Less than two weeks after being sworn into power, the publication of International Trade Ministerial Mandate Letter on November 12, 2015 signaled the Trudeau Liberal Government’s path forward in the pursuit of a new and invigorated Canada-China relationship. The Mandate letter outlined bilateral trade growth with China at the centre of the Government’s trade diversification strategy.
Four days later, Prime Minister Trudeau and President Xi Jinping had a formal meeting on the sidelines of the G20 whereby Xi signaled reciprocal interest in deepening relations, noting that it was Prime Minister Pierre Trudeau who established diplomatic relations between the two countries 45 years ago, and adding that “forty-five years later the field both China and Canada should and can cooperate in is broader". The meeting had a productive conclusion with both countries committing to exploring the possibility of a free-trade agreement between the two countries.
Later, in September 2016, Prime Minister Trudeau and Chinese Premier Li Keqiang announced the beginning of exploratory talks toward a Canada-China Free Agreement. After four rounds of exploratory talks took place, Mr. Trudeau traveled to China in December 2017 with the intention to launch formal trade talks, however came back empty handed. It has been reported that said negotiations hit a stalemate as the PM demanded that any FTA with China include clauses on human rights, gender equality, religious freedom and enforcement of stringent labour laws.
Negotiations were continuing although the relationship between Canada and China was somewhat strained because of concerns over trade issues as well as the Canadian Government’s veto on the AECON takeover by Chinese company Nexen. Fast-forward to December 2018, tensions were exacerbated by Canada's arrest of Huawei Technologies' Chief Financial Officer, Meng Wanzhou, based on a warrant issued by a court in New York state and the subsequent detention of two Canadians living in China. By December 18, 2018, the free trade discussions between the countries had been halted. China warned of grave consequences if Meng was not released.
After the United States formally requested Ms. Meng’s extradition on Jan. 29 the situation has steadily aggravated. With no end in sight to the China-United States trade war Canada continues to be positioned in the middle of this crisis. The United States has been vocal in its support to Canada for upholding the rule of law and in condemning China for the human rights violations of the two Canadian detainees. The Chinese administration on the other hand has put the blame on the Government of Canada for the sustained detention of Wanzhou. Furthermore, China has in apparent retaliation punished Canada by formally pressing charges against the two Canadian detainees Michael Kovrig and Michael Spavor, and blocked billions of dollars of Canadian canola and other farm imports.
Commentators define the current state of affairs between the two countries as the worst since both countries began diplomatic relations in 1970. It has been widely reported that Chinese officials refuse to take any calls from Canadian officials.
The extradition case will be heard by a Supreme Court judge in September, during a crucial period of the election. Expect this item to lead electoral discussions.
PM Trudeau says Chinese aggression is ‘not something we need to continue to allow’. But it is not clear exactly how Trudeau might plan to counter Chinese aggression, which had included not only hostage diplomacy but broader refusals to recognize international norms and rulings such as those related to the South China Sea.
Conservative Leader Andrew Scheer announced his foreign policy vision for a conservative government come past election on XX. Several mentions were made on China by the leader. Speaking about Canada’s relationship with China, Scheer said we need a “total reset.” His speech came closest in specifics when he discussed the various measures he would take to confront China, saying Canada should not expand trade with the growing superpower until that reset is secured.
“So long as China is willing to hold our exports hostage, all the while committing human rights violations on an industrial scale, we have no choice as Canadians but consider other trade partners,” Scheer’s remarks read.
The Conservative leader will vow to launch a complaint with the World Trade Organization over Chinese trade “blockades,” and pull out Canada’s contribution to the Asian Infrastructure Investment Bank.
Additionally, Scheer would ban Huawei from accessing Canada’s 5-G networks.
The Grain Growers of Canada (GGC) on September 12th called on all party leaders to unveil their plans to reopen markets that have been closed to Canada’s agriculture sector. “We are just weeks away from choosing a new federal government and we have yet to hear anything concrete regarding trade from any of our major parties or political leaders,” GGC Chair Jeff Nielsen said in a press release. “Whoever wins this election will be inheriting this situation and must have a strategy in place to address it in short order.”
China has repeatedly declined to provide Canada with adequate scientific evidence to justify shutting the door to imports of Canadian canola, the federal government told the World Trade Organization in a new complaint. Canada this week laid the groundwork for a challenge at the WTO of China’s ban on canola from Canada, which began in March.
The blockage of canola has been tied to a diplomatic spat between Canada and China that’s been traced to when Canadian authorities arrested Chinese tech executive Meng Wanzhou at the Vancouver International Airport last December. Losing out on access to China’s market for what had been Canada’s top export to the country has cost the Canadian canola industry about $500 million in the past six months.
“Canada has repeatedly attempted to obtain information from China regarding the scientific basis for its measures and on the process to restore full market access for Canadian canola seed,” the Canadian government said in a Sept. 9 filing to the WTO.
The Canadian government will support Taiwan’s efforts to join a key triennial gathering of civil aviation authorities in Montreal at the end of September.
The Taiwanese government has heavily lobbied Canada and other countries to back its effort to participate as a guest at the 40th assembly of the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations that co-ordinates safe and secure international air travel.
The Sept. 24 to Oct. 4 summit offers a forum for member countries to discuss the latest issues concerning global aviation. Since 1971, Taiwan has not been a UN member, which is needed for full participation at ICAO, but the self-governing island has pushed for guest invitations to ICAO meetings.
It most recently attended the 2013 assembly but was not offered a ticket to the 2016 gathering, with Beijing’s consistent opposition to its participation in international bodies largely believed to be the reason. The move by the Canadian Government will not be well-received by China. However, the move itself is no more than posturing from the Canadian Government. It remains to be seen whether China takes retaliatory measures.
Scott Simon, who holds a co-chair in Taiwan studies at the University of Ottawa, said it is not the first time Canada has supported Taiwan’s participation at ICAO, but as the host country, it sends a message to the world that a practical approach should be taken on the issue.
“It’s not as if we’re creating diplomatic relations with Taiwan. There’s nothing radical going on, it’s just that (Canada is) being very pragmatic here,” he said. Simon said despite Canada’s support, it’s unlikely Taiwan will be able to attend the meeting due to China’s objections. Asked for comment on Canada’s position, the China’s embassy in Ottawa referred to its response to the Globe. In it, the embassy said “China’s position is consistent and clear.” “The issue must be handled in accordance with the one-China principle,” it said. The policy dictates that mainland China must be the only China recognized in the diplomatic sphere.
After 220 days with no Canadian ambassador to China and relations between the two countries seriously strained, the Trudeau government named Dominic Barton — the former head of Justin Trudeau's economic advisory council — to the post. Business leaders cheered the news.
Beijing was given a heads up about the Barton pick by Chrystia Freeland last month. The foreign minister spoke with her Chinese counterpart Wang Yi at the ASEAN summit in Bangkok last month and floated Barton's name to make sure Beijing wouldn't oppose his appointment. That's more notice than the Liberals gave the NDP or Conservatives opposition parties, who were kept in the dark despite the announcement coming just weeks before the federal election.
Bank of Canada holds rates steady but flags global trade concerns. The Bank of Canada kept its key interest rate unchanged at 1.75 per cent Wednesday, while warning that the U.S.-China trade conflict is having a more damaging impact on global growth than previously thought.
“As the US-China conflict has escalated, world trade has contracted and business investment has weakened,” the bank stated Wednesday in a news release. “This is weighing more heavily on global economic momentum than the bank had projected in [July].”
Domestically, the bank noted that Canada’s second-quarter growth was strong and exceeded the bank’s most recent forecast. Wednesday’s release pointed to stronger energy production and housing activity as contributing factors.
A day after the U.S. imposed new tariffs on goods from China, the Chinese Commerce Ministry said it lodged a complaint against the country at the World Trade Organization.
The latest tariffs actioned by the U.S., escalated the trade war with China by imposing 15 per cent tariffs on what China says will affect $300 billion of Chinese goods, violate the consensus reached by the countries’ leaders at a meeting in Osaka, the Commerce Ministry said. As Reuters reports, the lawsuit represents the third that Beijing has brought to the WTO to challenge U.S. President Donald Trump’s China-targeting tariffs.
Trump warned China last week that he would be “tougher” on China if trade talks dragged on into a second term. Negotiators from the two countries are supposed to meet in Washington to attempt to defuse the trade war, but as Reuters points out as well, no precise dates have been set yet.
China’s move to stop buying several Canadian agricultural products has punished beef, pork, canola and soybeans farmers, and now industry leaders are worrying about the prospect of a broader threat — an eventual U.S.-China trade deal.
But a few Canadian crops have had stronger sales to China over the past year. The trade fight between the world’s two largest economies has, for example, helped contribute to a surge in Canadian wheat exports to China since Beijing imposed tariffs on American products. There are industry fears about what could come next — what will happen to Canadian farm exports if U.S. President Donald Trump and Chinese President Xi Jinping eventually strike a deal?
“If Trump forces China to buy a lot of American agri-food products, we won’t be selling Canadian agri-food products to China,” said Brian Innes, president of the Canadian Agri-food Trade Alliance. “Canada may benefit in the short term, but we’re going to get whiplash if Trump makes a deal with China.”
Innes said Trump has been clear that any trade agreement would feature major agricultural purchases by China from the U.S. At the moment, there are few signs of progress in U.S.-China negotiations. The trade war has grown increasingly bitter in recent months.
The two sides have hit each other with levies on hundreds of billions of dollars worth of goods. Last week, China announced it would stop buying American farm products in response to Trump’s threat of fresh tariffs on Chinese imports. On Tuesday, however, the U.S. Trade Representative softened its position by announcing it would remove some Chinese products from a tariff list over “health, safety, national security and other factors.” Robert Lighthizer’s office also decided to delay the application of duties on certain products until Dec. 15, instead of the previous start date of Sept. 1.
Negotiators are expected to meet next month in Washington for another round of talks. Between January and June, federal numbers show Canada exported $335 million worth of wheat to China — an increase of more than 60 per cent compared to the same period in 2018.
Despite the continuing diplomatic feud, China’s embassy in Ottawa says relations with Canada will “eventually be on the right track” and expressed willingness to increase co-operation with Canada’s military. The softer-toned comments, found in a post on the Chinese-language version of the embassy’s website, stand in contrast to comments Beijing has made regarding the Huawei affair in recent months.
For example, the Chinese foreign ministry had warned Canada in June not to be “naive” to think its allies could put pressure on China regarding the detentions of Canadians Michael Kovrig and Michael Spavor.
However, the post on the website details a rather warm reception held at the embassy on July 30, celebrating the 92nd anniversary of the founding of the People’s Liberation Army, the name of China’s military.
The event was attended by the embassy’s charge d’affaires, Chen Mingjian, as well as defence experts and professionals, overseas Chinese, representatives from Chinese-funded institutions, and Canadian MPs and military officials.
Wu Junhui, the military attache at the embassy, gave a speech at the reception. According to the post in Mandarin, he said the “Chinese military is willing to work closely with the Canadian military to enhance understanding and strengthen co-operation in various fields.” He said China-Canada relations face difficulties and challenges but that relations will eventually normalize.
“As long as the two sides adhere to mutual respect and equality, and value each other’s core interests and major concerns, relations between the two countries will eventually be on the right track, and the relations between the two militaries will remain stable and develop,” Wu said, according to the post.
The post also said attendees expressed optimism about the “long-term development prospects of China-Canada relations.”
Asked about Canada’s military relationship with China, a Department of National Defence spokesperson said, “Canada’s relationship with China remains a priority, and we continue to engage on defence and security issues. In complex bilateral relationships, there will be difficult moments, but we will continue to look for ways to move forward,” the spokesperson said.
Ontario’s agriculture minister is calling for the federal government to offer compensation to meat producers who have been affected by the ongoing trade spat with China. In a letter to Agriculture Minister Marie-Claude Bibeau released on Tuesday, Ernie Hardeman says his office has been told that affected farmers are losing between $15-$30 per hog per week in revenues, because of China’s decision to block pork imports coming from Canada.
“Ontario strongly encourages the federal government to work with the meat sector to provide compensation to ensure they remain viable until predictable trade is restored and assist them in securing new export markets,” Hardeman wrote.
In what Canadian officials understand as retaliation for the arrest of Huawei executive Meng Wanzhou, China has suspended necessary import permits for Canadian canola — citing unsubstantiated pests complaints — and pork. China also suspended Canadian exports of meat in late June after the Canadian Food Inspection Agency discovered several dozen veterinary health certificates had been forged.
The Trudeau government has so far increased the maximum loan limit under the Advance Payments Program (APP) to $1 million, and for canola farmers, have made $500,000 interest-free.
Prime Minister Justin Trudeau said today his office did not pressure a former Canadian ambassador to avoid recommending that Canadians cease non-essential travel to China."I can confirm that the PMO did not direct that to happen," Trudeau said during a media availability at the Kitsilano Coast Guard base in Vancouver Monday afternoon.
The Globe and Mail reported last week that former Canadian ambassador to China David Mulroney said he had been instructed by an official with Global Affairs Canada to clear any public comments on Canada's China policy with the department beforehand. The official reportedly cited the "election environment" and said they were passing on a request from the PMO.
Mulroney told the Globe that the Global Affairs official also cautioned against telling Canadians to suspend non-essential travel to China. Mulroney told the newspaper he found the request troubling and said the department official implied he should soften his tone. Foreign Affairs Minister Chrystia Freeland said last Thursday that neither she nor the PMO had pressured the former diplomats over their comments on Canada's China policy.
The House of Commons committee on foreign affairs meets Tuesday July 30th to vote on whether to study allegations that federal officials have pressured two former diplomats. The Liberals hold five of the committee's nine seats. More to come.