The gig is up

Caught in the middle between the world’s two economic giants—China and the United States—Canada’s economic future is in peril.

It’s a bit nonsensical when you look at it analytically. The United States starts to slam dunk us with their trading policies and our solution is to diversify by making China our number two trading partner.

A little history is in order.

Since the time of former Prime Ministers Pierre Trudeau and Jean Chretien, we’ve been cultivating a relationship with Communist China.

Chretien was instrumental in developing a reasonable trade relationship with China. He advocated for China to become a member of the World Trade Organization as he believed they would then follow international trading rules.

He argued that human rights would come to China as the middle class grew so his trade efforts never broached that sensitive subject.

Alas, both assumptions were completely wrong.

Prime Minister Stephen Harper took a much more popular approach to China when he became Prime Minister. He criticized their human rights record and stood up for free enterprise.

China showed their displeasure by cancelling Harper’s visit to China. Harper, like many ordinary Canadians, was very reluctant when a Chinese state-owned energy company came with bags of money to scoop up Nexon Inc.

He was pushed by business interests and lobbyist to approve the sale, but immediately brought in restrictions for future takeovers of Canadian companies by stated-owned entities. China was mad again.

Eventually, Harper softened his approach to China as the agricultural and corporate sector continued to see China as the new promised land.

Then along came Prime Minister Justin Trudeau who naively believed he was ‘special’ because of his father’s past relationships with China.

He seemed to actually believe that the world, including China, would embrace his human rights/gender and sexual equality agenda as central to all trade agreements.

Of course, that, too, went over like a lead balloon in Beijing and Trudeau never developed a meaningful relationship.

Trudeau’s one short-lived masterstroke was appointing John McCallum to China as our Ambassador. Like Chretien, he knew how to handle the minefields in Chinese politics and culture.

Then, the United States dropped their nuclear bomb on China-Canada relations by requesting Canada to extradite Huawei Chief Financial Officer Meng Wanzhou.

In his attempt to smooth over Chinese anger, McCallum got himself fired.

So today canola exports are blocked and virtually all pork, beef, soybeans and peas exports have been banned.

At the same time, the Americans dropped tariff bombs on Canadian lumber and aluminium and never signed off on Trump’s masterpiece free trade agreement (USMCA).

Instead the genius in the White House starts a trade war with China with the unintended consequence of crucifying his own agricultural base.

Always the deal maker, Trump then gained a concession. China promised to buy between US$40-billion to US$45 billion worth of agricultural products from the U.S. which effectively kills any chance of Canada getting agricultural sales restarted with China any time soon.

Canada has free trade agreements with Chile, Columbia, Costa Rica, Europe, Honduras, Israel, Jordan, Korea, Panama, Peru, Mexico and most importantly we are a member of the Trans-Pacific Partnership (TPP) with 10 other countries in Asia and South America including Australia and New Zealand.

The gig is up—Canada has lost and will continue to lose by courting trade deals with the economic giants.

Rather, governments and industry groups need to start putting their emphasis on these mid-sized economic partners who, like Canada, are feeling the wrath of both the Asian tiger and the self-serving bully in the White House.

 

B. Schimke

ECA Review

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