GLOBAL OUTLOOK

by David Bercuson

Frontline Defence
October 31, 2017

The Liberal government’s pursuit of a free trade agreement with China is apparently supported by a large number of Canadians, but Ottawa is ignoring real security and defence problems posed by such a relationship.

The current preoccupation with a trade agreement with China is being driven by two major factors: President Trump’s peremptory dismissal of the Trans Pacific Partnership, and the significant “poison pills” that the United States has offered Canada and Mexico in the current NAFTA negotiations. Under these circumstances, it is almost inevitable that Canada will look elsewhere to balance anticipated losses in trade with the United States. China is currently one of the largest markets in the world (alongside the United States and the European Union), so it is almost a given that Canada would seek trade opportunities there. 

But free trade with China could bring considerable difficulties. Put simply, Chinese interests run counter to those of the United States in many respects especially the clash of military power in the South and East China Seas.  Despite President Trump’s inbred isolationism, the United States’ concept of freedom of the seas is a direct affront to China’s ongoing efforts to bully the rest of Southeast Asia into recognizing China’s claim to sovereignty to virtually all of the South China sea. 

The American objection to China’s desires is absolutely fundamental to almost every current and historical precedent of American sea and naval power.  They will not back off.   Currently the situation there is a standoff and the United States continues to press its claim, but with the “reelection” of Xi Jinping for another five years of leadership - and in light of Xi’s ambitions to build China into a global, rather than a regional, super power – further clashes between the US (and its two closest allies in the region, Japan and South Korea), and China are virtually inevitable. 

Sooner or later Mr. Xi will push back against American freedom of navigation cruises and overflights which will push Canada into a very tight spot if we are chasing Chinese markets with little regard to geopolitical realities.    If Canada is tied to China in a free trade agreement, Canada’s relationship with China will have to take second place partly because of our very close ties to the United States and partly because we largely share America’s views on freedom of navigation.  The implications for future China-Canada relationships will be graver than if we had not had a free trade agreement in the first place.

The next issue that bears considering is, quite simply, that we have many reasons why we should not trust China with military or even dual use technologies because the Chinese have been engaging in widespread theft of our intellectual properties for years.  If China insists on a free trade agreement in which virtually all sectors of our economy will be on the table – and there is every indication that they will – we had better be prepared to see an increase in this sort of activity in the future. 

When a U.S. company tried to purchase Vancouver-based MDA a few years ago, the Harper government blocked the sale because it feared that the satellite surveillance technologies that MDA had developed would be lost to Canada under U.S. trade rules and be shifted to the control of the State Department. What will happen if the next suitor for MDA is a Chinese company acting under a China-Canada free trade agreement?

Finally, Canada should study the possible domestic effects of a Canada-China free trade agreement. Both Australia and New Zealand, which have concluded such agreements, are growing increasingly restive at some of the actions China has taken in their respective countries. Australian intelligence chief Duncan Lewis recently warned that China’s growing interference in domestic politics poses “a threat to our sovereignty, the integrity of our national institutions and the exercise of our citizen’s rights”. 

China and Canada will come to free trade talks from two very different approaches: we will seek access to greater markets, they will seek greater domination of our domestic industries and political affairs. 

– David Bercuson, Research Director, Canadian Global Affairs Institute