Impact of potential U.S.-China trade war on Canada unclear: McCallum

McCallum says Canada could possibly ‘walk and chew gum at the same time’

The Canadian Press

January 25, 2017

THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA – The federal government’s new ambassador to China says Canada can cultivate strong ties there without jeopardizing its relationship with the U.S.

But John McCallum, the former immigration minister appointed ambassador to China earlier this month, says it’s also too early to tell whether a potential trade war between those two superpowers could catch Canada in the crossfire.

U.S. President Donald Trump has threatened to take punitive economic measures against China, accusing it of destroying the U.S. economy. If China retaliates with measures of its own, some see the potential for a tit-for-tat tariffs dispute that could drag Canada’s economy down as well. Then, there’s the diplomatic question of what could happen if Canada is seen favouring one relationship over the other.

But McCallum said the reality is that no one knows yet how the U.S.-China relationship will play out in the coming weeks or months, him least of all, as he remains in Canada before officially taking up his post in the spring.

His job will be to focus on Canada-China relations, others will focus on the Canada-U.S. dynamic, but neither should suffer, he said.

“We are able to walk and chew gum at the same time,” McCallum said about balancing both relationships.

Canada needs to play a long game with both countries, said Dan Ciuriak, a fellow at the Centre for International Governance Innovation and a former deputy chief economist in the Foreign Affairs Department.

Trump’s election and populist forces elsewhere in the world suggest the current model of globalization is poised to give way to something else, he said.

“The international relations elements of this are going to be very tricky, but the Trump administration has very strongly stated it is America first,” he said.

“And every other country must look after its own interests and that includes Canada, it could hardly be expected otherwise.”

McCallum moves into diplomatic circles after 16 years as an MP, including several stints in cabinet, most recently as immigration minister primarily tasked with bringing more than 25,000 Syrian refugees to Canada in a matter of months.

His strong political and personal ties with the Chinese-Canadian community – his wife is Chinese and he represented a Toronto-area riding that was about 35 per cent Chinese – were among the reasons he was tapped for the high-profile diplomatic post by Prime Minister Justin Trudeau.

He’ll be reporting directly to the prime minister once he takes up the job and that connection has been seen by many observers as something that will be welcomed by Beijing as a sign of Canada’s seriousness about its relationship with that country.

McCallum didn’t disagree, and suggested the reverse was also true – Trudeau wanted someone he could speak with directly about developing relationships there.

Another potential sign of how Canada views the relationship with China, however, has aroused some criticism: a recent decision by the Liberal cabinet to overturn the previous Conservative government’s rejection of a Chinese company’s takeover bid for a Canadian high-tech firm, first reported by The Globe and Mail.

A source close to the decision told The Canadian Press the deal was initially quashed because of concerns about the relationship between the Chinese company and the Chinese government. Canadian officials were told “the impact of illegal transfer has been assessed as high,” meaning there was the possibility the Chinese government would end up with advanced military laser technology being produced by the Canadian firm “sooner than would otherwise be the case,” according to portions of the note provided to The Canadian Press.

The opposition Conservatives have characterized the Liberal decision as a move to appease the Chinese, but McCallum said the government remains concerned about national security issues as it relates to trade. He wouldn’t say, however, what changed with this particular deal.

“What I can say is the security people are right now examining that deal and we shall see what they say,” he said.