Hitting the Great Trade Stonewall of China
Canada got a tough Chinese-style lesson in power politics on Monday.
Justin Trudeau arrived in China in the belief that his hosts had accepted the fundamentals of his “progressive trade agenda.” He fully expected to announce the launch of formal free trade talks Monday, with Chinese Premier Li Keqiang in the Great Hall of the People overlooking Tiananmen Square.
He left empty-handed — which is going to make this a very long week for the prime minister, as he’s asked to elaborate on what went wrong.
“We’re pleased to continue exploratory discussions towards a comprehensive agreement,” Trudeau said, after Li had made clear the Chinese were not prepared to bend on some of the issues close to the prime minister’s heart. Trudeau said there was no specific issue that had unravelled a prospective deal, but that it’s clear the “people first” nature of Ottawa’s agenda did not dovetail with Chinese priorities.
Li said different national conditions justify different responses. “It is only natural that we don’t see eye to eye on some issues,” said the Chinese premier.
The problem is, Trudeau was led to believe those objections had been settled.
Guy Saint-Jacques, Canada’s former ambassador in Beijing, said that when Trudeau visited China last year he said he would not agree to free trade negotiations unless they included chapters on the environment, labour rights, state-owned enterprises and public procurement.
To the ambassador’s surprise, the Chinese said they were persuaded by the prime minister’s arguments — agreement that led to Trudeau’s great expectations on this visit. But clearly, no one had informed Li.
It was apparent from the moment of the Canadian party’s arrival at the Great Hall that the hosts were going to be assertive on their home turf.
The Canadian media’s pool cameraman was manhandled and had his shot of Trudeau and Li blocked by Chinese security.
TRUDEAU LEAVING BEIJING WITH EMPTY HANDS AFTER PROGRESSIVE AGENDA SNUBBED
Adam Scotti of the Prime Minister’s Office was blocked from entering the photo opportunity between the leaders — a problem, because he’s Trudeau’s official photographer.
Word emerged that the question-and-answer session scheduled for the end of the day was in doubt because of cold feet on the part of the hosts. “That’s coordinated cold feet,” said one international journalist who covers the Chinese government on a regular basis.
If it was tense outside the room, it sounds like the jetlagged Canadian delegation at the table was sweating spinal fluid. Would it be too cynical to suggest the Chinese ambushed their visitors, knowing that leaving without an announcement would prove embarrassing to them? Probably not.
Trudeau emerged to give his final statement looking like the boy who expected a bike for Christmas and instead got a pair of plain socks.
China already has a $43-billion trade surplus with Canada. It would have liked to extend its influence further by pushing for a more generous investment review threshold and broader access to the Canadian market.
But it doesn’t need a deal with Canada. After the 19th National Congress of the Communist Party in October, President Xi Jinping outlined an alternative vision of globalism to rival Western liberalism — one in which China sits squarely at the centre as an authoritarian, statedriven market economy.
It was always hard to see how Xi’s vision, which is illiberal in the extreme, squared with Trudeau’s ultra-liberal trade agenda.
That they were irreconcilable should have been apparent before Monday.
The moment was right for a deal. The prize is irresistible: Xi said this weekend the Chinese economy will need $24 trillion in commodity imports and $2 trillion in investment over the next 15 years, and that China will hold the first expo in international imported products in Shanghai next year to encourage imports. China “does not seek a (trade) surplus,” he added.
But it seems the opportunity to secure preferential access to the Chinese market may have passed for now — and with it the protection and certainty that comes from clear rules and a binding dispute-resolution mechanism.
For Trudeau, it became a question of principles. Unlike the socialite who agreed to consider sleeping with Winston Churchill for £5 million but dismissed the offer of doing the deed for £5, he has some. We didn’t even get to haggle over price.
But with the future of Canada’s trade relations in disarray, at what cost to the Canadian economy?
In a late, hastily convened press conference, Trudeau put a brave face on the Chinese brush-off.
“This was a very successful second leaders-level dialogue. Moving forward on a free trade deal with China is a big thing — it’s not a small thing — and the progress we made today in discussions means we will be able to keep moving forward in a responsible way,” he said.
Another such victory and we will be utterly undone.