Trudeau’s China visit must reset trade ties

The long-standing dispute over canola exports will weigh heavy on Canada Prime Minister Justin Trudeau’s August 30-September 6 visit to China as he readies to meet with Chinese President Xi Jinping and attend the G20 summit. In the run-up to the significant tour that comes at the invitation of Premier Li Keqiang, Ottawa has sent strong feelers that it is keen to cozy up with Beijing. Its overtures ahead of the trip indicate that it wants to renew the relationship with China — which is its biggest overseas trading partner after the US.
However, there have been undercurrents too which suggest that without resolving the canola row, the process of resetting the ties won’t go far. China plans to impose tighter certification standards on imports of the commodity — used to make cooking oil and animal feed — from September 1. It fears risks of spreading backleg fungus infection to its domestic rapeseed crops. And therefore, it wants to cut the maximum dockage rate to one percent, from the current 2.5 percent. This would mean a lot of extra cleaning for Canada, which will raise cost and would be time-consuming. Canada has high stakes in the canola issue as it exports worth C$ 2 billion ($1.55 billion) to China, shipping 4 million tonnes of the product to the Asian country. If this is hit, Ottawa will lose a big market.
Trudeau’s visit comes at a very sensitive juncture. He has the tough job of taking a stance which keeps the Chinese in good humour and doesn’t compromise his nation’s business interests. It would be a challenge to engage China in such a way that the trade irritant is removed and there is a win-win situation for both.
With China’s middle-class market growing, Canada needs to tap into its potential. Canadian products, goods and services in Chinese markets can help the trade to grow exponentially. But it has to be a two-way traffic. And Canada is fast realizing it. It is mulling to relax the foreign investment regulations to attract more capital from China in the country. It is imperative that both work together and hold more meaningful consultations and dialogues to iron out the rifts. A survey by Abacus Data underlined that more Canadians back growing economic and trade relationship with China. A 2016 white paper clearly brings to the fore the fact that a free trade deal between the two countries would entail $7.8 billion in additional economic activity within 15 years and create over 25,000 new jobs.
According to Canadian government figures, Sino-Canadian trade exchanges top Can$85 billion ($66.5 billion). A large share of Canadian lumber, minerals and agricultural products go to China. China also imports copper, zinc and steelmaking coal from Canada. The ties can be strengthened if both explore the potential of climate change and tourism pacts. While leaders from both the sides should show increased eagerness, it is crucial that more people-to-people interactions are organized.
While mingling with the Chinese people, Trudeau must also meet the business leaders and traders of both countries and keep his ear to the ground so he understands the practical problems and works on them with his Chinese friends. The Canadian Prime Minister’s visit will spell success if it is able to build the momentum in the bilateral trade and strike a more balanced approach towards the business challenges facing the two countries.