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Is Trade with China What We Really Want?

Prime Minister Stephen Harper visited China last week, in an attempt to negotiate more open trade flows with lower barriers. Rumors have been circulating that the Chinese are in favor of a complete free trade agreement with Canada. Understandably, Harper wants to reduce Canada’s dependence on the US, especially after President Obama’s administration rejected the Keystone XL Pipeline; a project that would have shipped Canada’s oil to the American Gulf Coast. As a spokesperson for Harper remarked before his departure, the Prime Minister hopes to “expand and deepen the strategic partnership between [the] two countries.”

However, Harper faces many challenges in the negotiations ahead. The current trade partnership is uneven, as Canadians face much greater restrictions on investments and imports than the Chinese do. Essentially, China is not as easily accessible to Canadians as Canada is to the Chinese. Will this ever change? China is not a transparent country, and arguably will not be for a long time. As recently as 2006, relations between Canada and China were extremely strained by Harper’s mere comments about Canada having to “sell out important […] values” in order to trade with China.

The Conservatives should be focusing on more than just oil talks. As the Official Opposition argues, Harper needs to discuss Canada’s drastic loss in manufacturing jobs. Our lower and middle classes are suffering due to outsourcing to Asia. As Jinny Sims, the NDP international co-operation and deputy foreign affairs critic, argues, “hundreds of thousands of Canadians […] are looking for productive employment” at the moment, while many jobs cross our borders and get taken up by the Chinese.

Luckily, Foreign Affairs Minister John Baird is aware that it is not in Canada’s best interest to have China monopolize our industry . We can benefit from Chinese investment, but the investment must be calculated and scrutinized at all times. It seems as though President Obama’s Keystone rejection has sparked increased interest from the Conservatives to move forward with the Northern Gateway; therefore, we must ensure that no drastic or impulsive decisions are being made with respect to Chinese trade and investment deals in the near future.

Gregory Chin is the Chair of the China Research Group at the Centre for International Governance. He argues that the trade relationship Harper is cultivating with China is a necessary one, because China is an “essential” market for Canadian oil. He told CTV’s Power Play that Canada must “diversify beyond the United States” in order to “secure prosperity for Canadians” in hopes that we may begin to trade natural gas with China. This being said, it is important for the Canadian government to remain critical and monitor its growing trade relationship with China and avoid a situation of trade over dependence.

With China looking to invest in Canada even more heavily during the coming years, via the Northern Gateway, FIPA (the Foreign Investment Protection Act) will help alleviate the worries Canadians have about the uneven investment balance between Canada and China. In 2010, Chinese investment in Canada totaled $14 billion while Canadian investment in China totaled $5 billion. We must keep in mind that China has more money to invest in Canada than Canada has to invest in China; however, we must also ensure that Canada’s total investments are not lower due to greater restrictions by the Chinese. As John Manley, CEO of the Canadian Council of Chief Executives, argued in November of 2011, “Canadian investors ought to be afforded the same access to China that Chinese investors are afforded.”

As the conservative government continues to search for ways  to diversify the Canadian markets, they must ensure that Canadian investments in China are both reliable and stable. Canadians must be benefitting  from an increased free trade agreement with a country like China, and be certain that this relationship is worthwhile . Indeed, as the lessons of mercantilism taught us, not all trade transactions are equally beneficial.

–  Marisa Corona



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