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Published December 1, 2017
By Jessica Stone
This week, Prime Minister Justin Trudeau is in effect Canada’s salesman-in-chief — with many Canadians betting he’ll announce the beginning of a free trade agreement with Beijing. Howard Balloch is a former Canadian ambassador to China, now doing business there.
“I think there’s no question that both sides are interested in engaging in free trade talks or talks on a comprehensive economic agreement of some sort. I think this visit will kick it off, and I hope it does. I think this will be welcomed by business in both sides,” Balloch said.
The five-day visit to China by Trudeau beginning on Sunday comes just as the U.S. toughens its positions against Canada and Mexico in negotiating a new North American Free Trade Agreement. The talks have underscored Ottawa’s need to diversify its trading partners – the U.S. is Canada’s largest trading partner.
“We’ve already seen a very significant increase in Canadian exports of lumber wood to China at a time when the U.S. has repeatedly challenged Canadian exports into that country. In some sectors, the replacement is more direct, but generally, it’s healthier for the Canadian economy to be less reliant on the U.S.,” Balloch said.
Since taking office, U.S. President Donald Trump has exited a major trade agreement and taken a more protectionist stance on global trade, even as China’s President Xi has pursued more globalization. Canadians see an opportunity for Ottawa to become China’s open door to the North American market – both for imports and exports, especially in the auto sector.
“If we engage them early and show them they can access that great market in NAFTA by investing in Canada, I think what we can do is we can cover off some of the Canadian decline in Canadian production that has happened over the last 20 years,” Flavio Volpe from Automotive Parts Manufacturer’s Assoc. said.
And Volpe adds while North America remains a potential fertile ground for Chinese automobiles, Canada’s abundant natural resources are a match for China’s industrial needs. A win-win proposition.
“China has signaled it needs potash, it needs petroleum. It needs fuels to supply its growth. It’d be great to have a discussion to say look, under that premise, we’ve got an abundance of natural resources, You’ve got an abundance of industrial capacity, Why don’t we see if we can find a deal that works for both,” Flavio Volpe from Automotive Parts Manufacturer’s Assoc. said.
Neither Balloch nor Volpe said China is likely to replace the U.S. as Canada’s primary trading partner any time soon. Washington has geographic proximity and close cultural ties. But China is Canada’s second largest trading partner and could be a significant economic partner down the road.
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