Flexibility pushed for Canada trade

Political differences need not hinder business side of China ties, forum told

Canada and China should put their diplomatic differences aside and instead focus on building up business ties, according to participants in a recent webinar.

There is a political countercurrent in Canada toward stronger ties with China, according to Carlo Dade, director of the Trade and Investment Centre at the Canada West Foundation.

“The economic reality is, we have to manage the relationship. This type of realism has to guide our thinking on trade,” Dade said at the forum on Canada-China trade relations that was co-organized by the Optical Valley Institute for Free Trade and the Jack Austin Centre for Asia Pacific Business Studies.

“Hatred is not manifested in the economic data. If you look at trade numbers, Canadian businesses and consumers are making choices every day transparently,” said Dade. “We didn’t want to engage China, but now we feel the pain, and we should change our mind. The shift is, we need to engage with China.”

Dade said that Canada, with its export-oriented economy, needs to diversify.

“The US has pushed us to diversify; they ignored NAFTA (North American Free Trade Agreement) and international rules for our soft wood lumber, and our government has been trying the best to save them.”

Diplomatic relations between Canada and China have been icy since Huawei executive Meng Wanzhou was arrested in Vancouver at the request of the US in 2018.

Canada has fallen from being China’s seventh-largest trading partner in 1988 to 22nd today.

Cui Fan, economics professor at China’s University of International Business and Economics, said the world has become increasingly regionalized. Cui said regional value chains have become more important.

China and Canada, however, have complementary economic structures, and the two countries have major potential to expand trade, Cui said.

“China is still opening and will be open wider. The home market (growth) effect will make China import more commodities, food and agricultural products from international markets, including Canada,” Cui said.

By signing the Regional Comprehensive Economic Partnership and proposing the EU-China Comprehensive Agreement on Investment, China has been active in building trade relations, and that will have implications for Canada, according to John Baird, former foreign minister of Canada.

“We are not progressive on trade; we are still talking about if FDI (foreign direct investment) from China will be good or not for Canada,” said Baird. “We are at risk of being left behind.”

‘Not the deadlock’

Chen Bo, economics professor at Huazhong University of Science and Technology, said: “The political tensions are not the deadlock for everything, including trade. An FTA (free-trade agreement) with China is rather a strengthening (of) than a challenge to existing rules.

“When the public attention or the public fever on China issues (goes) down, it’s the time we can start to talk about something real beneficial, like the Canada-China FTA.”

As to who started the “fire” between the two countries, Canadian Senator Yuen Pau Woo told participants that the responsible thing to do is to build “firewalls” to protect the relationship.

Other countries with political differences have built a successful relationship with China, said Woo.

“China, (South) Korea and Japan have signed an FTA with lots of obstacles, and it is something Canada needs to pursue,” Woo said.

“We have a fragile global economy post-COVID-19. I want to see more engagement with China; it is tremendously important.”

Baird said: “China has made an incredible transformation of its economy since 1978. When we look at the dramatic reduction in global poverty, there’s a huge decline in poverty in China. … It’s because of China’s opening market and global engagement.”