Wenran Jiang is a political science professor at the University of Alberta and a former special adviser to the Alberta Department of Energy. He directs the Canada-China Energy and Environment Forum and its annual conference.
Chinese Premier Li Keqiang's visit to Canada, following closely behind Prime Minister Justin Trudeau's first official China trip, signals Beijing's positive response to Canada's "resetting" of the bilateral relationship and its pro-active attitude. Yet there is much confusion on what China wants from Canada, especially in a potential free-trade agreement.
Recent reports and commentary suggest that China is pressuring Canada into a free-trade deal, that Beijing has specifically imposed unilateral conditions for the bilateral discussions and that entering such talks is bad for Canada.
Nothing is further from the facts and truth.
First, yes, China has indeed approached Canada about a free-trade deal, and raised it on multiple occasions. It will be on the agenda again during Mr. Li's talks with Mr. Trudeau. But Beijing is doing the same with many other countries as part of its drive toward free-market status around the world. It's also part of China's emerging role in championing globalization against protectionism, as reflected in the consensus reached at the recent Group of 20 leaders' summit. China's leadership understands that Canadians have concerns and that Ottawa may take time to formulate its policies. Thus, Beijing has only suggested that the two sides establish a mechanism to conduct feasibility studies.
Given China's status as the world's largest-growing economy and largest energy and raw materials consumer, and as Canada's second-largest trading partner, it makes perfect sense to enter into such joint feasibility studies.
Second, Beijing has not imposed any preconditions for an FTA with Canada. Chinese officials and senior executives have expressed their views about the Canadian side doing more to facilitate the flow of trade and investment – more like a wish list rather than preconditions. This includes pipelines to the West Coast, enhanced port facilities, reconsideration of restrictions on Chinese state-owned enterprises in Canada's energy sector, an open invitation for Canada to join the Asia Infrastructure Investment Bank, and an extradition treaty that will see a speedy return of Chinese economic criminals and corrupt officials hiding in Canada.
Instead of arguing against the above as something the Chinese have forced on us, Canadians should focus on whether these initiatives are in our national interest in the first place.
Take pipeline and port infrastructure, for example: It will benefit Canada the most if we can move energy and other resources to the Chinese and Asian markets. As I have argued for a long time, large-scale energy products exports from Canada to China, including liquefied natural gas and natural gas products, conventional and unconventional oil and value-added petrochemical feed stocks, will move the bilateral trade balance much more in Canada's favour. These exports to China will also contribute to the global fight against climate change by replacing Chinese use of coal.
Finally, the Canadian public should understand that nobody is putting a gun to our heads on an FTA. But we are running short of time. Australia, New Zealand, South Korea, Switzerland, Iceland, Peru and members of the Association of Southeast Asian Nations have all concluded FTAs with China, and an additional dozen countries are in the negotiating process. The United States is working with China on multiple treaties on trade and investment. Even Japan, which has many fears about China's rise and is involved in bitter territorial disputes with Beijing about the East China Sea, is at the advanced stage of reaching an FTA with China and South Korea.
Canada has a lot of comparative advantages in the global economy, and numerous studies have indicated that Canadian and Chinese economies are highly complementary. But what Canada lacks now is the competitive advantage. While we are complacent and hesitant, other countries have moved passed us in gaining a much better position in the Chinese market.