Monday, August 29, 2016

Kelly McParland: Twenty-five years of courting China has Canada shouldering a $46 billion trade deficit

Kelly McParland: Twenty-five years of courting China has Canada shouldering a $46 billion trade deficit

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Prime Minister Jean Chretien led a "Team Canada" delegation to China in 1994. Trade had grown substantially, mostly in China's favour.
AFPPrime Minister Jean Chretien led a "Team Canada" delegation to China in 1994. Trade had grown substantially, mostly in China's favour.
Listening to Prime Minister Justin Trudeau outline the priorities of his upcoming visit to China produces a distinct sense of déjà vu.
“What we want is to set a very clear and constructive relationship with China that … looks at the potential economic benefits of better trade relationships, while at the same time ensuring our voice is heard clearly on issues of human rights, labour rights, of democracy, of environmental stewardship,” he said. “There’s a tremendous amount of work to be done.”
Yes, indeed. Rewind the tape to November 1994, and a very similar set of aims were set out for a visit by then-prime minister Jean Chrétien and his “Team Canada.”
Chrétien revealed four broad policy ambitions: economic partnership, sustainable development, human rights and good governance. Canada was “positioning itself to build an economic partnership” with Beijing, to the mutual benefit of both. The prime minister was determined to “assist” Beijing in managing its environment “to the benefit of the global environment,” to stress the importance of human rights and UN obligations, to exercise “responsible international behaviour” and raise concerns over “the general lack of political freedom.”
Last year’s exports were topped by pulp, oil seeds, wood products, charcoal, fish and cereals. In return, Canadians bought electronics, appliances, toys, clothing and sports equipment.
Twenty-two years later, much has changed in China, and not necessarily for the better. While Canada prepares for the possibility of a national carbon tax, Beijing is often wreathed in a choking smog of industrial pollution, with coal smoke belching into the air. Human rights have made little, if any, progress: dissidents are not only jailed, but kidnapped from Hong Kong as the penalty for open criticism. Strict censorship limits access to the Internet, while Beijing backs large-scale efforts to hack into foreign computer systems in search of industrial and political intelligence. While paying lip service to international relations, Beijing has launched an aggressive attempt to claim the South China Sea for itself, belligerently challenging other countries, from Vietnam to the Philippines.
The one area of obvious progress has been in material wealth: the Chinese people are far better off than they were two decades ago. It’s this vast middle class that has Canadian businesses eyeing the opportunities, and Trudeau mulling prospects for a free-trade accord. China favours a trade pact, and no wonder — it’s already doing bang-up business selling goods to Canada. Last year, two-way merchandise trade totalled $85 billion, compared with $4.8 billion at the time of Chrétien’s visit. The bad news is that China, with almost 400 times Canada’s population, sells us far more than it buys. The trade imbalance in 2015 was $46 billion in China’s favour, and widening rapidly.
AFP/AFP/Getty Images)
AFP/AFP/Getty Images)Prime Martin went to China in 2001 to meet President Hu Jintao, also hoping to "strengthen trade ties"
One of Chrétien’s goals was to shift Canada’s exports from natural resources toward technology and services. Yet last year’s exports were topped once again by wood pulp, oil seeds, wood products, charcoal, fish and cereals. In return, Canadians bought electronics, appliances, furnishings, toys, clothing and sports equipment. Sales to China equalled just 4.1 per cent of Canada’s total; imports topped 12 per cent of our purchases.
So Trudeau is correct: there remains a tremendous amount of work to be done. The question is whether Beijing is any more willing to reciprocate than it ever was. The former Conservative government could never decide what it favoured more: blunt expressions of disapproval or a piece of the trade pie. The Liberals seek greater “balance,” but it takes two to teeter-totter, and the record has overwhelmingly favoured China to date.
And there’s little evidence the administration of President Xi Jinping is fundamentally different than its predecessors. Corruption remains rife, punishment selective. The flood of money into Vancouver and Toronto’s real estate markets is evidence that many wealthy Chinese feel the safest place for their money is outside the country. Foreign Minister Wang Yi left a distinctly poor impression when he chose to lecture Canadian journalists during a visit to Ottawa, a hint of the imperiousness that often seems to lurk behind China’s increased self-confidence.
There will be plenty of diplomatic pleasantries when the latest Team Canada lands in Beijing. They should be treated for what they are: just words. Canada needs to see concrete action from China on issues that are important to Canadians before we agree to yet further measures that are important to China. China offers an attractive market, but it is not the only market. Nor does Canada need to bend its principles in any way to increase access. Decades of access to Canada have benefited China greatly; it’s time for China to demonstrate that freedom and fairness flow in both directions.
National Post