share of those exporting to the United States, Canada's largest and most important trading partner, is understandably high. In 2000, 89 percent of Canada's SMEs that were exporting were active in this market. As of 2011 (the last year of available data), the share was still dominant, but had fallen 12 percentage points to 77 percent. At the same time, SMEs that reported exporting activity in emerging markets rose from 12 percent in 2000 to just under 29 percent by 2011. This is a sign that some significant diversification of export activity has occurred at the SME level. However, that share has not changed materially since 2009, suggesting that the trend is on hold. (DFATD 2014)

Prime Minister Harper announced a total of C$50 million over five years to support market research and participation in trade missions for Canadian SMEs. An additional C$42 million over five years was provided to expand the Canadian Trade Commissioner Service (CTC), with $9.2 million annually thereafter. New trade offices were opened in China and more support was provided for the CTC in India (DFATD 2015a, 2015c).

This special issue of Canadian Foreign Policy Journal evaluates various efforts to diversify Canadian trade and investment interests under the Conservative government. We seek to promote new thinking about Canada's position in the global economy, through examination of our changing relations with the “emerging” markets in Asia, Latin America and Africa. We focus on the Canadian government's record in promoting economic ties with key actors in each of these regions. The authors address the following questions: How has the global economy changed and what opportunities and dangers does this change pose for Canada? How do these changes affect Canada's traditional role in the world system and the state's capacity to promote Canadian economic interests? The articles were written before the October 2015 election and may provide guidance for the new Liberal government.

The authors share a sense that the Canadian government's response has been inadequate, and that Canada is falling behind in the reshuffling global order. While this record may reflect the limitations of the previous Canadian administration, we believe it also relates to deeper problems that beneficiaries of the status quo face in accommodating new challengers. Here we lay out ideas about how to interpret the dilemmas facing Canada, drawing on literature on institutions and cognitive commitments, global bricolage and the relationship between “old” and “new” middle powers.

Evolution of Canada's relations with emerging markets

From 1945 until the end of the Cold War, Canada lived a charmed existence, emerging from the Second World War stronger and more prosperous than it entered it. The global order constructed after the Second World War was built much on the image of the Western Alliance that won it. Canada became a key supporting player in the forging of the post-war institutions described in G. John Ikenberry's After victory (2000) and in “embedding liberalism” during the post-war era (Ruggie 1982). As the Cold War highlighted the contrast between “embedded liberalism” and its challengers and dissenters, Canadian leaders believed that Canada, as a middle power without an imperial past, had room to maneuver that other members of the Western Alliance lacked. Canada could maintain relations with Cuba and open relations with China without fear of fraying the Western Alliance. Canada diversified relationships in the confident knowledge that it was bringing countries into a world system of which it was a charter member.

An ocean away from the front lines, buoyed by the enormous expansion of its industrial sector due to wartime demand, Canada entered the post-war economic order with renewed self-confidence. A booming American economy further promoted the expansion of resource and manufacturing sectors. Expansion largely took the form of branch plants of United States-based companies, and Canada became increasingly integrated into the North American market. Canada sought to protect its prosperity in successive rounds of trade liberalization under the General Agreement on Tariffs and Trade (GATT). Our traditional political economy, built on staple exports based on our resource bounty of fur, fish, wood, wheat and oil, sustained a high-wage, high-skilled industrial economy behind the tariff walls of the National Policy. Under conditions of expanding international trade, gradual trade liberalization would sustain the industrial capacities acquired during the wartime boom. At the same time, external demand for staple commodities insured trade competitiveness. At the same time Canada's huge geography and sophisticated high-wage economy promoted the development of sophisticated services in banking, transportation and telecommunications.³

As trade liberalization eroded the basis of import substitution industrialization, Canada flirted with diversification through the so-called “Third Option” in 1972, and, when this failed, doubled down on continental free trade, first in a managed effort in the Auto Pact, and then through a comprehensive FTA with the United States in 1988.⁴ Continental free trade was intended to serve as a springboard for the globalization of Canadian industry. Exposure to American competition spelled the end of the branch-plant economy, but advocates believed that the remaining industries would then be well positioned to compete worldwide.

Rather than a springboard for global competitiveness, however, free trade made Canada further dependent on the American market and a devalued dollar for industrial exports. As the emerging markets accelerated development in the 1990s and 2000s, Canada's market share failed to keep pace, and our exports became increasingly concentrated in resource-intensive commodities. A few key players in telecommunications and transportation equipment, such as Nortel, Blackberry and Bombardier, became spectacular shooting stars in a general ambience of underperformance. The commodities boom occasioned by China's rise masked declining competitiveness, however.

The end of the Cold War enabled Canada to expand the framework and domain of multilateral rules-based orders, such as in the World Trade Organization or the Ottawa process, or the Montreal Protocol, the Kyoto Protocol and the responsibility to protect doctrine. However, as the United States opted for unilateralism and “coalitions of the willing,” Canada was cast adrift. The demise of unipolarity in the wars of Iraq and Afghanistan followed by the Great Recession of 2008 again reordered the global landscape but cost Canada its calling as the intimate and reliable ally of the leading power. It could no longer depend on a concert of liberal powers to shape the global order. Western powers lost dominance, and the concert was frayed. Past Canadian initiatives towards the Asia-Pacific, particularly to bring China into the global order, became anachronistic and redundant – out of step with our capacity and with Asian ambitions to reorient global and regional centers of power.

In an effort to reinvigorate Canada's traditional middle power role for a new age, Prime Minister Paul Martin proposed the G-20 Leaders Summit, expanding and extending an ad hoc grouping of finance ministers and central bankers, which had been formed to address the growing inadequacy of the G-7, and the Bretton Woods institutions in which he had previously participated as Finance Minister. His initial effort was stillborn, both because of resistance from the still-overbearing United States under George W. Bush and, more importantly, because at the time of his proposal it was merely a well-meaning effort without a compelling purpose or rationale rooted in an immediate crisis. Its branding as the effort of a Liberal government in the tradition of middle-power internationalism tainted it with the stain of original sin in the eyes of Martin's Conservative successors, depriving Canada of a chance to play a pivotal role in the aftermath of the 2008 crisis. Instead, the cause was taken up by Martin's unfortunate British counterpart, Gordon Brown, and ironically, by none other than George W. Bush.

In light of the relative decline of the United States, its strongest economic partner, there are strong economic incentives for Canada to diversify its trade and investment relations. The Canadian business community has vocally expressed interest in promoting Canadian ties with the emerging powers, as reflected in reports by the Canadian Council of Chief Executives (Dawson 2014), the Canadian and international law firm Gowlings Canada (2012), and the Conference Board of Canada (Palladini 2015). A Conference Board report states:

While emerging economies brought increased demand for Canada's natural resources and agricultural goods, they also brought skilled workers with relatively low wages and vast economies of scale. Concomitantly, firms began to develop global value chains to produce products and services, and looked increasingly outside of North America and Europe to source the inputs and skills they needed. While Canada's major trade agreements such as the North American Free Trade Agreement (NAFTA) served it well, the country was ill-prepared to go toe-to-toe with emerging-market competitors in manufacturing. (Boothe 2015, p. 6)

The chief executive officer (CEO) of Scotiabank, Rick Waugh, stated in a speech to the Toronto Board of Trade:

“Our historical near-total reliance on the US may have been enough in the last century, but it hasn't prepared many of us for the next century,” Mr. Waugh said. “It has made us complacent – too comfortable to sit back and be happy trading with ourselves or with the big market in our back yard, rather than sharpening our skills to take on the bigger world.” (quoted in Robertson 2013)

Even with the recent recuperation of the American economy and the slide of the loonie, Canada's trade deficit continued to climb. This reflects in part the fact that Canada has lost its former share of American imports, falling to about 13 per cent of total American imports by 2015, while Canada accounted for about one fifth of American imports in the late 1990s (Tencer 2015). This situation makes improved trade relations with emerging markets even more crucial to Canada's economic future.

The Harper government did perceive potential political benefits from global changes, and placed great emphasis on reaching out to the diasporas of these emerging markets, hoping to pull votes away from the Liberal party which traditionally received strong support from “new Canadians.”

Interests, ideas and institutions

If economic and political interests indicate a shift toward emerging markets, how do we account for disappointing outcomes of government efforts thus far, as described in this special issue? Our explanation draws on the fact that economic interests and the ideological and institutional paradigms of Canadian foreign policy have dramatically diverged in recent years, contrasting with the convergence of the era of embedded liberalism. This is less because they could not be diplomatically reconciled, and more that they could not be reconciled in the old way. The rise of the BRICS as well as other emerging actors located in the Global South fundamentally challengers the old way of doing business and old attitudes about global hierarchies. Institutions and cognitive frameworks adapt slowly to these changing realities.

Both liberal institutionalists and constructivists emphasize how institutionally embedded ideas shape foreign policy. A classic text is Judith Goldstein and Robert Keohane's Ideas and foreign policy: beliefs, institutions and social change (1993). Goldstein and Keohane are at pains to establish the importance of ideas in Max Weber's metaphor as “switchmen” in foreign policy. But a more mundane purpose served by institutions in foreign policy intervenes more directly: not only do institutions embody ideas and engender interests as well as predetermine choices, they also manage information, set agendas and socialize actors. Robert Keohane has pointed out the ways in which international institutions act as “informational structures,” that reduce transaction costs and the uncertainty associated with the “private information” surrounding state preferences (Keohane 2002, pp. 27–38). Beyond interest-driven bilateralism, modern diplomacy is built around the pre-programmed agenda of multilateral institutions propelled by an agenda of yearly meetings backed up by an extensive administrative and bureaucratic network to manage information flows and planning efforts surrounding these regular meetings. These networks don't simply channel information and react to ongoing events and shifting national interests; they generate the information that maintains the networks.

In the case of Canada, the vast bulk of information and work flows through the network of existing multilateral commitments, such as NATO, NAFTA, the OAS, APEC, the G-8, the British Commonwealth, Francophonie and, of course, global multilateral bodies like the United Nations and its affiliates. The majority of Canada's commitments in this regard are organized along the North Atlantic axis. With the exception of APEC and Japanese involvement in the G-8, almost none of the regular multilateral agenda of our foreign policy establishment involves trans-Pacific relations, meaning, in particular, that China is largely handled within the North Asia geographic division of the Department of Foreign Affairs, Trade and Development (DFATD).⁵

Indeed, the thrust of Canadian multilateralism, at least under the current government, is shown by the fact that the page devoted to Canada's membership in international organizations on the DFATD website bears this subtitle: “Canada promotes commonly shared values such as equality and democracy through its participation in many international organizations” (DFATD 2015b). In other words, the underlying purpose of our participation in a multilateral order is to brand that order as liberal. While these may be widely shared goals of Canadians, defining the purpose of our engagement in this way gratuitously constrains our role and undercuts our economic interests.

Two-way trans-Pacific trade (with China, Japan and Korea) has begun to eclipse trade with the European Union with which we have long-established linkages through NATO, Francophonie, the Commonwealth and the G-8 as well as the OECD.⁶ The result is an imbalance between our diplomacy and economic agendas. Canadian prime ministers will likely meet British or French counterparts at least four time a year, whereas they may meet with the president of China on the margins of APEC or the G-8 once, and for as little as fifteen minutes. Canada's achievement of a “strategic partnership” with China in 2005 never quite lived up to its billing, even before the Harper government commenced its conflicted reconsideration of our relationship with China (Paltiel 2012). Still, the 2014 achievement of the establishment of annual foreign affairs ministers and economic and financial strategic dialogues, to plan bilateral relations and co-ordinate co-operation in different areas (Luo 2015), can be seen as a breakthrough at a time when the conduct of foreign policy is deeply entrenched in the prime minister's office (Nossal and Sarson 2014).

The overlapping circles of the G-7 and NATO continue to define and direct Canadian engagement even as both our interests and the weight of global decision-making have shifted away from the Atlantic triangle. The insubstantiality of the APEC agenda contrasts heavily with the seriousness with which NATO issues are treated. This means less involvement from deeper rungs in the bureaucracy and less dense policy communities. The lengthy NATO-led commitment to the war in Afghanistan drew resources in both the defence and aid envelopes, in addition to foreign affairs. Dense interconnections mean officials at multiple rungs in the political and administrative hierarchy develop close working relations that may amount to informal consultation on issues of common concern. This allows officials to compare notes before submitting policy briefs to their superiors and to continue to share their thoughts and concerns once a common agenda is decided. By contrast, relations with the BRICS and other emerging powers remain more formalistic and discontinuous. Ongoing policy agendas and regular meetings mean continuity across administrations and electoral changes. Hemispheric relations had never been a top priority for previous governments and were poorly integrated into the agenda of annual summits and policy conclaves. Africa is relegated to the somewhat patronizing context of the Commonwealth and La Francophonie, the virtual shadows of old colonial empires. Here, the ambience is one of benevolent concern rather than engagement over issues of serious mutual interest. As emerging powers extend their multilateral engagement, they have begun to forge complementary multilateral institutions outside the dominance of the old established powers, complete with a style, spirit and agendas of their own. Canada can no longer hope to draw them into its own orbit smugly centered on the G-7 and the Bretton Woods institutions.

The shift from a unipolar to a multipolar global political economy dramatically accelerated after the collapse of Lehmann Bros. The Harper government was hostile to Martin and his G-20 legacy, and more closely wedded to the bedrock values and institutions of Atlanticism. Thus, at the very moment when the post-war paradigm was crumbling, Canadians were conditioned to view events through old lenses and pursue diplomacy along well-worn tracks.

Traditional and emerging middle powers

A major intellectual challenge in studying Canada's response to the emerging markets is to understand the implications of a changing global economy for Canada's traditional middle power role. As discussed in the article in this issue by David Black and David Hornsby, various scholars are examining the relationship between “traditional” and “emerging” middle powers. Canada is a classic exemplar of a traditional middle power. The concept of “middle power” is normally defined not just in terms of a country's objective material capabilities (military or economic), but also in terms of a certain style of foreign policy behavior. According to Robert Cox:

An ability to stand a certain distance from direct involvement in major conflicts, a sufficient degree of autonomy in relation to major powers, a commitment to orderliness and security in interstate relations and to the facilitation of orderly change in the world system are critical elements for the fulfilment of the middle power role. (Cox 1989, p. 827)

Andrew Cooper, Richard Higgott and Kim Richard Nossal (cited in Flemes 2007, p. 8) argue that middle powers are characterized by “the tendency to pursue multilateral solutions to international problems, the tendency to embrace compromise positions in international disputes, and the tendency to embrace notions of ‘good international citizenship’ to guide diplomacy.”

These classic definitions of middlepowermanship were developed in the post-war period and were primarily applied to Western liberal democracies (although Cox included Brazil). Notably, the traditional middle powers described in these discussions are characterized as seeking to build “a more orderly world system,” in contrast with the superpowers of the time which were seeking to impose “an ideologically preconceived vision of the ideal world order” (Cox 1989, p. 827). John Holmes, the pioneering theorist of middle power diplomacy, described it as “lapidary in the sense of building from the bottom up, stone upon stone, a structure that grows out of the landscape, not imposing from above some architectonic grand design” (1979, cited in Cox 1989, p. 827). These interpretations highlight a shared interest in cooperation, in orderly processes of incremental change, and in the preservation of existing international organizations (which might be threatened by the more self-interested and impetuous behavior of great powers). Indeed, Cox argues, the middle powers played an important role in upholding the hegemonic world order of the Pax Americana period. He argued that “the evidence of a decline of hegemony is to be sought less in loss of power than in a tendency towards unilateralism in furtherance of specific interests” (1989, p. 829). Eduard Jordaan (2003, p. 167) also emphasizes that traditional middle powers act to support the status quo, and thus perpetuate existing inequalities in the global world system.

“Emerging middle powers” like Brazil, India, Indonesia, Turkey and Mexico may share long-range objectives with traditional middle powers in growth, peace and international cooperation, and may similarly adopt a strategy of “soft balancing” as a way to constrain powerful states (particularly the United States) from unilateral behavior (Flemes 2007, p. 14). However, they differ in important ways from traditional middle powers on how to achieve these objectives. In particular, they highlight the fact that existing international institutions were built in a different setting, when many of the emerging powers were still colonies that lacked a seat at the table where decisions about the construction of the post-war order were made. As a result, substantial reform of global institutions is, in their view, not only just but necessary in the light of the tectonic shifts in the global economy. Jordaan, like Cox, insists on analyzing the underlying social forces in each country that sustain aspirations and behavior on the world stage. The emerging middle powers and their national elites tend to be reformist, not radical, since they benefit in many ways from the existing order, thus providing a basis for cooperation between the traditional and emerging middle powers, as Black and Hornsby argue. The basis for collaboration, however, lies in acknowledging aspirations for reforming the hierarchy of existing international institutions rather than reflexively reiterating the terms of the post-war order.

Bricolage

The current situation of rapid global transformation recalls Thomas Kuhn's (1962) description of the efforts of scientists to shore up the paradigm they had been socialized into, in the face of mounting contradictory and puzzling data and with increasingly incoherent adjustments to the theories around which the research paradigm was built. James Mittelman (2013) suggests that the behavior of emerging market economies can best be captured by the term “bricolage,” originally used in the social sciences by anthropologist Claude Lévi-Strauss (1966) and later adopted by Jacques Derrida (1978). The term is often translated as “DIY” (do it yourself) or “tinkering”, and is explained by Lévi-Strauss as constituting the act of creating something by piecing together “the things at hand” – diverse objects originally intended for another purpose (Ferguson 2009, p. 183). The concept in fact resembles Holmes’ description of the “lapidary” style of policy change embraced by middle powers. Lévi-Strauss describes the use of myths by so-called primitive peoples to guide action as “intellectual bricolage”. He contrasts the work of the bricoleur with that of the scientist or engineer:

The “bricoleur” is adept at performing a large number of diverse tasks; but, unlike the engineers, he does not subordinate each of them to the availability of raw materials and tools conceived and procured for the purpose of the project. His universe of instruments is closed and the rules of his game are always to make do with “whatever is at hand,” that is say with a set of tools and materials which is always finite and is also heterogenous because what it contains bears no relation to the current project, or indeed to any particular project but is the contingent result of all the occasions there have been to renew or enrich the stock or to maintain it with the remains of previous constructions or destructions. (Lévi-Strauss 1966, p. 11)

Mittelman (2013) applies the term “global bricolage” to the behavior of the emerging market economies. The term conveys the sense of the creativity, spontaneity and unplanned character of these countries’ behavior in recent years. The result is a global system characterized by a “messy mosaic of global governance” in which new institutions and regional groupings are being cobbled together in an unpredictable manner (2013, p. 32). This process is full of conflict as well as opportunity, as differences emerge between the BRICS and other “emerging market economies” as well as between the emerging markets and older great powers.

It may be that the term describes better the activities of formerly dominant G7 states like Canada than those of the BRICS.⁷ The GMAP, for example, could be seen as less of a grand and innovative scheme than as an ad hoc cobbling together of supplementary strategies to shore up existing frameworks and improve Canada's economic performance in the international political economy without requiring any fundamental shift in the government's worldview or underlying habits or assumptions. The use of FTAs as a primary method of advancing Canadian commercial interests, or the appointment of more trade commissioners, may be seen as an almost reflexive resort to existing methods rather than the fundamental realignment of the country's foreign and domestic economic policies which may be required in the light of the dramatic changes that have occurred in the external environment.

Chapter summaries

The articles in this special issue examine in more detail the dynamics affecting Canada's relations with different world regions and a select group of emerging economies. David Black and David Hornsby, in their article on South Africa, point out that Canada's relations with that country have languished since the heyday of our efforts to isolate and shame the Apartheid regime into democratic reform. Warm embrace of Nelson Mandela did not translate into effective economic or political engagement in the post-Apartheid era. Canada has not supported South African efforts to exercise leadership as an emergent middle power on the African continent or on the global stage, nor have we engaged proactively where we share common interests as in encouraging best practices and corporate social responsibility in the extractive industries and resource development, a major economic interest nationally and transnationally, for both countries. Canada has neglected post-apartheid South Africa's ambitions and aspirations and needs to engage with the country fully if it is to build effective economic and political relationships.

Laura Macdonald points out the yawning gap between Canada's rhetoric and achievement in relations with Latin America. After launching an “Americas Strategy” for hemispheric engagement, far from improving relations with the two largest political and economic actors in the region, Brazil and Mexico, Canada's political and economic relations have been contradictory to the point of insulting. Canada never effectively engaged Brazil and appears indifferent to its global and regional ambitions, while economic relations between the two states appear more competitive rather than complementary. With Mexico, our natural partner in NAFTA, we failed to engage fully and even offended sensibilities and hampered commercial and tourist interaction by unilaterally imposing a visa requirement. The resulting unhappiness hampered relations at the highest level. Whatever efforts we make elsewhere in the region cannot make up for our failure to respect or engage the largest players.

Jeremy Paltiel's chapter again points out how achievement has failed to match rhetoric on the Asia-Pacific. For more than two decades, Canadian governments have touted the opportunities in China and Asia while our market share of exports to the region has continued to slide. While the effort to involve Canada's SMEs in exports contained in the GMAP is necessary, he questions whether a narrowly economic level to link Canadian companies to Asia value chains is likely to succeed. This is a region where economic activity is often state-driven and political engagement is crucial. Our ambivalence towards China is characteristic and symptomatic of a failure to recognize and capitalize on a global shift in power.

Anita Singh points to the ways in which Canada's ambitions to share the bounty of India's rise in global markets remain out of step with India's own priorities and preoccupations. India's reluctance to identify wholeheartedly with the West has often been misunderstood by Canadian policymakers who project onto our shared Commonwealth legacy a shared destiny from which India sometimes vigorously dissents. At the same time, they may view India's own global ambitions with a wary eye. India's Canadian diaspora does not always view our bilateral relationship in the same way either. Better engagement should be built on a skeptical appreciation of our differences alongside our common aspirations.

All of the articles conclude that economic ties with the emerging markets need to be built on a diplomatic engagement that recognizes and accommodates the political sensitivities and ambitions of the concerned states. Even though the growth rates achieved in these countries in recent years are slowing down, their role in global affairs will not disappear and remains fundamental to Canada's economic and diplomatic aspirations.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The term “BRIC” was originally conceived of by Jim O'Neill, head of economic research at Goldman Sachs in 2001. The concept was based on gross domestic product (GDP) growth rates, GDP per capita and population size. South Africa was later added to the group partly in order to include an African state (Stuenkel 2015, p. 1).

2. Canada accumulated a C$13.6 billion trade deficit in the first five months of 2015, with exports falling for the fifth consecutive month in May, despite improved prices. David Parkinson (2015), Globe and Mail, July 8, 2015, B1.

3. For a discussion of Canadian political economy through this period, see Macdonald (2004), Clarkson (2008) and Stanford (2008).

4. On the development, failure and current possible return to the Third Option, see Hancock (2015).

5. Numerous conversations with senior diplomats, foreign policy scholars and even sympathetic Conservative politicians have made clear that no one was capable of persuading Harper to make bilateral relations with China a higher priority until 2008.

6. In 2008, Canada's trade with Asia represented more than C$38 billion as compared with European trade of a little under C$41 billion. At the same time, Asian trade was growing at a rate of nearly 20 per cent. China surpassed Japan and the United Kingdom to become Canada's second largest trade partner with C$52 billion in trade. See “Canada's Trade with the World, by Region” Asia-Pacific Foundation of Canada, accessed at http://www.asiapacific.ca/statistics/trade/regional-trade/canadas-trade-world-region.

7. Both China and Brazil, for example, are quite strategic in their foreign policy design, and can be viewed as having clear long-term perspectives on their foreign policy objectives and how to achieve them.