Andrew Scheer, leader of the opposition federal part Conservatives in Parliament, has come out on the national campaign trail swinging against China. He has called for placing tariffs on Chinese imports in retaliation for China’s recent blockage of Canadian agricultural products such as pork and canola. Much of China’s actions have to do with current extradition hearings, requested by U.S. authorities, against Huawei Technologies Co. Chief Financial Officer Meng Wanzhou. Ms. Meng is being held in custody in her Vancouver mansion awaiting the start of these hearings which could take months. In retaliation, China has charged two former Canadian diplomats with espionage and they are being held in detention.
Next to the U.S., China is Canada’s major trading partner. Canada has been pushing for entry into the proposed Trans-Pacific Partnership (TPP) trade agreement, negotiations for which the U.S. withdrew from under President Trump. The TPP would allow Canada to strengthen economic ties with Asian countries and reduce its reliance on the U.S. markets. Then there is Canada’s current relationship with China’s Huawei corporation which is a world leader in wireless technology. Pressure is being put on Canadians by the Americans to limit the involvement of Huawei in their telecommunications sector due to national security concerns.
Prime Minister Trudeau has to be very careful in his government’s approach to China given the potential negative impacts on the Canadian economy. With respect to the two Canadians in Chinese custody, he has correctly obtained the support of Canada’s major allies to put diplomatic pressure on China. However, getting into a trade war with China would not be advisable at this time given that billions of dollars of trade would be at risk. Canada would be better off looking to diversify its trade with other Asian countries such as Vietnam. Vietnam has been Canada’s largest trading partner in the ASEAN region since 2015. In 2017, two-way merchandise trade between Canada and Vietnam reached $6.2 billion, up from $5.5 billion in 2016. In 2017, Canada’s merchandise exports to Vietnam in 2017 amounted to approximately $1.1 billion. India is another country to be seriously considered for trade expansion as Canadian exports to India were over $3 Billion (US) during 2017.
Chinese companies provide Canadians with many affordable goods (just think of Walmart and Dollarama) and trade opportunities. Any move to imposing tariffs would only hurt the average Canadian through increased costs for such goods. The China-U.S. trade war, which is hurting average Americans, has only further complicated matters. Yes, there are political and humanitarian concerns with China’s domestic policies, but so are there similar concerns in other industrialized countries. Throwing more gas on the fires is not going to help resolve anything at this time. As a middle power caught in a dispute between the world’s two largest economies, I would suggest that the Canadian government continue to take a slow, calculated and cautious approach to these issues.
FROLITICKS 