ASIA-PACIFIC: TRUDEAU AND CHINA TRADE
Incoming PM must improve relations with Canada’s second-largest trading partner
Aweek after the federal election that swept the Liberals and Justin Trudeau into office, speculation has began on the effect on Canada’s various relationships on the Pacific Rim.
There will likely be two things that will signal Trudeau’s Asia-Pacific policy direction. One will be the new Liberal government’s actions on the recently signed Trans-Pacific Partnership, which still needs to be passed by Parliament; the other is Ottawa’s relationship with China, which had struggled to gain momentum in the neardecade Conservative rule.
Under Stephen Harper, Ottawa’s direction on free trade across the Pacific involved engagement of most major markets except China. There’s the trade deal with South Korea that came into effect 11 months ago, Canada’s first with an Asian economy. There are the overtures to India and Prime Minister Narendra Modi to expand regional investment in infrastructure and technology.
The Harper administration also named Canada’s first dedicated ambassador to ASEAN, the Association of Southeast Asian Nations. Federal officials heavily promoted opportunities in markets such as The Philippines, Malaysia and Indonesia. Through the Trans-Pacific Partnership, the two most interesting gains for Canadian free-trade proponents may be Japan — one of the world’s top economies — and Vietnam, the only high-growth developing Asian country in the TPP’s initial 12-member field.
But there is no sign of a freetrade deal with China, Canada’s second-largest trading partner and the world’s second-largest economy. While limited pacts on foreign investors protection, as well as commodity-specific agreements on blueberries and cherries, have been signed, Ottawa has not pursued a wider trade deal with Beijing, citing the current trade imbalance. (Countries like Australia and New Zealand have either active or pending trade deals with China.)
How the Trudeau administration deals with this issue will be closely observed. Historically, a Liberal government has been more open to working with China in what some academics call “a missionary approach,” to aid and influence Beijing in modernizing and contributing to the global scene. It was under the elder Trudeau’s time as prime minister, in 1970, when Canada became one of the first Western countries to establish official diplomatic relations with the People’s Republic of China.
That contrasts sharply with Harper’s initial foray into China relations, signified by stark ideological differences and a limited warming of economic and diplomatic ties in the latter years. Most observers agree that, under Trudeau, the willingness of Ottawa to consider a trade deal with China will be higher. Just how far Ottawa goes in pursuing that relationship — Beijing has repeatedly shown interest on its side — will determine what Canada’s Asia-Pacific strategy will look like.
The other issue is the TransPacific Partnership. Trudeau said during the campaign that a Liberal government would review the recent agreement in detail before making a decision on whether to proceed. However, he also said his party is generally in favour of free trade. Had the NDP and Thomas Mulcair come to power, the Trans-Pacific Partnership would have been in a more precarious position in Canada.
Among the countries with the quickest response to Trudeau’s election win was Japan. Tokyo has engaged Ottawa in free-trade talks for a decade, but has said in the last few years that the multilateral Trans-Pacific Partnership should take precedence.
Japanese ambassador Kenjiro Monji said last week that Tokyo is seeking a meeting of Trudeau and Prime Minister Shinzo Abe at the APEC/G20 summits in November. Tokyo is keen to solidify the TransPacific deal and is taking no chances in trying to engage the new Canadian leader early on the issues.
Several nations that are not part of the Trans-Pacific Partnership enjoyed close ties with Canada under Harper and are eager to keep the relationship growing. The Canada-India Foundation has urged Trudeau to visit New Delhi and forge an economic partnership agreement, as well as a foreign investors protection pact. Ottawa and New Delhi previously promised to increase trade three-fold to $15 billion.
It is all adding up to a big plate of policy decisions awaiting the new prime minister and his yet-to-be-selected cabinet.