Free trade with China on the table

Possibility of a Canada-China free trade agreement raises questions

Ayame Ulrich

Splashed across the foreign/political news sections in our papers over the past few months has been the possible free trade agreement (FTA) with China.

Still in the negotiation stage, the FTA with China is a complex multi-layered topic on Stephen Harper’s desk and is the culmination of increasingly warmer relations between the two countries.

Back in February, Prime Minister Harper met with the Chinese government, including Premier Wen Jiabao.

They determined to produce a study of how their economies could be “complementary” and agreed this study could open talks on what an FTA would mean for their respective countries in general.

Harper seemed very positive, saying that an FTA, though far in the future, could mean greater trade diversity and the creation of Canadian jobs.

On Aug. 15, the study concluded that while there were certain challenges to overcome, there was “untapped potential for further growth.”

This type of political and economic shift raises many questions and concerns from both sides.

Most government officials questioned about the pending talks on an FTA claim that it’s a far off goal, queued behind current and more pressing foreign trade deals, which are open and presently on the table.

Former prime minister Brian Mulroney responded Wednesday to questions about the encouragement from Beijing Ambassador Zhang Junsai to begin FTA talks within the next few years.

Mulroney said it would not happen in less than five years and would likely take more than 10, saying, “I think it is premature with China and I don’t think we’re going to do it - certainly not within a decade.”

Similarly, Trade Minister Ed Fast believes that deepening trade with China is a priority for Canada but an open free trade agreement would be “premature.”

Foreign Minister John Baird claims Ottawa is not ready to begin free-trade negotiations with China, but is instead focused on wrapping up deals with other Asian countries.

So despite Chinese ambassador Zhang Junsai urging the Canadian government to open discussions for an FTA very soon, I’d have to advise that we don’t hold our breath on this one.

I have no doubt that if the current government’s foreign trade priorities are maintained in the future, an FTA with China will become a reality, but I’d give it 10 to 15 years.

On July 23, the state-owned Chinese oil-producer CNOOC Ltd. made a bid to take over Alberta oil company Nexen Inc. for $15.1 billion. A majority of the shareholders approved the buy-out, but the final decision rests with the federal government.

In September, Ambassador Junsai commented with candour in a Globe and Mail interview on the Nexen buy-out that business is business and should be kept that way, free from any political considerations.

Yet, the proposed take over of Nexen is “the most important acquisition by an Asian firm in Canada,” and it’s not the only piece of pie CNOOC Ltd. has bought up.

OPTI Canada Inc. was bought out by CNOONC last November.

To be blunt, I’m nervous about a foreign company owning major oil-producers in Canada. Yet, as long as the possibility of reciprocity is present my anxieties can be laid aside.

For example, the Bank of Nova Scotia is attempting to purchase the Bank of Guangzhou in China.

These types of international business deals are truly setting a new standard for Canada-China relations. It’s a step forward to be sure
equal opportunity to expand in each others’ markets is an excellent sign of goodwill.

Is the FTA a good idea?

Is complete free access to Chinese businesses, stocks, financial markets and products going to be beneficial to Canada and its citizens?

I’d say yes.

I agree with the Canada-China Complementarities Study in concluding that there is “untapped potential for further growth” and that “international trade is a key contributor to the prosperity of the Canadian and Chinese economies.”

Following his meeting with the Chinese government in February, Prime Minister Harper seemed optimistic about a possible FTA, though he was more than aware it wouldn’t be a quick or easy decision.

“(There are) considerable steps and some obstacles and questions that would have to be addressed,” he said.

I believe the prime minister is right on the money here.

This isn’t something to rush into. It’s a big deal and deserves due diligence.

Thomas Guenther is a freelance writer who lives and works in Winnipeg.

Published in Volume 67, Number 7 of The Uniter (October 17, 2012)

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