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Canada to seek more trade ties with Russia

Minister of International Trade Ed Fast will lead a trade mission to Russia in June with the aim of boosting business between Canada and Russia.

Sean Kilpatrick/The Canadian Press/Sean Kilpatrick/The Canadian Press

Facing criticism from Russian President Vladimir Putin that Canada is missing opportunities, International Trade Minister Ed Fast is poised to announce Canada's first trade mission to Russia in three years.

Mr. Fast will unveil details of the trip on Monday, a mission that's expected to involve executives of 10 to 20 Canadian companies in engineering, aerospace, infrastructure and construction.

Mr. Fast, who has embraced missions as a way to boost trade, plans to visit three cities – Moscow, St. Petersburg and Rostov – from June 3 to June 8.

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"It's a priority market for us," a Canadian official said.

Mr. Fast, who became trade minister last May, wants to "hit" all of the high-growth BRIC countries – Brazil, Russia, India and China, the official added. He has already visited three of them; Russia would be the last.

Mr. Putin, recently returned as Russia's president, told The Globe and Mail in an interview in Moscow earlier this month that he is concerned about how little trade there is between Canada and Russia, given the two countries' similarities. Each country has vast stores of oil and gas, large agriculture sectors, and large mineral reserves, such as potash.

Two-way trade totalled only $2.8-billion last year – roughly half of what Canada did with Brazil and a quarter of trade with relatively tiny Hungary. Investment is also light: Canadian direct investment in Russia totalled less than $600-million in 2010 (though that was up 12 per cent from 2009), and roughly half of it is in the mining industry.

For all its promise, Russia remains an exceedingly tough place for Canadians to do business. Its potential is undermined by distance, taxes, corruption, red tape and unpredictable investment rules, particularly in mining.

In December, Germany's Siemens AG won a $780-million (U.S.) order from Russia's railway operator for high speed trains, a contract for which Montreal-based Bombardier Inc. had been in the running.

In a flyer produced for the visit, Ottawa acknowledged "this market remains challenging, requiring a great deal of dedication to achieve success."

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The last Canadian trade mission to Russia was led former trade minister Stockwell Day, who went to Sochi, site of the 2014 Winter Olympics, in June, 2009. Peter Van Loan, now government House Leader, visited Russia in July, 2010, but did not travel with a business delegation.

Experts say personal relationships are crucial in Russia, where red tape and heavy bureaucracy are endemic. European countries are generally doing a much better job of making sure their top officials get face time with their Russian counterparts.

"We have not seen a high-level visit to Russia for quite some time," said Piotr Dutkiewicz, a Russia expert and professor at Carleton University in Ottawa. "This is a signal that Canada is not taking Russia seriously enough. The signal to Russia is, 'Why should we support business if Canadian government doesn't provide the political support?' In Russia, business is politicized, more than elsewhere."

Part of the blame for the squandered opportunity also lies with the Conservative government, Mr. Dutkiewicz argued. He said Ottawa lacks a strategic plan for Russia and has been slow to arrange visits by Prime Minister Stephen Harper and other top ministers to a country where personal contact is vital. Mr. Harper is slated to visit Russia in September for the Asia Pacific Economic Co-operation summit in Vladivostok.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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