With B.C.'s provincial election rapidly approaching, the province's political parties will need to sell their record – and fresh ideas – on their business game plan for B.C. As Business in Vancouver explored last week, that will involve assessing which party can best steward the province's economy and create crucial high-paying jobs. But in an increasingly global economy, B.C. voters will also need to assess which party can secure the province a prominent place on the world stage and help its businesses capitalize on the hottest international markets.
To that end, the BC Liberal Party will need to defend its record in championing B.C. abroad since coming to power in 2001 – and prove the party has delivered significant measurable results.
At a glance
B.C.'s international self-promotion efforts over the past dozen years have included at least 68 trade missions led or supported by the province's trade and investment branch, according to B.C.'s jobs ministry. Since the Jobs Plan was announced in September 2011, the Liberal-led government has doubled B.C.'s global staff to approximately 60 and added six new international offices, bringing the province's total to 13.
But opinions vary on how successful these efforts have been.
Lindsay Meredith, marketing professor at SFU's Beedie School of Business, said the BC Liberals' offshore efforts look best when compared with what the rest of Canada has done in the same 12-year period.
"We've done relatively well, not because we have been so profoundly innovative in opening up new markets, but that we were smart enough to quit sucking at the American teat, which was exactly what Ontario and Quebec have totally refused to learn," he said.
But Jenny Kwan, the BC NDP's critic for small business, technology and economic development, criticized the Liberals for the limited success of their promotion attempts.
She said the province's export growth has flatlined on the BC Liberals' watch (see graph, page 7).
"If you compare the last 10 years of the Liberal government's work in [promoting B.C. abroad] versus the 10 years under the BC NDP administration … the NDP has a higher export volume than that of the Liberals," she said.
B.C. exports under the BC Liberals
Keith Head, an international trade professor at UBC's Sauder School of Business, said that at first glance, B.C.'s export levels under the BC Liberals don't reflect well on the party.
But he said that, upon closer inspection, it's unfair to pin those stagnating export levels on policy failure. Head said that the trend was principally driven by a strong Canadian dollar during the 2000s, just as B.C.'s strong export growth of the 1990s was driven by a weak dollar.
He added that Ontario saw the same dollar-driven export growth trajectory as B.C. did, with growth in the 1990s and stagnation in the 2000s. Head said Alberta bucked the dollar-driven trend to maintain growth during the past decade, but only because of its oilsands.
"You can't blame the Liberals for the strong dollar for the last 10 years," he said, "nor can you blame them for not discovering oilsands."
While Head assessed B.C.'s export levels under the Liberals as a "neutral" indicator, he said B.C.'s export diversification over the past decade indicates some Liberal-led success (see graph).
"China is now 15% of our exports; that's roughly six times higher than it was when the Liberals took over, so they have increased our presence in Asia."
Head cautioned that it's hard to distinguish how much of that diversification occurred because of a shift in market demand versus policy initiatives. He said he suspects the policy portion of he equation is "probably small."
"You can sort of say this diversification happened on [the BC Liberals'] watch, so give them some credit for things that happened on their watch."
Greg d'Avignon, president and CEO of the Business Council of BC, agreed that much of B.C.'s export diversification was driven by a shift in market demand away from the U.S. But he said some Liberal policy moves have helped drive that trend. He pointed to the government's 2003 push to secure Asian market access to B.C. forestry products.
"A lot of that was setting up trade offices in China and the premier [Gordon Campbell] himself was lobbying on building code amendments in China."
D'Avignon said that initiative helped promote the more than 1,000% growth in B.C.'s China-bound softwood exports between 2003 and 2011.
Trade missions and offices
While Premier Christy Clark's government has pulled out all the stops to publicize her trade missions since she became premier in May 2011, the party has been carrying out various trade missions annually since taking power in 2001. According to a breakdown supplied by the jobs ministry, the government's trade and investment arm has led at least 68 trade missions since 2001, 11 of those since Clark became premier.
But the value of those trade missions is hard to assess.
Head said that a study he did with Sauder professor John Ries into Jean Chrétien's Team Canada missions found that those trade missions had no effect on Canada's trade with the countries visited.
"Unless Christy Clark has the magic that Jean Chrétien lacks, I'm going to be skeptical that she's done wonders with trade missions," he said.
A BIV analysis of Clark's May 2012 trade mission to Japan, Korea and the Philippines didn't find a single deal of the $500 million announced on that mission that wouldn't have happened without the mission (see sidebar, page 6).
D'Avignon agreed trade missions don't necessarily lead to deals that wouldn't have happened anyway. But he argued that they accelerate and catalyze deals.
"When a prime minister or when a premier goes on those trade missions, it adds an even heightened degree of credibility to the investment and prestige of the deal going forward," he said. "It's quite helpful; I think it accelerates economic activity."
In contrast to the contested value of trade missions, local experts broadly supported the Liberal-led move to increase B.C.'s trade network over the past few years (see map, page 6).
Head argued that trade offices provide much more practical value than trade missions.
"Trade missions often end up devolving into photo ops where people want to look good, and they go to these places and have their pictures taken, and they don't have a huge economic function. Whereas when you put trade representatives in a country and employ them there on a long-run basis, there's a much more decent chance that they'll develop a set of connections that will help."
Taxes, ports, First Nations
D'Avignon said foreign investors contemplating doing business in B.C. look at core business competitiveness issues that go much deeper than the province having trade offices.
He said in the past 12 years, the Liberal-led government has chalked up points with foreign investors by lowering corporate taxes and participating in the $22 billion Pacific Gateway infrastructure expansion program, which has expanded the province's port, rail, road and airport infrastructure.
"That $22 billion has been a huge catalyst for money to come into the marketplace, particularly in the mining sector and to a certain extent the forest sector."
D'Avignon said the Liberals' reconciliation efforts with B.C.'s First Nations, including final treaties with six First Nations and some interim economic benefit agreements during the party's time in power, has also won some points with foreign investors.
While direct foreign investment isn't tracked provincially, D'Avignon said public and private capital investment in B.C. has risen significantly under the Liberal-led government. He said that measure rose to $51 billion in 2011 from $24 billion in 2001 and $18 billion in 1991.
Looking forward
D'Avignon said that, as global competition intensifies to land foreign investment, B.C.'s next government will need to keep pushing to make B.C. a more competitive business jurisdiction.
He said B.C. is complex for investors to navigate. For example, it has some of the world's most stringent environmental standards and environmental processes "that sometimes don't have a start and a finish."
He said B.C.'s First Nations' land claims add to the province's complexity.
"There's a myriad of overlapping [First Nations] claims in the province and the consequence of that is that the strength of claim isn't well-known by industry and, in many instances, governments struggle with that as well."
He said B.C. will need to fight to attract international capital.
"You see that now in LNG as an example, where all of the proponents around the table are global players. They're quite candid in the fact that they're looking at Washington state, Oregon, they're looking at Qatar, they're looking at Australia, they're looking at Indonesia as potential locations."
Meredith added that while the next B.C. government faces challenges in promoting B.C.'s products and business advantages, it may also benefit from an increasing ability to leverage Ottawa's support.
"B.C. is now getting into position where it can pound very effectively on the Ottawa door because we're getting a big enough population now that we count. We'll be able to say, you know what, we need more Ottawa support for foreign trade exploration." •
Deals didn't require Asia trade mission
A BIV investigation found that a majority – if not all – of the 25 deals announced on Premier Christy Clark's May 2012 trade mission to Asia would have occurred without the mission.
Just after the mission to Japan, Korea and the Philippines, the provincial government touted $500 million in deals signed or announced on the trip. Deals included RCI Capital Group Inc. and TStone Corp. agreeing to $300 million worth of matching funding for investment in Canadian clean-tech portfolio companies.
However, after surveying the majority of B.C.-based dealmakers, BIV did not find a single business or organization that chalked its deal's success up to the trade mission.
