By Daniel Huot
The current Asian economic crisis has disturbed trade with most countries visited by Team Canada trade missions and has raised questions about the missions’ effectiveness, according to one of the North-South Institute’s top researchers.
Ted Paterson, director of finance and special projects at the North-South Institute in the Byward Market, says many of the deals signed by businesses accompanying Prime Minister Jean Chrétien during the Team Canada missions to Asia in the past four years could be in jeopardy.
“I’d be surprised if half the deals signed pull through,” he says.
Team Canada trade missions have so far resulted in 850 new business deals worth approximately $23 billion, according to government figures. The North-South Institute estimated in its 1998 annual report total Team Canada trade to be worth $8 billion just in 1996 in its 1998 annual report.
Team Canada trade missions have been visiting Third World countries and signing promises and proposals with local businesses since 1994.
Team Canada missions have visited many Asian countries, including China, Indonesia and the Phillipines.
Paterson cites Indonesia as a prime example of a country that could have problems repaying its debts to Canadian companies.
“Banks in Indonesia were receiving international loans. They had no money, so they had to gather loans they gave to Indonesian companies. Now the companies are struggling to repay the banks. But the companies are short of cash and they can’t repay their imports,” Paterson says.
Most of the international loans in the region came from Japanese banks that eventually faced financial difficulties. As the banks demanded to be repaid, they dragged many nations, including Indonesia, into recession. This has left countries without enough foreign currency to repay their loans.
“There are no U.S. dollars, no Japanese Yen, no Canadian dollars around for them to pay for their imports from other countries. This spread to Canadian exporters and importers in (Indonesia),” Paterson says.
Yvon N. Jolicoeur, director of the major projects division for the Canadian Commercial Corporation, says the Asian crisis should be temporary.
Jolicoeur says Asia was expected to be boom before the economic crisis hit.
“The infrastructures were there before. One day everything was going fine; the next day it was a mess. Conditions did not change overnight. The infrastructures are still in place. Once some key problems are resolved, we will see better days ahead,” Jolicoeur says.
André Lemay, a spokesperson for the Ministry of Foreign Affairs and International Trade, echoes Jolicoeur’s statements.
“Japan is putting in place a pretty ambitious financial recovery plan,” he says.
“Indonesia and some other countries also have economic recovery plans in place and some other countries are making their own plans.”
Jolicoeur says Team Canada missions are important for Canadian businesses and the prime minister plays a crucial role.
“Obviously, you need the visibility. When the (prime minister) goes on this mission, it is mentioned in the local media, even in cities like Mexico or Sao Paulo. Business people know there is a Canadian delegation doing business with them and it generally favours business in general,” he says.
Denis Leclerc, executive director for the Canadian Foundation for the Americas, agrees.
“Missions are taken much more seriously when you have the (prime minister) and provincial leaders instead of the chamber of commerce,” he says.
However, Paterson says Team Canada missions have damaged Canada’s image as ahuman rights defender.
“These are countries with clear, well-documented cases of human rights abuses. Many are not democratic in the way we understood it,” Paterson says.
He also criticized the prime minister’s manner of doing business with the leaders of some of the countries visited by Team Canada.
“The prime minister put himself in a position where he could not bring up human rights. If he raised human rights, he would not come back with the deals he promised. The leaders of Indonesia and China knew that and laughed at him,” Paterson says.
He says changes in regimes affected trade.
“The Indonesian crisis proves you can’t conduct business with a non-democratic country,” he says.
Jolicoeur, who has participated in Team Canada missions to Latin America, says Canada could lose its competitive edge if it didn’t conduct such missions. “Germany did the same thing in China,” Jolicoeur says. “Governments support their exporters and all sectors of the economy in order to support their export market. If we didn’t do it, we’d be the exception.” There are no Team Canada missions set for 1999.
The trade file
What’s new: The current Asian economic crisis has disturbed trade with most Asian countires visited by Team Canada trade missions.
What it means: Ted Paterson of the North-South Institute criticizes the way business is conducted with non-democratic countries, while representatives from other organizations blame the Asian economic crisis for the current Team Canada problems.
What’s next: A new Team Canada trade delegation could be scheduled in the future, but there are no plans for one yet.