Sunday, October 29, 2017

John Ivison: With Bombardier intervention, Trudeau scorns his own 'Think China' message

John Ivison: With Bombardier intervention, Trudeau scorns his own 'Think China' message

The story caused my eyebrows to arch because of the circumspection Justin Trudeau’s government showed toward the dragon. To this point, the Liberals have been cheerleaders for all things Chinese

A curious but apparently well-sourced Reuters report appeared Thursday, saying the Canadian government facilitated a deal between Bombardier and European plane-maker Airbus for the CSeries jet in order to thwart a potential investment by a state-owned Chinese company.
The report, which is not being denied by government officials, said concerns were raised in government when it became known Bombardier was considering a partnership with Chinese jet-maker Comac.
The fear in Ottawa was that jobs and technology could be siphoned away to China, where intellectual property theft remains rife.
Consequently, the government helped pave the way for the October 16 agreement in which Airbus took a majority stake in the CSeries for one dollar.
Airbus CEO Tom Enders walks away from a Bombardier CSeries jet during a visit to Bombardier’s Mirabel plant in Mirabel, Quebec, Friday, October 20, 2017. THE CANADIAN PRESS/Graham Hughes
The story caused my eyebrows to arch because of the circumspection Justin Trudeau’s government showed toward the dragon. To this point, the Liberals have been cheerleaders for all things Chinese.
Last month, the Prime Minister held a fireside chat with Alibaba Group CEO Jack Ma, at which he called on Canadian companies to deepen the “Canada-China friendship.”
Small- and medium-sized businesses should embrace globalization and explore China’s market potential, Trudeau said at the Toronto event. “Think big, think beyond our borders,” he said.
Canada is pursuing a bilateral trade deal with China and Trudeau is famously on the record as saying he admires the “basic dictatorship” because of its ability to “turn its economy on a dime.”
Jack Ma, chairman of Alibaba Group Holding Ltd., right, and Justin Trudeau, Canada’s prime minister, react during the Gateway ’17 Canada conference in Toronto, Ontario, Canada, on Monday, Sept. 25, 2017. Cole Burston/Bloomberg
This enthusiasm at the top, combined with the apparent impasse at the NAFTA negotiating table, has had an impact on public opinion. As the National Post reported this week, almost 70 per cent of Canadians support a free trade deal with China, according to a University of British Columbia poll. While over half of Canadians still harbour “unfavourable” views of China, more people are receptive to the idea than in any previous poll.
A decision on launching negotiations is expected before the end of the year, perhaps as soon as next month when the Prime Minister meets Chinese president Xi Jinping at the Asia-Pacific Economic Co-operation summit in Vietnam.
Yet while he was venerating the Chinese in public and urging businesses to take the risk of investing in Asia, the Prime Minister was ensuring that Quebec’s crown jewel was not exposed to the vagaries of Chinese ownership.
David Mulroney, the president of University of St. Michael’s College in Toronto and a former Canadian ambassador in Beijing, believes it was timely advice, given Xi’s recently delivered three-hour address to the Communist Party’s national congress. Xi talked about modernizing the Chinese economy, but used the word “market” 21 times, compared to 51 times in a similar 1997 address by then-president Jiang Zemin.
Canadian Prime Minister Justin Trudeau is greeted by Chinese President Xi Jinping during the official welcome at the G20 Leaders Summit in Hangzhou, Sunday, September 4, 2016. THE CANADIAN PRESS/Adrian Wyld
“Welcome to the Canadian future,” Mulroney said. “Every decision can’t be made to appease Beijing.”
Under Xi, China’s goal is to double GDP by 2020, from 2010 levels. Mulroney said the state will use its industrial might to achieve that target and that, if the CSeries were bought by the Chinese there would be a danger it could disappear into the Chinese industrial system.
“You have to think carefully about that with a corporation like Bombardier that has been so generously supported by the taxpayers of Canada,” he said. “The Airbus deal is a much better investment for Canadian taxpayers.”
Mulroney suggested that doing business in China is becoming easier, but that companies have to do their due diligence. “It’s not the U.S. There is a lot of upside but companies have to be more careful.”
With the NAFTA talks going poorly, Ottawa interest in diversifying trade is only growing. The Prime Minister is likely to sign a reinvigorated Trans-Pacific Partnership agreement at APEC in Vietnam, albeit without the United States as a participant.
The Liberals appear bent on a deal with China in addition — something on which the Conservatives have blown hot and cold down the years.
From the Chinese point of view, striking a deal with Canada would be a sign that it can work with developed economies, as it transforms itself from reliance on exports and investment toward a services and consumption-based economy.
The Chinese struck a free-trade deal with the Australians in 2015 that provoked fears Chinese companies would bring their own workers to build infrastructure projects. It was eventually agreed that salaries of Chinese workers would match corresponding Australian rates.
For Australia, the attraction was a phased out elimination of 20-per-cent tariffs on beef, pork, dairy and wine, as well as a significant boost to its tourism and education industries.
Canada would benefit from first mover advantage if it is next to strike trade deal with the dragon.
But, despite the warmth of current relations, Trudeau appears to be heeding the old Chinese proverb — don’t trust a person who claims to be honest, and never trust exaggerated friendliness.