Canada should focus on five priority trade deals to open markets and benefit its financial services sector, according to a new report by the C.D. Howe Institute.
December 10, 2015 – Canada should focus on five priority trade deals to open markets and benefit its financial services sector, according to a new report by the C.D. Howe Institute. In “Opening up New Trade Routes for Financial Services: Canada’s Priorities,” authors Daniel Schwanen, Dan Ciuriak and Jeremy Kronick provide, for the first time, a ranking system to assess the best potential markets for Canadian financial services firms to either deliver services directly across borders or deliver them by investing and operating in those markets.
“Financial services figure prominently in recent major trade and investment agreements involving Canada, such as the Comprehensive Economic and Trade Agreement (CETA) with the European Union and the Trans-Pacific Partnership (TPP),” remark the authors. “This is good news for Canada, since financial services represent a source of strength for the Canadian economy,” they add.
In order to determine the countries that Canada should target as realistic priorities in trade negotiations – with a focus on financial services – the authors rank markets from the viewpoint of both economic attractiveness and the feasibility of concluding negotiations:
- TPP: Canada’s first priority, which encompasses a number of markets in which Canada could better exploit its advantages in financial services, should be to ratify the TPP.
- A Canada-China FTA: Canada should respond to China’s still outstanding offer to negotiate a trade agreement.
- Pacific Alliance: Although Canada has a bilateral free trade agreement with Mexico, Peru, Columbia and Chile, it should seek to join the Pacific Alliance group in order to benefit from any deeper trade liberalization within this important economic grouping.
- India: Canada’s reservations on completing a trade agreement with India need to be weighed against the opportunities presented by such a deal, including giving Canadian firms better access to the Indian financial services market.
- Indonesia, Philippines, and Thailand and other countries in ASEAN: Canada should quickly seek an agreement with this group, at least on par with what ASEAN members have signed, collectively and individually, with Australia and New Zealand.
The authors note that some potentially very attractive markets – such as Brazil, Russia and Saudi Arabia – did not make it onto the list of top priorities. “The reason behind this evaluation is that these countries have shown less openness than others to negotiate agreements that liberalize trade and investment in services with any partner, let alone Canada,” they state. “This does not mean they are not potentially important partners, but the indicators we use suggest only a low potential for progress on trade in services with them.”
The report concludes that successful trade agreements including liberalization of financial services with these markets would bring significant gains to the Canadian financial sector and economy as a whole.
Click here for the full report
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For more information contact: Daniel Schwanen, Vice President, Research; Jeremy Kronick, Senior Policy Analyst; or Dan Ciuriak, Fellow in Residence, C.D. Howe Institute: 416-865-1904 or email: amcbrien@cdhowe.org.