Magazine article Behind the Headlines

Pacific Century: What's in It for Canada (Part Three)

Magazine article Behind the Headlines

Pacific Century: What's in It for Canada (Part Three)

Article excerpt

In the last two issues I have tried to make the case that a substantial measure of Canada's future prosperity, security, and independence are riding on this country's ability to improve its position and performance in the Asia Pacific region. On further reflection, I would like in this final installment to stress the complexity and diversity which attend Canada's relations with the Asia Pacific. These qualities are often lost in the heat of the debate over human rights or buried under the hype of trade and investment promotion. I would like to focus especially on the region's recent financial problems, the worsening environmental conditions, security issues, and the findings of the CIIA's 1997 national foreign policy conference.

Let's start with a return to first principles: economic considerations are not likely to be displaced as the driving force behind Canadian interests in the area. Certainly the stakes, in terms of the costs of miscalculating trade partnerships or investment decisions, are significant. But the horizon is not exactly cloudless. A currency and stock market meltdown has afflicted members of the Association of South-East Asian Nations (ASEAN) and led to much greater international scrutiny of such issues as the quality of macroeconomic management in Thailand, presidential succession and business practices in Indonesia, and the political judgment of Malaysia's leadership. For the first time in a decade, and as the sell-off has spread, issues of public debt, government deficits, and trade imbalances are very much on the regional agenda.

Moreover, while the cascading pattern of development has produced some impressive results at the low or `take-off' end of the cycle, the prospects for more mature economies when the escalator slows are less obvious. And in the wake of a period of explosive growth, Canadian exports to the region appear to be on a down turn. So is the party over?

It would be premature to conclude that the Asian boom has gone bust. All economies ebb and flow, and although Southeast Asia has taken a battering, in aggregate it accounts for only a small percentage of the value of the total regional economy. Underlying competitive strengths remain, and to write off even the hardest hit would be unwise. A retreat was probably inevitable, but there are convincing reasons to conclude that following a period of consolidation the advance will continue, if at a more modest rate.

Business and investor confidence is, in any case, renewable; other issues are less tractable. Perhaps most troubling, to cite a refrain popular among neo-Malthusians, is the possibility that population growth may collide with resource depletion in the face of accelerating air, water, and soil resource degradation. With environmental pressures on the rise and the urban quality of life in freefall in many of the largest Asian cities, many believe that the time has come not just to assess the costs, but to question fundamentally whether or not the preponderant model and pattern of Asian development is sustainable.

At the time of writing (early October 1997) large swathes of Indonesia, Malaysia, and the Philippines are blanketed, for the second time in three years, in a toxic chemical and particulate fog which obscures everything except the steep price to be paid for the regional economic miracle. There have been record-breaking highs in the Air Pollution Index, which was recorded at 851 on 23 September in Kuching, Sarawak, and is two to three times higher than the official level of `hazardous.'

Clearly, neither the local nor the global ecosystem can tolerate the manner or pace of unregulated industrialization which has been embraced by most countries in Asia. The gritty reality is that deteriorating environmental conditions in many of the world's investment hot spots do not jive with the uncritical enthusiasm of the trade and investment promoters. Yet unexamined puffery still suffuses much of the reporting about the wonders of Asian growth. …

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