Advancing strategic relationship with China and Asia must become a priority says CIBC's Prentice
CALGARY, Sept. 27, 2012 /CNW/ - CIBC (CM: TSX) (CM: NYSE) — Canada must look past the United States if it wants to continue to gain access in the gas and oil markets, says the Hon. Jim Prentice, Vice-Chair of CIBC.
Speaking today in Calgary at a speech hosted by the University of Calgary's School of Public Policy about possible outcomes in the U.S. elections and changes to the leadership in China, Mr. Prentice laid out a number of challenges that must be addressed to ensure Canada remains competitive in the energy market.
"We are in the midst of a moment of great consequence for our energy industry," says Mr. Prentice. "For decades we've been going about our business in a certain way; comfortable and content within the North American marketplace."
Canada has been a critical supplier of energy to the United States, the world's largest economy, and crude oil alone accounts for 15 per cent of our exports. Canada has been fortunate to have ample natural resources and is fortunate to live next to a country that has been in need of those natural resources. But the world is changing and Canada must adapt, Mr. Prentice says.
"Simply put, we need to better understand our changing world and what it means for us," says Mr. Prentice. "In geo-political terms, this is a highly consequential year for Canada. This fall, an election in the United States and an election of sorts in China will serve to further demonstrate just how dependent Canada is in our new global world."
Next month, many of China's leaders will be stepping down and Canada and the world will begin watching to see how a new government will manage China's growth and conduct its international relationships.
The presidential election in the United States also brings two different views to the energy file although with one common element.
"Under either administration, I think it's safe to say the Americans will pursue their own interests quite aggressively," says Mr. Prentice. "And though they are great partners, we can't be lulled into believing that their interests and our interests on energy will ever be the same."
Even with Canada's substantial resource base, financial strength, an open-for-business environment, fair and predictable regulations and market-based business principles, Canada is still only exporting to one customer.
"But there's one critical element we're missing, customers," says Mr. Prentice. "Right now we effectively have only one buyer. Of the oil we export, 99 per cent of it goes to the United States. That makes us a price taker, not a price maker. And I'm not sure you fit the definition of a so-called superpower when a single client has a firm grip on the basket where you keep 99 per cent of your eggs."
"Let's be clear and let's not sugar-coat it. The development of Pacific corridors for oil and liquefied natural gas stand as one of the most important, and certainly one of the most challenging, initiatives that our country has encountered in decades."
Mr. Prentice stressed that we need to make it a national priority to look beyond America and advance our strategic relationship with China and Asia. "Asia is where the growth of today is, and where the growth of tomorrow will be. That's where we need to be."
But China and the rest of Asia will look elsewhere if Canada becomes too cumbersome to do business with, warned Mr. Prentice.
"We offer advantages as a resource producer related to stability and security of investment, but we are also a high-cost environment," says Mr. Prentice. "If Asia finds it too cumbersome or bothersome to deal with us, they'll get into business elsewhere."
Despite the challenges, Mr. Prentice believes Canada can continue to be competitive, but it must adapt and change. He concluded by saying the public policy choices for Canada in the coming years will be as difficult as they are consequential.
"We have been blessed with our abundance of resources and the opportunity to build from them a strong economy and an enviable way of life. But prosperity is not a birthright. Only with foresight and smart choices will we be able to fully enjoy the benefits of our national bounty."
Mr. Prentice joined CIBC on Jan. 1, 2011, and has responsibility for expanding CIBC's relationships with corporate clients across Canada and abroad, and for providing leadership on strategic initiatives to enhance CIBC's position in the market. He joined the bank following a successful career as a lawyer, Member of Parliament and one of the most senior Ministers in the Canadian Government, serving variously as the Minister of Industry, the Minister of the Environment and the Minister of Indian Affairs and Northern Development.
CIBC is a leading Canadian-based global financial institution. Through our Retail and Business Banking, Wealth Management and Wholesale Banking businesses, CIBC provides a full range of financial products and services to 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information:
Sean Hamilton at (416)-304-8456 or [email protected]