In trade talks with China, Canada must have a negotiating position

by Colin Robertson

The Globe and Mail
August 3, 2016

With Prime Minister Justin Trudeau’s official visit to China a month away, Canadian policy toward the Middle Kingdom is under review. Closer relations will serve Canadian interests, mindful that when dealing with China, the game is long and often tortuous.

The Chinese want a free-trade deal and their objectives are clear: improved access to our energy and agri-food resources and a more relaxed regime for Chinese investment, especially state-owned enterprises.

But what are our objectives?

Recent studies – notably those by Wendy Dobson and Paul Evans, and Laura Dawson and Dan Ciuriak – point out the potential benefits of a free-trade agreement (FTA), and the Canadian business community has been mostly encouraging.

But now we need negotiating positions.

The Harper government’s complementarities studies are now four years old and there is little evidence the Track II dialogue around a maritime energy corridor made any progress. The Trudeau government ruminates about joining the China-inspired Asian Infrastructure Investment Bank but shouldn’t this fit into our larger strategy?

A good starting position should be the recently negotiated Trans-Pacific Partnership and the standards it sets for investment, intellectual property and services, as well as environment and labour.

Launching an FTA with China will startle American policymakers who take for granted the Canadian energy that underwrites their “energy independence.” Getting more of our oil and gas to Pacific tidewater will get us a better price as well as leverage in dealing with resurgent American protectionism.

Talks with China should encourage Japan to resume the nascent Canada-Japan economic partnership negotiations, set aside in favour of the Trans-Pacific Partnership. The TPP is now at risk of becoming a victim to U.S. protectionism.

The Chinese are tough negotiators. As a rising great power they confidently believe they hold the upper hand. They are skilled in playing off Western impatience. For China a tentative “deal” is often just the starting point for serious negotiations.

The Chinese are also masters at “hardball.” The recent public dressing-down of a Canadian journalist, by Chinese Foreign Minister Wang Yi, for her “prejudice” and “arrogance,” is right out of the Chinese playbook on forcing “foreign devils” to kowtow to them. During his 2009 visit to Beijing, Prime Minister Stephen Harper had to endure the public scolding of Premier Wen Jiabao for taking too long to visit China.

Recent Chinese behaviour – that of their Foreign Minister as well as their rejection of the recent international tribunal ruling on the South China Sea – deserves a response.

Prime Minister Trudeau can underline his credentials as a G7/20 leader by speaking before a Chinese audience to the responsibilities of all nations, including China, to the rules, norms and institutions of the liberal international order. Foreign Minister Stéphane Dion, blindsided by Wang Yi in Ottawa, should speak to Chinese students about human rights, press freedom and the rule of law.

Tougher, necessary and behind-closed-doors conversations should also be held around ongoing Chinese cyberespionage and cybertheft aimed at our institutions and on efforts to influence our elected officials. There should be a discussion of Hong Kong as well as the consular case of Kevin Garratt, the Canadian missionary indicted by China for espionage.

Much easier will be the discussions around enhancing our people-to-people ties.

The Harper government achieved “approved destination status” for Chinese travellers. They are now our third-largest tourist source. There are more than 100,000 Chinese students in Canada. Representing one-third of our foreign students, they inject over $2-billion annually into our economy. Recent Chinese immigration has also increased their numbers to over 500,000, the second-largest foreign-born group in Canada. These ever-expanding family ties are an advantage, especially given the overseas Chinese business networks.

Pierre Trudeau once remarked that “Canada has a ringside seat on the Pacific.” But our engagement has been episodic and lacking in sustained strategic direction. We were late, often reluctant, participants in the Trans-Pacific Partnership. Our investment in regional security is minimal. The people flow requires more effective marketing. It’s time to get into the ring, and China is the place to start.

In negotiating with China the Trudeau government needs to be disciplined, focused and patient. Nor should we ever forget that as negotiators the Chinese are more dragon than panda.

A former diplomat, Colin Robertson is vice-president and fellow with the Canadian Global Affairs Institute.


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