Canada having more free-trade dialogue with China: minister

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Trade Minister Chrystia Freeland 

                    takes slow approach to China

China wants a free trade deal with Canada. It’s no longer clear Canada wants the same, even as Ottawa and Beijing prepare for joint leaders’ meetings that might otherwise provide an ideal stage for a major announcement.

On Friday, Canadian International Trade Minister Chrystia Freeland sat down with Chinese Commerce Minister Gao Hucheng in Shanghai, during Ms. Freeland’s first ministerial trip to China.

But in a subsequent 15-minute interview with The Globe and Mail in which she was repeatedly asked about the topic, Ms. Freeland never once used the words “free trade.”

She instead signalled Canada will move slowly when it comes to China – the world’s second-largest economy, but a country ruled by an authoritarian regime that jails critics, heavily censors speech and continues to detain a Canadian missionary on spying charges.

“This is a long-term relationship, and we are going to act in a careful and consequential, step-by-step way,” Ms. Freeland said.

Rather than discuss formal trade measures, Ms. Freeland emphasized her conversation with Mr. Gao.

“We’re building a real foundation of positive human relations, and that is really important – that sort of level of human knowledge and contact and trust,” she said. “That is an essential foundation for building a closer commercial relationship.”

A warm chat, however, hardly seems like a necessary precondition to the free-trade talks China has openly championed.

In June, Foreign Minister Wang Yi travelled to Ottawa and urged “Canada to negotiate a FTA with the Chinese side.” Chinese Ambassador Luo Zhaohui has repeatedly called for the same; in May he said, “Both sides are considering the start of negotiation of a bilateral free-trade agreement at an early date.”

Prime Minister Justin Trudeau has planned a trip to China in September, and Premier Li Keqiang has discussed a Canadian tour shortly thereafter. Such high-level visits are often used to sign major agreements, and observers had expected Canada would agree to launch free-trade talks.

Yet this year’s visits come at a time when “China has unleashed an unprecedented crackdown on civil society, human rights defenders, religious minorities, the media and others,” according to a June report by the Conservative Party Human Rights Commission in the U.K.

Meanwhile, Mr. Wang, the Chinese foreign minister, shocked Canadians when he lashed out at a reporter in Ottawa who asked about China’s human rights record.

In the weeks since, Canadian leaders have adopted a more skeptical stand toward China.

“I don’t think an FTA is something to rush,” Mr. Trudeau said in a recent Postmedia interview, citing “an awful lot of work” that remains to be done, including on human rights.

The Canadian business community, meanwhile, has voiced concern about signing a deal with a country often accused of violating the spirit of free trade with non-tariff measures.

Some of the early western signatories to Chinese free-trade deals have also discovered that the promise of profitable new business is often clouded by unexpected problems.

Australia’s coal industry, for example, celebrated the deletion of tariffs on exports. But China instituted a new coal quality inspection regime, calling it a green measure in its war on pollution.

The results have been striking: despite favourable tariff treatment, Australian coal exports were down nearly 30 per cent last year.

New Zealand similarly cheered a free-trade agreement that will wipe out dairy tariffs by 2019. But that deal also included “safeguards” that, until 2024, bring back tariffs once exports have reached a certain quota volume. New Zealand farmers have complained that the safeguard levels were set too low, and have also accused China of product stockpiling that has eviscerated prices in recent years.

Some 85 per cent of New Zealand farms are now losing money, even as China’s domestic dairy production quickly rises.

The United States has struggled to find common ground even on the wording of a much less ambitious deal, a bilateral investment treaty. Last week, U.S. Trade Representative Michael Froman said the most recent Chinese offer remained “a fair distance away from being acceptable.”

Canada does not, however, need a sweeping free-trade deal to give companies and industries a hand up in China. It can instead pursue smaller, individual measures.

Ms. Freeland said she has been “personally focused” on gaining better market entry for Canadian canola.

She also sees potential gains for Canadian clean-tech companies, which worry their intellectual property won’t be properly protected in China, and the health-care industry, which is struggling to get noticed.

Canadian companies want “China to think of us as a country that can provide solutions in those areas, too,” Ms. Freeland said. Canada needs “to start telling the Canadian innovation story. And the health-care opportunities are really about innovation.”

Ms. Freeland has advocated courting Chinese trade and she reiterated that stand, saying Canada must prepare for a time “in the not-too-distant future” when the world’s most populous nation also becomes its largest economy.

“It is therefore absolutely essential for the government of Canada to be focused on our economic and commercial relationship with China, to be focused on developing closer relationships and connections,” she said.

Yet asked about her unwillingness to use the words “free trade,” Ms. Freeland offered no comment.

“You can quote what I’ve said,” she replied.

Canada having more free-trade dialogue with China: minister

By Fergal Smith

http://ca.reuters.com/article/domesticNews/idCAKCN0WW2GT

TORONTO (Reuters) - Dialogue with China about a free-trade agreement has increased since Canada's new Liberal government took office late last year, Canada's international trade minister said on Wednesday.

Chrystia Freeland made the comment in an interview after an event in Toronto where Xue Bing, China's consul general in Toronto, said Canada and China should start negotiations on a bilateral free-trade agreement as soon as possible.

Freeland declined to say whether informal negotiations had started on a deal, but said there had been "increased dialogue" around the issue since November.

Expanding trade with China is one the goals cited by Prime Minister Justin Trudeau in his mandate letter to Freeland.

Trade deals typically take years to negotiate. The Liberals said in January they would take the "technical step" of signing a 12-nation Trans-Pacific Partnership (TPP) trade deal, but have not yet said whether they will formally ratify it. The deal does not include China.

In her speech at the event on Wednesday, Freeland also noted that when in opposition the Liberals made it clear that it was "a lost opportunity" for Canada not to have joined the Asian Infrastructure Investment Bank (AIIB) as a founding member.

"We are a government that likes to keep its promises, so stay tuned," she said in the speech.

Canada's former Conservative government had said last year it was actively considering joining the AIIB, despite U.S. and Japanese reservations, but Canada was not among the 50 nations that signed the articles of agreement.

(Editing by Sandra Maler)