Categorized | Canadian Politics

Canada and China still not ready to launch free trade talks

Posted on 07 December 2017 by admin

Prime Minister Justin Trudeau and Chinese Premier Li Keqiang say the countries will continue with “exploratory” discussions that have been ongoing for more than a year

BEIJING—It was “candid and in-depth” for the Chinese, “wonderful and fruitful” for the Canadian side.

But at the end of a long afternoon of ceremony and discussions, Canadian and Chinese leaders emerged from an opulent meeting room in Beijing’s Great Hall of the People without the big announcement that was widely expected.

Canada and China are not launching free trade talks.

At least not now.

Prime Minister Justin Trudeau and Chinese Premier Li Keqiang announced Monday evening that the two countries would continue their “exploratory” talks on a trade deal.

Those discussions have been going on for more than a year, since Trudeau made his first official visit to China in September 2016.

In the days leading up to his current visit to Beijing, which began Monday with a pitch for tourism in Canada, expectations ramped up that Trudeau was travelling to the Chinese capital to confirm that Canada would be the first G7 country to pursue a free trade agreement with the world’s second-largest economy.

International Trade Minister François-Philippe Champagne told reporters en route to China that Canada had yet to decide whether to launch free trade talks, but that the country is looking to diversify its trading partners. Industry Minister Navdeep Bains, meanwhile, told Global News over the weekend that free trade with China is “the objective” for the government.

Instead, Trudeau and Li emerged from a bilateral meeting Monday with just three, less comprehensive deals: an agreement to expand trade in agriculture, an action plan on energy cooperation, and a memorandum of understanding for a joint learning initiative.

“Canada is deeply interested in further engagement and trade across the Pacific,” Trudeau told Li during their meeting, adding that the discussions they held on the matter were “wonderful and fruitful.”

Li said the countries were entering a “golden era” in their relationship and that their talks have been “candid and indepth.”

The sunny words were spoken after Trudeau and his Canadian entourage — which included Canada’s ambassador to Beijing and the ministers of industry, small business and tourism, industry, environment and international trade — were treated to a grand welcoming ceremony in the symbolic heart of Chinese political power.

With Canadian flags flapping beside the distinctive insignias of Red China along Tiananmen Square outside, a contingent of immaculately synchronized soldiers stood at attention before the Canadians. Trudeau and Li stood on a dais in the middle of a grand hall, as a military band played both countries’ national anthems.

Li then led Trudeau out of the hall and into an anteroom, where top officials held their bilateral meeting.

Li later told reporters at a joint press conference — in which the Chinese cancelled a plan to take questions from reporters — that China is “open” to the prospect of a free trade deal with Canada, and hailed the agreements the countries had reached so far.

“We see tremendous potential in such cooperation,” Li said.

Trudeau said that he is “pleased” that exploratory talks on free trade will continue. He said greater market access to China’s 1.3 billion consumers would be good for Canadian business, and that Canada needs to adjust to the “shifting” global trade landscape.

“We believe that done properly a trade agreement would benefit both countries, creating jobs, strengthening the middle class, and growing our economies,” Trudeau said, describing Canada’s ambition for a “progressive” trade deal that would include chapters on gender, labour standards and the environment.

Late Monday evening, Trudeau held his own press conference at the swank Four Seasons hotel in central Beijing. The prime minister called a potential trade deal with China “a big thing” that needs to be done responsibly. He said China is “open” to Canada’s vision of “progressive” trade, but that “China is very aware” starting trade discussions with a G7 country would be a “big precedent.”

Trudeau added that “there wasn’t one issue” that held back an agreement to launch talks Monday.

“We both are very much in agreement that we need to get this right and move forward at the proper pace,” he said.

The Trudeau Liberals have made doubling trade with China a goal for the Canadian government. Bilateral trade was worth $85 billion in 2016 — with Canada in a $43 billion trade deficit — while there was $34.6 billion in two-way foreign direct investment.

After more than a year of exploratory talks on launching free trade negotiations, as well as country-wide public consultations on the matter, many felt Canada was on the cusp of formally starting talks this week.

Business groups representing some of Canada’s top export products to China, including mining and agriculture, said this week that one of the prime benefits of a trade agreement would be to create a sense of stability for Canadian firms and industries doing business in China.

“The potential is there given the market dynamics, and the fact that Canada is a world-leading mining jurisdiction, and China has a significant appetite for our materials,” said Brendan Marshall, vice president of economic affairs at the Mining Association of Canada.

“The question is: Are we willing to create a greater level of predictability and therefore business confidence?”

But no trade agreement would be worthwhile without creating a reliable dispute resolution mechanism or guarantees that its stipulations would be upheld, said John Manley, a former Liberal cabinet minister who is now the president and CEO of the Business Council of Canada.

“The trouble always with China is they’ll sign agreements, but will they respect them? Enforceability is going to be one of the factors by which we judge whether we’ve got something worthwhile,” Manley said.

Not everyone is keen on free trade with China, though. Human rights groups sent an open letter to Trudeau last week that called on him to place concerns about restricted political freedoms and imprisoned Canadians over the push for trade talks.

Others, such as the United Steelworkers union, have voiced worry that fewer barriers to trade could allow China’s state-owned companies to flood the Canadian market and wipe out businesses with excess production of goods like steel.

The lingering question of trade with China also adds to the list of potentially imperilled commercial agreements for the Liberal government. U.S. President Donald Trump has repeatedly vowed to rip up the North American Free Trade Agreement, while talks on reviving the deal on the Trans Pacific Partnership — a trade agreement between 11 countries in Asia and the Americas, excluding China and the U.S. — faltered last month during a summit in Vietnam.

Trudeau continues his visit in China on Tuesday, when he is set to speak with Canadian and Chinese business executives before attending a private dinner with President Xi Jinping.

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