CHINA TRADE SYNDROME.

Canadians are taking a lesson about the risks of putting a free-trade deal in the hands of a nationalistic, megalomaniac champion of alternative economic facts by racing towards an even worse version of it. The second round of exploratory free-trade talks just wrapped up in Ottawa between officials from Canada and China, a country that was into government-enforced economic chauvinism and bullying trade postures long before they were cool in America.

The more U.S. president Donald Trump threatens to make our economy his number one target, with tariffs on our lumber, penalties looming for our shenanigans in dairy marketing and warnings he’ll tear up NAFTA, the more urgently Canadians want to sign up for a similar arrangement with the Donald Trump of Asia. Except, in a few years, one way or another, Trump will be gone. China’s run as a nationalistic megalomaniac champion of alternative economic facts is now in its seventh decade.

Naturally, any country shrewd and bold enough to literally construct islands in the Pacific Ocean to fortify its global dominance would sense the opportunity to strengthen its industrial power amid the current anti-globalization panic. Sure enough, there was Chinese president Xi Jinping turning up at the World Economic Forum in Davos this year, the first time any Chinese leader had. His speech, reporters gushed, was an “attack on the anti-globalization rhetoric that has led to the election of Donald Trump as U.S. president and the Brexit vote in Britain.” Xi, we were told, “seize(d) the role as leader on globalization.”

Here in Canada, China’s recently appointed ambassador, Lu Shaye, has been championing a deal with Canada, as he does in a piece elsewhere in FP Comment today. Lu used a recent speech to cite the “more complicated global picture” as evidence that a free-trade agreement between our two countries has gained “greater significance to both sides.” Last week, Canada’s finance and international trade ministers joined China’s vice premier Wang Ying for a private Chinese banquet to work on “mutually beneficial co-operation” and the countries’ “commitment to progressive trade.”

But the sort of agreements that come from ministerial summits and multiple rounds of negotiations are never truly free trade. Rather, they’re tactically crafted arrangements where countries bargain for openness where they feel they can press an advantage while writing hundreds of pages of exemptions and loopholes for industries they seek to protect.

Canada’s as guilty as anyone. Since B.C. and Ontario slapped foreign-buyers taxes on real estate — conspicuously aimed at blocking Chinese capital — and Ottawa caved to populist fears in capping China’s investment in resource firms, we’ve only begun identifying the long list of sectors where Canadians will demand protection from those predatory Chinese who would pay us too much money for our assets and sell us more affordable goods. It’s easy to imagine the xenophobia waiting to be whipped up by the dairy cartel should anyone consider importing communist cheese.

And China’s protectionism is bound to prove worse. President Xi’s “Made in China 2025” initiative explicitly deploys trade barriers to ensure Chinese industries control at least 80 per cent of their domestic market in 10 industrial sectors. When foreign companies want to build plants there, China requires them to partner in local joint ventures, and share their technologies; they require that companies build R&D facilities in China, too. Meanwhile, Beijing has used its courts to shakedown Qualcomm on fake “monopoly” charges to arrange sweetheart licensing deals for local manufacturers, and has subjected Apple and Google to arbitrary shutdowns.

Ambassador Lu writes in FP Comment that Canadians need not fear China’s state-owned enterprises, or widely documented allegations of its corporate high-tech espionage. But research from a U.S. bipartisan commission in 2013 alleged that Chinese companies had stolen over US$200 billion worth of secrets from American businesses.

Would Beijing really be willing to bargain away all its protectionist rules and high-handed incursions for better trade with Canada? It is a mystery, after all, what exactly Canadians think the Chinese so badly want to buy from us in such vast quantities that they don’t already. Lu writes that our oil isn’t competitive enough to be of interest any longer, and resource commodities largely move globally free of tariffs anyway. China still restricts our beef, over a 13-yearold mad cow scare, and last year suddenly decided our canola exports were too “impure” to accept anymore, before it changed its mind, with Trump-like capriciousness, and allowed partial imports following entreaties from Canadian officials.

So it’s not likely any deal with China would spare our exporters any more than NAFTA does from the temperamental orders of a fickle government. But the U.S. at least has a record of abiding by trade law. It’s unclear how any deal could be enforced with a country that sees the legal system as a weapon to be deployed to aid its industrial policy. China has been widely criticized for reneging on commitments it made when it joined the World Trade Organization, like failing to open markets to foreign communication firms, to reform its state-owned enterprises, to reduce export subsidies and to treat foreign banks fairly. The Information Technology and Innovation Foundation, an independent American think tank, reported in 2015 that rather than “abiding by the rules and norms of the WTO system” China was using the WTO “as a shield to protect its innovative mercantilist policies,” which have worsened since it joined in 2001.

Trump might threaten to tear NAFTA, But a China deal probably wouldn’t be worth the paper. Most Canadians probably don’t really want free trade with China, but if they do, they won’t find it in a complicated deal full of unenforceable technical rules and carve-outs indulging China’s distinct economic culture, ripe for game-playing to favour its state-owned and state-championed industries. Better to just drop all Canada’s barriers and be done with it. If the Chinese want to subsidize the products we buy and pay over-market prices for our assets, let them.