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China pushes to expedite exploratory free-trade talks with Canada

Chinese Ambassador to Canada Lu Shaye in Ottawa March 21, 2017.

Blair Gable

China's envoy to Canada is calling for a rapid conclusion of exploratory free-trade talks so negotiators can quickly get down to work on a far-ranging trade agreement with "win-win results" for both countries.

Next Monday, Chinese and Canadian negotiators will sit down for five days in Ottawa for a second round of exploratory trade discussions. The first set of talks was held in Beijing in February.

Ambassador Lu Shaye used a speech to the Canada China Business Council this week to outline Beijing's preconditions for a sweeping free-trade agreement that he said would provide enormous economic benefits to Canadian companies.

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"We hope to speed up the exploratory discussions process on pushing China-Canada FTA [free-trade agreement] so as to create better conditions and environment for co-operation between our two countries," Mr. Lu said on Tuesday in the Toronto speech, which was posted on the Chinese embassy's website. "FTA sees mutual benefit and win-win results, which will not only be helpful for China to enter the Canadian market, but also for Canada to enter the Chinese market – and latter is much bigger."

The speech came the same day Chinese Premier Li Keqiang held an hour-long telephone conversation with Prime Minister Justin Trudeau.

During the call, Mr. Keqiang pressed Canada to relax export controls on high-technology to China as part of a proposed free-trade deal, among other topics.

China's full-throated campaign to gain greater access to Canadian advanced technology, including an end to national-security tests for foreign takeovers by Chinese companies, is the opening gambit in negotiations that are expected to be onerous.

Former Liberal deputy prime minister John Manley, now head of the influential Business Council of Canada, said China is not behaving any differently than U.S. President Donald Trump, who has been talking tough about reopening negotiations on the North American free-trade agreement.

"This is part of the prenegotiation ritual," Mr. Manley said. "Lay out hard lines and strong positions, but every negotiation results in some give and take."

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Nevertheless, while China has come out of the gate with firm positions on what it wants, including access to Canadian high technology and advanced manufacturing, the Trudeau government has kept largely silent about what Ottawa expects in return.

"Clearly [the Chinese] want lots of access to our market, and historically they haven't been very generous about giving us access to theirs," Mr. Manley said. "We should be prepared to consider proposals provided there is a clear recognition that anything that is given is reciprocal."

Mr. Lu even urged Canada's corporate elite to "actively introduce and explain to the Canadian public" the benefits of a free-trade deal with the world's second biggest economy.

He noted that public-opinion surveys and media editorials in Canada have raised major concerns about opening up this country's economy to China, especially to state-owned enterprises that often act in the interests of Beijing and are known to steal foreign technology.

A recent Nanos Research survey conducted for The Globe and Mail found 88 per cent of Canadians do not want Mr. Trudeau to give Chinese state-owned enterprises open access to the economy; 81 per cent want national-security tests conducted before Chinese firms buy Canadian firms involved in energy, high technology and advanced manufacturing; while 66 per cent want Ottawa to link human rights to free trade.

Mr. Lu was blunt in discounting these worries, saying China's state-owned enterprises have been given a bad rap, and are no different than Canadian Crown corporations.

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He urged Canadians to think fondly of China's government-owned companies, which still dominate the Chinese economy.

"China's state-owned enterprises are not evil, but a baby-sitter who cares [about] peoples' life," he said. "If the Chinese government also treats Canadian state-owned enterprises with discriminating policies, what will Canadians think about that?"

He maintained Canada has nothing to fear if Chinese companies scoop up high-tech firms in this country, arguing national-security tests were unnecessary.

"China is the victim of foreign cyberespionage activities, rather than the perpetrator," the envoy said.

In 2014, the Canadian government publicly blamed a "Chinese state-sponsored actor" for a cyberattack on Ottawa's National Research Council – a breach that cost Ottawa hundreds of millions of dollars.

The Chinese envoy also appeared dismissive of the potential appeal that Canadian technology might offer for China. "To be frank, in many high-tech areas, China is not lagging behind but more advanced than Canada," he said.

Nevertheless, China has shown an interest in buying up Canadian high-tech firms at a time when the Trudeau government seems to be less concerned about the implications to national security.

Last month, the Liberal cabinet overturned a Conservative government cabinet order and allowed a Hong Kong company partly owned by the Chinese government to take over a Montreal technology firm. The Harper cabinet had blocked the sale of ITF Technologies to O-Net Communications in 2015 after Canada's national-security agencies warned the deal would undermine the Western military's technological edge over China.

Although China wants Canada to lift restrictions on investment in the oil sands, Mr. Lu said Chinese firms have lost money from their current investments and "I do not believe Chinese enterprises would still be interested in this."

He also said Beijing does not want human rights linked to free trade, and lauded China for lifting 700 million people out of poverty, calling it "the greatest human-rights achievement in human history."

Mr. Manley, who speaks for Canada's top-150 corporations, said Canada must keep national-security screening in place – as most countries do – but added that a blanket denial to Chinese state-owned enterprise investments is not necessary.

"You would carve out certain sectors that you think could be gateways to potential cyber issues," he said. "You don't need to carve out natural resources providing you assure that natural resources are sold in the global market."

Mr. Manley agreed with Mr. Lu that human rights should not be part of the free-trade talks.

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About the Authors
Ottawa Bureau Chief

Robert Fife is The Globe and Mail's Ottawa Bureau Chief and the host of CTV's "Question Period with The Globe and Mail's Robert Fife." He uncovered the Senate expense scandal, setting the course for an RCMP investigation, audits and reform of Senate expense rules. In 2012, he exposed the E. More

Parliamentary reporter

Steven Chase has covered federal politics in Ottawa for The Globe since mid-2001, arriving there a few months before 9/11. He previously worked in the paper's Vancouver and Calgary bureaus. Prior to that, he reported on Alberta politics for the Calgary Herald and the Calgary Sun, and on national issues for Alberta Report. More


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