Canada-China FTA called for by banker
Canada and China should be working on a free-trade agreement to enhance their underdeveloped trade relationship, said a top Canadian banker.
From “underdeveloped relationship to properly developed one is going to take more concrete thinking on both sides. We are not competitive. We are complementary,” said Kevin Lynch, vicechairman of BMO Financial Group.
“What we want to do is to find more areas for trade between our two countries. More concrete discussions about how we double trade in five years.”
Lynch identified significant potential in bilateral trade agricultural products, including clean technology related to water and air, and health services dealing with the aging population.
Canada can be an important part of the Chinese strategy of diversifying its energy supply, he said.
In its new Five-Year Plan (2016-20), China aims to push forward the establishment of free-trade agreements with Israel, Canada, the Eurasian Economic Union and the European Union, as well as an Asia-Pacific free-trade area.
In his banking profession, Lynch said he looks forward to an expanded role of the trading hub of the Chinese currency renminbi in Toronto, which was launched in March last year.
“We are large participants in it. The more we can expand it, the better for everybody. It lowers the cost for companies doing business in China and outside China,’’ he said.
“If you are a small business person, the renminbi trading hub is crucial to get your cost down. The transaction cost was so high before. We are a country with a lot of small and medium-sized enterprises. Guangdong province is a region with a lot of medium-sized companies as well.”
Expanded trade between Canada and China will provide further opportunity to make renminbi clearing even more effective and valuable, Lynch said.
The Toronto renminbi hub serves as conduit for 24-hour coverage of global renminbi transactions, enabling businesses to convert Canadian dollars directly into Chinese currency.
Lynch’s bank runs the only fully incorporated subsidiary of a Canadian bank in China.
“We want to grow with the Chinese economy and find innovative ways to serve customers because we are not of the size of domestic banks,” he said.
China is the second-largest trading partner of Canada, after the United States, with two-way trade reaching 85.8 billion Canadian dollars last year, up 10 percent year-on-year, said Rachael Bedlington, consul general of Canada in Guangzhou. Chinese investment in Canada last year is estimated at $61.8 billion.
“The Chinese market represents tremendous opportunities for Canadian companies in a wide variety of sectors. We also see Canada as a prime destination for Chinese investment,” she said. “We are convinced that Canada-China trade will continue to steadily rise in the years to come.”
Bedlington’s consulate general is expanding to keep pace with increasing bilateral ties, with the immigration section launched last year to boost the capacity of handling visa applications.
As a new step in promoting ties, Alberta province launched its trade office in Guangzhou, capital of Guangdong province, on Tuesday, the fourth such office for Alberta in China.
“The government of Alberta is very interested in increasing our opportunities to trade with China going both directions,” said Deron Bilous, Alberta’s minister of economic development.