Prime Minister Stephen Harper is back in Asia, visiting Thailand, Japan and South Korea. While there, think of him metaphorically as a fisherman with Asia as a big, blue sea.
Mr. Harper has six lines in Asian waters, at different depths. But it’s unclear if any fish are interested in biting or, if they are, whether he can pull them into Canada’s boat. What’s clear is that Canada got interested late in the Asian sea and is furiously casting about looking for a nibble.
Mr. Harper is fishing for free-trade deals. Very preliminary talks are supposed to start with Thailand and Japan for bilateral deals. Early talks are under way with India, there are the stalled negotiations with South Korea, possible entry into the multilateral Trans-Pacific Partnership and – the biggest fish – a bilateral free-trade deal with China.
China has been Canada’s fastest-growing trade partner for a decade; although it still takes only 3.7 per cent of our exports, it represents 11 per cent of our imports. Liberal governments worked hard at the bilateral relationship. Those ties cooled when the Harper government passed through its hectoring stage about China. Having grown up, Mr. Harper and his ministers can’t go often enough to China.
During Mr. Harper’s visit last month, the Chinese declared their interest in a free-trade deal. Mr. Harper was well aware of that interest but responded cautiously. Talks between the two countries had been going on for about a year to learn whether the Canadian and Chinese economies were compatible for free trade (“complementarity” discussions, in the jargon of trade policy).
The results of these discussions are supposed to be known by May, but it would seem they’ll signal that, yes, there are reasons to believe both countries would benefit from a free-trade deal. After that, the Harper government has to signal the Chinese whether and when and how formal negotiations might begin.
China is obviously Asia’s biggest market. It dwarfs the potential of the nine-member Trans-Pacific Partnership, a group that includes the United States (with which Canada already has a free-trade deal). And China would never demand, as some TPP members do, putting Canada’s politically sacred (although economically foolish) supply management for certain agricultural products on the table for change.
Ideally, all of Mr. Harper’s lines into Asian waters will get results, but there’s no guarantee of that. Canadian ministers have been on bended knee to the TPP countries to give Canada a seat, but there’s no guarantee one will be offered. A deal with South Korea is bitterly opposed by Ontario car manufacturers, which have the Harper government’s ear (as would be any bilateral deal with Japan). South Korea inked a pact with the U.S., which lessens that country’s interest in any deal with Canada.
Negotiating with India means dealing with that country’s notorious bureaucracy, which is a recipe for delay. Free trade with Japan might be ensnarled in the TPP negotiations that Japan wants to join.
The deal that holds the greatest allure is the Chinese one. China obviously wants Canadian commodities, and Canada wants new arrangements for better patent protection, trade in services and more legal certainty in China.
Since only New Zealand has a free-trade agreement with China, Canada could become the second such country, although others are talking to China. For Beijing, Canada would be a free-trade foothold into North America; for Ottawa, the Chinese market, despite enduring poverty for many citizens, is the largest and fastest growing in the world.
Between lip and cup, as they say, lies a vast distance. To say the least, China has a different political system. Its human-rights record will be an ongoing source of discord. Chinese trade unions exist only on paper, if at all. Environmental protection, although improving, leaves much to be desired. Wage rates are a fraction of those in Canada. Suspicions still reasonably exist about how the government influences China’s state-owned companies. Inside the Conservative caucus, many MPs display affection for Taiwan, witness to which is the number that show up for Taiwan’s national day ceremonies in Ottawa.
So, although China is the biggest fish in the Asian sea and thus the most alluring prospect for the prime ministerial fisherman, it might be the hardest to land.