China and Canada: Free trade agreement coming?

The National Post is reporting that the Canadian government, led by Conservative Prime Minister Stephen Harper, is in the process of negotiating a free trade agreement with one of its growing business partners, China.

Canada already signed up for NAFTA, the North American Free Trade Agreement, in the ’90s, opening up its borders to the US and Mexico. But now it appears Harper has his eyes on the East… or West, depending on which Canadian coast you find yourself looking from.

The Post has more:

“An announcement on exploratory talks was originally to have been made last month when the Canadian and Chinese governments released a joint study on the benefits both sides could expect from deeper trade links. The study was released on Aug. 15 and concluded there is ‘untapped potential for further growth.’

However, the $15-billion bid for Calgary-based oil company Nexen by China’s Cnooc Ltd delayed the talks announcement, which is now expected to be made once Canada has completed its 45-day review of the Nexen deal (that process can be extended an additional 30 days). Sources suggested the Canadian government will use the review process to leverage Chinese approval for takeovers by Canadian companies such the Bank of Nova Scotia’s pending purchase of the Bank of Guangzhou

Bilateral trade between Canada and China has grown six-fold in the past decade – increasing from $11-billion in 2001 to $65.6-billion last year. But that growth masks an imbalance that is also growing – nearly $50-billion of trade was goods and services Canada imported from China, with only $17-billion going the other way. Mr. Harper is looking for that to change.”

For an interesting perspective on the potential free trade agreement, and other trade wars happening between China, the US, and Europe, check out this editorial by Terence Corcoran. He argues that trade peace is always better than trade war:

“In Europe, pundits are in a state of alarm over a looming trade war with China. The immediate focus is allegations China is dumping subsidized solar panels into Europe, killing local industries. But the dispute threatens to escalate — as trade wars often do.

In retaliation, for example, China’s alcoholic-drinks industry wants an investigation of European winemakers. According to China Daily, the head of the Chinese alcohol industry says Europe is flooding China with low-quality wines.  It’s a sure sign the world of trade has changed when China — it has a wine industry? — is threatening to go to the World Trade Organization. Solar panels are firing up trade war talk in the United States as well, joining a list of trade irritants — including the value of China’s currency — that has many worried about a potential U.S.-China trade war.

Amid all the talk of war, Canada is talking trade peace … In a world filled with talk of full-blown war and retaliation, Prime Minister Stephen Harper’s apparent support for trade negotiations is welcome — so long as genuine free trade remains the real objective.

For many Canadian policy makers and business leaders, the objectives of economic engagement with China seem to be something other than free trade. In their enthusiasm for what they now refer to as the Pacific Century, in which China overtakes the United States as the world’s biggest economy, the Canadian business and political establishment appears ready to accept – a may even eagerly anticipate – a load of economic compromises on the road to a new Canada-China partnership.”

Read more on China, France, America and the world beyond in the latest edition of Carnet Atlantique.

September 11: We Still Remember.

 

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