THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

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No. 51  of 2015 

MONDAY, JULY 20, 2015      

 

   

Filed from Portland, Oregon  

     

Click here for last Thursday's Cuba quote from Senator Moran.

CANADA CONSIDERS AIIB

"Our government - [the Government of Canada] - is monitoring developments to determine, among other things, the opportunity for Canadian companies to compete for infrastructure projects."

Hon. Joe Oliver
July 8, 2015
CONTEXT
At a Beijing ceremony on June 29, fifty countries signed the Articles or Agreement for the new, China-led Asian Infrastructure Investment Bank (AIIB).  Canada was not one of them.  That does not mean, however, that Canada will not, sooner or later, join what is already an impressive list of AIIB members.  Most of the major countries have already signed on.  The notable exceptions are the United States, Japan, and Canada.
 
Joe Oliver is Canada's Finance Minister.  On July 8, he was a featured speaker at the Canada China Finance Forum in Toronto, and he explained to that group the considerations that will guide Canada's thinking on joining the AIIB.  Today's quote highlights the big one, namely, what AIIB membership could mean for Canadian companies.

The new bank is not operational yet.  It won't be until two conditions have been met.  One is that at least ten signatory countries will have ratified the Articles of Agreement.  The other is that the countries which have ratified those articles account for at least, "50 percent of the initial subscription of the authorized capital stock."

COMMENT
China only proposed the bank in 2013.  Given the very positive, world-wide response it has already received, we doubt it will be very long before those operational criteria are met. 

We also don't expect it will be too long before Canada decides to join.  Minister Oliver reportedly told his audience on July 8, for example, that the value of future AIIB projects could run into trillions of dollars.  Thus, as Alastair Sharp of Reuters put it, "The share won by Canadian companies need not be large to be meaningful."

***

The AIIB story is very much an evolving one.  We shall all have lots of time to think about what it means from the obvious perspectives, as well as from ones which may not be obvious yet.  The obvious ones are:

 

  • Development;
     
  • The Global Competitiveness of those who supply the products of development, from cement to cell towers; and
     
  • The role that institutions like AIIB play in the geopolitical jockeying for power and prestige.

***

With apologies for what may seem like non sequiturs, these developments surrounding the establishment of the Asian Infrastructure Investment Bank brought to mind two others.  (They may be non sequiturs, but there are clearly fewer than six degrees of separation.)


The first is the lapse of the charter of the Export-Import Bank of the United States.  If you visit the ExIm website today, this is what you will see:


"Due to a lapse in EXIM Bank's authority, as of July 1, 2015, the Bank is unable to process applications or engage in new business or other prohibited activities. For more information, please click here."


The second item we would like to mention is this chart:

 

From the PewResearchCenter
 

It is one of 29 slides in a PewResearchCenter presentation on "Global Views on China and the Balance of Power."  Richard Wike and Bruce Stokes of the Pew Center did the research. 


***


Taking these two items in reverse order, the graph above is probably the most discouraging one in this slide presentation, at least from an American perspective.  Time will tell whether the U.S. or the rest of the world has the more accurate assessment.  It cannot help, however, that, as the world judges politics and national interest, American politics seem to be separating from American interests.  That is one way of looking at the ExIm Bank saga.


As noted, Joe Oliver will decide on Canada's participation in AIIB based on whether joining would help Canadian businesses.  Admittedly, the Export-Import Bank of the United States is a different kind of bank.  Development is not its primary business.  Helping U.S. companies is, and yet America is shutting it down.  

RELATED EVENT

On Friday, July 24, the Global Business Dialogue will host a public discussion on the topic:


FINANCE AND CHINA'S SOFT POWER:
A Look at the Future of the RMB and Other Items in China's Toolbox.

 

This session will run from 9:00 to 10:30 a.m. at the National Press Club in Washington, DC.  Please click the title link above for registration options and other details.

SOURCES & LINKS

Canada's AIIB Decision is a link to a July 8 Reuters story with today's featured quote from Canada's Finance Minister.


About the AIIB is a link to the Wikipedia entry on this new development bank.


From the AIIB is a link to the website of the Asian Infrastructure Investment Bank.


At ExIm is link to the website of the Export-Import Bank of the United States.


A Chart from PewResearch takes you to the full deck of slides from which the one above was chosen, as this presentation appears on the site of the U.S.-China Business Council. 
 

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