This article was originally published in Maclean's Magazine on January 20, 1997
PM and Delegates Revisit Asia
If omens mean anything, the members of Prime Minister Jean CHRÉTIEN's new version of Team Canada may have some cause for concern. For the 500 assorted politicians, business executives and educators in the trade delegation did not choose an auspicious moment to launch their latest effort at selling Canada's goods and services abroad. Embarking on a three-country, 14-day trip to East Asia late last week, they landed in Seoul just as the South Korean capital was convulsed by riots over tough new labor legislation. Not long after arriving at a military airport south of Seoul, members of the mission herded onboard a fleet of trucks sporting red maple leaves and whisked into the city along a route lined solidly with helmeted police wielding plastic shields. Blocks away, other police hurled tear gas into a mob of 3,000 Korean workers, who responded with a barrage of metal pipes and paving stones ripped from the streets. "A local concern," was the only remark that a discomfited Chrétien could offer when asked for comment.
The Prime Minister's reply may have been diplomatic, but there were plenty of good reasons why he clearly wanted to avoid irritating his hosts as he set out last week on a tour that will take him and his mission from South Korea to the Philippines and Thailand over the course of two weeks. Of immediate concern was the fate of 73 new business deals, worth more than $600 million, that were signed during the mission's first full day. Beyond simply generating new trade with Korea, however, Chrétien hopes to utilize the current Team Canada trip - the third to Asia in as many years - to kick off a yearlong round of activities designed not only to sell more Canadian products to Asia but also to persuade more Canadian companies to look towards the booming markets of the Far East. "Canada has been a country oriented to the Atlantic for the past 130 years," he said on the eve of the mission's departure from Vancouver. "Now, Canadians have to realize that the Pacific is where the future lies."
To that end, Chrétien's government has assembled the largest Team Canada mission yet - the biggest trade delegation, in fact, in Canadian history. It includes all of the premiers except Patrick Binns of Prince Edward Island, as well as both territorial leaders and more than 450 business executives, municipal government representatives, and university and college principals and presidents. For the first time, Quebec is represented. Premier Lucien Bouchard agreed to join the tour, unlike his predecessor, Jacques Parizeau, who boycotted the two previous Team Canada trips - to China in 1994 and to India, Pakistan, Malaysia and Indonesia last year.
Bouchard's presence was expected to prove a mixed blessing, introducing the always discordant national unity note into what in the past have been remarkably harmonious endeavors. The premier is being shadowed by a full contingent of Quebec media eager, as always, to record the slightest nuance of change in his position on the province's relationship with the rest of the country. Predictably, it did not take long for the issue to surface. As Chrétien and the premiers gathered to witness the signing of the new business agreements, Bouchard was pestered for his reaction. "I will resist the temptation to say it's a sign a partnership is possible," he responded, adding that he would prefer "not to raise this question here." Both Chrétien and several of the premiers similarly attempted to dodge the issue. "We're here to celebrate the Team Canada approach," said Chrétien, "and to come with business people and sell Canada and make new partnerships."
On that particular score, the first day of the trip had to be counted as at least a modest success. Of the 73 deals signed, 33 involved $225 million in firm commercial contracts, but the rest, bearing an official value of $378 million, were more nebulous: agreements in principal, memorandums of understanding and letters of intent. The agreements are as varied as they are numerous. They range from a $216,000 contract between Kornova Trading Inc. of Halifax and Won Kwang Fisheries Ltd. of Seoul for the supply of wooden residential construction materials, up to what could amount to a $500-million joint venture between British Columbia's TRL Microwave Technology Inc. and South Korean partners Soosan Group and Sokchun for the creation of a wireless communications company. The port of Vancouver signed a container delivery contract with Hanjin Shipping of Seoul, a $50-million deal that followed a similar contract signed with South Korea's Hyundai Merchant Marine that went into effect last November. Montreal's ERA Clothing Inc. initialled an agreement with the Sam Gi Textile Co. Ltd. under which the Seoul-based firm will become the exclusive distributor in Korea of ERA's Hollywood jeans.
Among the most lucrative and at the same time most controversial deals are two involving the problem-plagued CANDU heavy-water nuclear reactors. Canatom Inc. of Toronto, which provides project and construction management and services for CANDU reactors, signed a memorandum of agreement with the Korea Power Engineering Company to work together internationally in the provision of engineering and other services for future CANDU projects. The two companies have co-operated in the past installing Korea's existing CANDU reactor at Wolsong.
Similarly, Canada's premier nuclear energy company - Atomic Energy of Canada Ltd. of Mississauga, Ont. - signed what was described as a "substantial" contract for an undisclosed sum with longtime Korean partner Hanjung for the supply of nuclear equipment to China. That deal is clearly an offshoot of the 1994 Team Canada trip, when the Canadians contracted to sell China two CANDU reactors for $3.2 billion. And the fact that the CANDU deal with China is still being worked out in detail close to three years after the initial signing is cited by Ottawa as an example of the need to view all of the Team Canada efforts as long-term projects. "It's taken almost three years since the Prime Minister first went to China to bring that deal close to fruition," said Charles Larabie, a trade spokesman in Ottawa. "It's important to remember that about all of the deals and understandings that have been reached."
In Korea last week, that mission experienced firsthand some of the major structural problems that can afflict the vigorous economies of the Far East, where annual seven-per-cent growth rates have been the norm for the past several years. Approved for membership in the Paris-based Organization for Economic Co-operation and Development last October, South Korea now has staked its future on shared market reforms with the world's top economies. The step is a big one for one of Asia's celebrated Young Tiger economies, but it is proving a painful graduation: deregulation means South Korea's traditionally protected markets could now face unemployment levels on a par with Western economies. For a country with an unemployment rate below three per cent, the prospect is daunting. It is the primary reason why Korean workers were in the streets last week, protesting draconian new labor laws that mirror similar legislation in the West. For the Team Canada members who caught a glimpse of that unrest, it was a sobering reminder that there are not merely possibilities in the booming markets of Asia, but problems as well.
Maclean's January 20, 1997