Canada, China have reasons to re-engage on trade

Canada has in the past gone its own way on trade with Asia, says a Canada West Foundation report

China’s vast population makes food security an issue for it and an opportunity for Canada.
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Glacier FarmMedia – It might not seem like it, but Canada and China need each other. That could be an opening to re-engage with Canada’s second-largest agricultural export customer, says a new report from the Canada West Foundation.

In many ways it’s an obvious match. Canada consistently produces a lot more food than it consumes so it needs reliable export markets, while food security is a priority for China.

In January, China and the United States agreed to the so-called Phase 1 agreement, committing the former to buying US$200 billion worth of American goods and services, including agricultural products, this year and next.

Why it matters: Canada produces more than its population can consume, so maintaining trade, especially with populous countries is important to agriculture-sector success.

The main benefit is restraining China’s use of non-tariff trade barriers, assuring access for American products, says the report entitled Reengagement Strategies for China on Agricultural Issues, written by Carlo Dade, the CWF’s director of its Trade and Investment Centre and trade policy economist Sharon Zhengyang Sun.

The deal makes China more food dependent on the U.S., its hegemonic rival.

It also puts Canada at a trade disadvantage in the Chinese market.

But if China signs a Phase 1-type agreement with Canada, both countries will be better off, the report says.

“It’s a basis upon which to approach China to reconsider some of its current practices, not because we want them to — here is the key part of the report — but because in our analysis it’s in their self-interest,” Dade told Glacier FarmMedia reporters on Zoom Nov. 3.

“If they also see this in their self-interest, if our self-interest and their self-interest aligns, then we may have the basis for something more sustainable. Different than the Americans forcing China to the table and beating a deal out of it, the idea is that we can come to something that’s based on a perception of self-interest. If that doesn’t happen, well that sends us another signal about where we stand and we have to go back and do some hard reconsideration.”

The report, which Dade spoke about at the Farm Forum Event, was made public Nov. 16.

“Even when farmgate receipts have recovered, producers continue to face the cost of uncertainty,” the report says.

Dade said he hopes the report stimulates discussion among farmers, industry and government about boosting agricultural exports to China and sends a signal to the Chinese about Canada’s objectives.

China’s cuts in some Canadian agricultural commodities are widely believed to be retaliation for Canada’s arrest of Chinese tech giant Huawei chief financial officer Meng Wanzhou in Vancouver in December 2018 at the U.S. government’s behest.

In December 2018 the Chinese arrested Canadians Michael Spavor and Michael Kovrig — a move also seen as retaliation. Both remain in Chinese custody.

While current tensions don’t bode well for improved trade short term, Canada should be prepared anyway, Dade said.

“Not engaging won’t get the hostages back. Not doing so won’t expedite their return. It will not improve their conditions.

“We’re dealing with a country and a system that’s claimed to be the epitome of long-term thinking…

“It’s a long-term relationship and we’ve got to start thinking long term.”

This article was originally published at the Manitoba Co-operator.

About the author

Glacier FarmMedia staff

Allan Dawson

Allan Dawson is a Glacier FarmMedia reporter who's covered agriculture since 1980.

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