As the president of the CABC and a Canadian who has been living in the region for almost 30 years, I want to emphasize the growing importance of ASEAN as a hub for business, trade and investment and Canada's potential gateway into the Indo-Pacific region.
As a single market with over 670 million people—I might add that about 50% of those are under the age of 30—ASEAN currently represents Canada's sixth-largest trading partner, with bilateral merchandise trade between the two regions growing steadily by about 6.4% per annum over the last two decades. Certainly, as the ASEAN economies and populations continue to grow, and their middle class grows, the rising demand for exports and services represents an increasing opportunity for Canadian businesses.
At present, however, Canada-ASEAN trade is still underperforming. This deficit needs to be addressed not only to maximize the economic benefit and market access for Canada in one of the world's fastest-growing regions, but also to provide long-term risk diversification for Canada to hedge against geopolitical and supply chain concentration risks and strengthen ties with a region fully supportive of global trade and the regulatory institutions that govern it.
According to a recent economic analysis conducted by C.D. Howe, a Canada-ASEAN FTA could see potential bilateral trade increases of up to $4.3 billion and income gains of $2.1 billion to Canada, as well as net job creation on the order of 2,000 to 3,000 jobs. While appearing modest, these are achievable numbers, not inflated goals, and they are, we believe, somewhat understated. This does not include the fact that an FTA or more formal trade framework is itself a catalyst to greater trade and custom between the two regions.
With the recent Russian invasion of Ukraine, and given some time, Canada is also ideally positioned to supply ASEAN with such necessary commodities as energy and food. Food security has increasingly become an issue as of late. Strategically, an FTA with ASEAN will also allow Canada to eventually enter the RCEP trade agreement, as an ASEAN FTA is a prerequisite for joining that.
While the strategic and economic potential is immense, so is the competition. Many of Canada's trade competitors, including the U.S., the EU and Australia, amongst others, and now the U.K., have been very proactive in ramping up their strategic engagement and trade initiatives with ASEAN. It is a hugely successful accomplishment to recent Canadian governments and to the work of Global Affairs Canada that, given our smaller current economic engagement and footprint with ASEAN compared with these nations, we are positioned where we are on ASEAN's list of priorities.
As such, the CABC and the network of Canadian businesses we represent urge Canada to continue to prioritize the negotiation and implementation of the Canada-ASEAN FTA and the Canada-Indonesia CEPA, in addition to exploring other opportunities for bilateral agreements with economies in ASEAN. A holistic approach is certainly necessary to yield long-term engagement with ASEAN. We should also ensure that we adopt a constructive and pragmatic approach during the current free trade negotiations by promoting the sharing of best practices and assisting with capacity building, understanding that this is the starting point to a much longer relationship with an opportunity to continue to upgrade and deepen our trade and diplomatic ties over time.
In conclusion, ASEAN is a region of significant growth, with a long queue of parties who want access. The time certainly is now for Canada to commit as a long-term trading partner to ASEAN and secure its presence in the Indo-Pacific. The CABC and its members stand ready to support Canada's efforts to increase regional trade with ASEAN, and hold a lot of optimism for the future of Canada-ASEAN trade and relations.
Given the limited time, I have outlined more analysis and recommendations in the briefing note we have submitted for the committee's consideration. I would very much welcome more discussion and any questions that you have subsequent to this. I'd be happy to follow up with that.
Thank you for the opportunity to make a few remarks.