Why Canada Needs to be Less ‘Nice’ in Canada-China Trade Talks

canada-china-flag-imageCanada continues to build its momentum in shaping a new relationship with China, given the visit by the Premier of China, Li Keqiang — the first China visit to Canada since 2010. These talks, along with Prime Minister Trudeau’s visit to China just a few weeks ago, is stimulating many questions and some confusion as to the direction that Trudeau is taking — what is his long term plan with China?

There is criticism that the Liberal government does not appear to share anything like a united vision[1] – however, I believe this lack of clarity is acceptable and possibly a good thing. In fact, I am somewhat relieved that the specific details are not entirely clear yet at this early stage. A renewed partnership with China is a complicated endeavour for many reasons, and it behooves the Canadian government to take some time to go through the ‘figuring out the details’ process. The debates and objections along the way are healthy for the country.

The ‘big picture’ good news is that Canada recognizes the importance of building strong trade ties with China for the economic growth. The caution and concern should be around the how the deals are structured and worded — what’s really in it for Canada and will China really play fair?

China does not have the most stellar track record when it comes to partnerships and playing by win-win rules. China is not talking to Canada only because our new Prime Minister is playing nice, nor only because of our very desirable natural resources, nor only because they want to tap into our innovation expertise…China has fewer and fewer allies like the USA and EU who have been burned before and are taking a more protectionist stance with China. As noted in the recent Forbes article: The China Factor: The One Thing Hillary And Trump Have In Common we see that the damage in the USA-China trade relationship is so deep, that this issue is the one binding point of agreement between the two presidential rivals – their adamant protectionist beliefs when it comes to American businesses and bringing it back home. Jean Charest, former Quebec premier and staunch free-trade advocate says, “Whoever is elected in the United States, it’s safe to say the relationship with China is going to be tougher. China sees Canada as a counterpoint to the United States, both in trade and the broader relationship.”

The need to trade with China, the world’s fastest growing economic power, is indisputable. However, this needs to be approached with much caution, due diligence and upfront protectionism at the beginning stages of the discussions in order to avoid an outcome similar to that our other Western neighbours.

For example, with the signing the Memorandum of Understanding between the Department of Innovation, Science and Economic Development of Canada and China, are we ensuring that our innovation advantage is protected? Are we taking measures to ensure that Canadians become stronger at commercializing innovation versus allowing our stronger Chinese partners to take the lead in an area where they excel, potentially leaving Canadians behind?

Canada should be ‘nice-enough’ but not the usual Canada-nice in order for its people to truly thrive as a result of these agreement. Eyes wide open, details thoroughly reviewed and tempered enthusiasm are the keys to a fruitful, long term Canada-China strategy.

 

For more on this topic and how the West can better compete and win in the new global economy, read  The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy

 

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