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Canadian executives are worried that the protectionist political environment emerging in North America and Europe could damage trade agreements that help boost the economy.

The latest quarterly C-Suite Survey of corporate leaders shows that more than 80 per cent say they are concerned that isolationist politics will slow the shift to freer trade and hinder the creation of new trade deals.

And many think the situation will deteriorate further. About four out of 10 executives say the political environment for business in North America and Europe will be worse in the next five years than it has been in the past half-decade. Only 12 per cent think it will get better.

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Read more: Canadian firms are slowly embracing extended relations with China

Read more: Canadian executives prioritize U.S. relations over those with China

Nolan Watson, chief executive officer of gold mine financing company Sandstorm Gold Ltd., is among those who are uneasy about the more inward-looking policies promoted by some global leaders.

"As a concerned citizen and as a business person who understands the implications of these policies, I am very worried about the direction the world is headed, with respect to protectionism," Mr. Watson said.

Currently, Asia appears to be more open to globalization than North America or Europe, he said. The increasingly protectionist view in the west may be partly due to the rise of China's economic power, particularly in manufacturing, he added. "That has caused a lot of people to be very angry, and that anger is spilling over into policy implications that are just bad for people."

In the United States, both presidential candidates have tapped into this sentiment by saying they don't like the Trans-Pacific Partnership trade deal. Donald Trump has also said he would renegotiate, or even rip up, the North American free-trade agreement (NAFTA).

In Europe, there are additional pressures caused by large refugee movements and the economic disparity that has grown between nations, Mr. Watson said. There is also increasing resentment of central control within the European Union, he added. "Politicians are feeding off the anger of people … taking advantage of the situation."

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The Brexit vote in June, in which Britain opted to leave the EU, was the most obvious manifestation of this anger. But now the Canada-Europe free-trade deal, known as the Comprehensive Economic and Trade Agreement (CETA), is also in trouble after a key regional parliament in Belgium rejected the accord last week.

Three-quarters of C-Suite respondents said the Brexit vote will have a negative impact on the European economy and 57 per cent said they think it is likely that more states will leave the EU in the near future. However, fewer than half of the executives said Europe will be an important market for their companies over the next five years.

China, on the other hand, is increasing in importance, and almost 60 per cent of business leaders said it will be a key market for their organization in the coming years.

China is the "economic giant" of Asia and will certainly be crucial for Canadian trade going forward, said Rupert Duchesne, group chief executive of Montreal-based Aimia Inc., the company that runs the Aeroplan points system and other international loyalty programs.

Mr. Duchesne described the apparent backlash against trade deals as "very troubling." These deals "are being blamed for things they didn't cause. But it is so easy to draw that correlation that you can see why it becomes a political football," he said. "In Canada, we cannot survive without trade deals that help us get better access for products and resources in other markets."

Our participation in trade – and two-way tourism – with China will also help encourage improved human rights in that country, Mr. Duchesne said.

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He characterized the federal government's efforts to open trade with China as a "good start" after years of neglect. "We are making good progress, and it is appropriate to do so after a decade of very little discussion."

The vast majority of C-Suite respondents – 83 per cent – said Prime Minister Justin Trudeau's recent trip to China was important to Canada and its economy.

Indeed, the efforts by the Liberal government, which has promised to double trade with China by 2025, appear to be paying off. A group of wealthy Chinese entrepreneurs is currently in Canada scouting out possible investment opportunities here.

But the C-Suite leaders – who are overwhelmingly enthusiastic about the negotiation of a free-trade deal with China – have some reservations about Chinese investments in Canada. Seventy per cent of survey respondents said they support placing limits on the ability of Chinese state-owned enterprises to invest in strategic Canadian industries such as the oil sands.

Willy Kruh, global chair of consumer markets at KPMG, said the relative enthusiasm about trade with China shows executives want Canada to spread risk when it comes to trade. "The C-Suite rightfully is looking at the global environment and saying: We see issues in the U.S., we see issues in Europe … and we need to diversify our risk, but let's go slow."

Mr. Kruh said China and India will be key trading partners for Canada. "These are countries that we cannot ignore if we are going to play on the global stage and improve our economy."

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Executives divided on approval of Liberals

One year after the election of Justin Trudeau's Liberals, a slim majority of corporate executives feel his government has met or exceeded expectations, while about 45 per cent say it has fallen short.

Regionally, the Prime Minister has left executives more satisfied in the East than in Western Canada, where about 52 per cent say he hasn't met expectations.

The new government's performance also gets different ratings depending on the sector the executives work in. More than half of oil and gas executives disapprove of the Liberals' overall actions in their first year in office, while only one quarter of bank and financial bosses feel that way.

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