Growing trade with the Chinese key for Canada
Envoy says forestry, agri-food could benefit from tapping into vast market
Boosting ties with China could go a long way toward diversifying the Canadian economy and reducing the impact of Canada-U.S. trade disputes over products like softwood lumber, Canada’s ambassador to China said Tuesday.
John McCallum — who was in Edmonton along with Alberta Trade Minister Deron Bilous to meet with a visiting trade delegation from Shandong province, China — told reporters the current softwood lumber spat with the Trump administration illustrates how important it is for Canada to grow its trading relationship with China, an economic powerhouse expected to account for about 20 per cent of global economic growth in 2017.
“The United States will always be Canada’s No. 1 trading partner … But the point is that we are also wanting to diversify our trade,” McCallum said. “Certainly forest products is one area. With trouble on the U.S. front on that sector, it’s more natural for Canada to turn to China as a partial recipient of Canadian forest products.”
About 70 per cent of exports from Canada’s $8.6-billion softwood lumber industry went to the United States in 2015. About 40 per cent of Albertan exports, valued at $600 million to $800 million, go south of the border. U.S. President Donald Trump recently slapped tariffs as high as 24 per cent on exports of lumber, claiming the Canadian lumber industry is unfairly subsidized.
McCallum said Canada has been working “aggressively” for close to 15 years to grow its market for forestry products in China. Historically, the Chinese have preferred to construct buildings out of concrete, not wood — but that is slowly changing. Lumber exports to China have grown remarkably in recent years and are beginning to expand beyond low-grade timber to higher value products.
Forestry is not the only industry where Alberta and Canada see potential for boosting trade with China. Agri-food, clean technology, and tourism are all sectors that could benefit greatly from tapping the vast Chinese market, said Bilous, as is energy.
“The news of Trans Mountain’s approval was very, very welcome news (in China),” Bilous said. “Asia is hungry for energy, for secure sources of energy … There’s keen interest in seeing Alberta, British Columbia and Canada moving forward with LNG as well.”
In 2012, China’s CNOOC Ltd. spent $15.1 billion to acquire Calgary-based Nexen Energy, sparking a national debate over state-owned enterprises buying Canada’s strategic natural resources. The controversy led former prime minister Stephen Harper to put limitations on foreign state-owned investment in the oilsands.
McCallum said those rules still exist, but hinted Tuesday they could be overturned if Canada and China move toward formal free trade negotiations. The federal government is currently engaged in exploratory talks with China on a possible bilateral free trade agreement.
“That is certainly one issue the Chinese might want to be put on the table,” McCallum said. “No decision has yet been made. It might be an issue that is on the table at some point.”
The 30-person delegation from Shandong — which is stopping in both Edmonton and Calgary this week — is the result of a trade mission Bilous led to Asia at the end of November. That mission was the largest in Alberta’s history and saw more than 86 Alberta businesses and organizations travel to China and Japan to meet with potential business partners, investors and customers.
Premier Rachel Notley, accompanied by Bilous, also travelled to China and Japan last month on her first trade mission to the Asia-Pacific region.
But the point is that we are also wanting to diversify our trade. Certainly forest products is one area.