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Canada's Harper Tilts Toward Trade in China

Tuesday, May 1st, 2012
stephen harper

Canadian Prime Minister Stephen Harper’s China policy resembles a gyroscope – it hugs the terrain. Once upon a time, this hardcore conservative loudly insisted that he would trade with China, but spurn bowing “to the almighty dollar,” i.e., he would press Beijing on human rights. During his 2009 sojourn there, Harper publicly chastised his hosts, with his disdain for the Communist party quite evident.

But on his latest trip to the Middle Kingdom between February 7th and 11th, he clearly felt the gravitational pull of China’s booming market -- and tilted that way. True, Harper plainly told Chinese officials that he disliked their decision to veto UN resolutions about Syrian dictator Bashar alAssad. Plus, he raised the case of Husayin Celil, a Canadian citizen and ethnic Uyghur who champions that ethnic group’s rights in China – and who is currently detained there.

The outstanding feature of this journey, however, is that Harper avoided confrontation to secure a bevy of 23 business deals worth almost US$3 billion.

To be sure, China is subtly claiming victory. Vice Premier Li Keqiang insisted that the two countries must seek “common ground while shelving differences.” He must be pleased that the new accords accelerate the bilateral trade. Since 2001, two-way commerce has tripled to reach nearly US$60 billion in 2010. China is now Canada’s second biggest partner while the former’s investment in the latter totals US$ 14 billion. The centerpiece of Harper’s visit is a Foreign Investment Protection (FIP) agreement that will, supposedly, provide security to Canadians investors. They have long bemoaned arbitrary Chinese decisions and loss of copyrighted products. Now Beijing pledges to create a neutral dispute resolution mechanism.

How do Canadian experts evaluate Harper’s efforts? One leading analyst is Charles Burton, a councilor in the Canadian embassy in Beijing between 1991 to 1993 and 1998 to 2000. In fact, Harper invited him to join the entourage, but Burton, “although honored [was] too busy.” However, he granted over 50 interviews regarding the summit, a signal that Canadians are eager for insights into China.

To start with, he insists that Harper’s 2009 visit “was not a disaster. We got an agreement on boosting Chinese tourism to Canada, which is up 25 percent” This time, “Harper spent half his time raising social issues such as Syria and Celil”, the Uygher Canadian whose agitating for the rights of that ethnic group within China has caused Beijing to detain him.

Harper mainly pushed commerce, though. Burton stresses that the “main trade focus was the FIP. We experienced rife copyright violations and proprietary production processes transferred to China. We have not seen the final FIP text and also wonder if China will honor its concessions.” It may yet be a flash point because while Harper praised it for ending 18 years of talks, the other side said that the partners will try to “finalize” the text.

A second pact will permit Canadian uranium producers greater access to China’s non military nuclear industry. The globe’s leading uranium producer, Cameco Corp, is Canadian. To secure that agreement, Harper loosened Canada’s accountability rules over how the uranium is used, even though China has a military nuclear sector.

The uranium exports do not trouble Burton, however. “We haven’t seen the specific wording yet. We are concerned about the international non-proliferation provisions. But I am confident Ottawa would not sell uranium unless there are safeguards to ensure peaceful use.”

Burton recalls that, “At the G-20 summit in Toronto two years ago, Beijing committed itself to currency revaluation so exports would be cheaper. That came up again.” But he rues that after he gave an interview to a Chinese media source, “it edited out that part.”

Other accords linked the two countries in energy, natural resources, education, science and technology and agriculture. Amidst the celebratory mood, China’s Premier Wen Jiao broached the option of a free trade pact. But Canada’s Minister of Trade, Ed Fast, replied, “Lets not get ahead of ourselves here.”

Why is Canada reticent? Burton warns that, “We are not confident that China will accept the loss of certain weak sectors, for instance if Canadian apples are freely available, it would likely devastate China’s produce. We have much more competitive services in banking, insurance and some high tech aspects as in mining. With unfettered access, China cannot compete. Overall, China is less developed and so we doubt its sincerity.”

If such negotiations do occur, considering that Li will probably become Wen’s successor later this year, Harper and his team will benefit from the high level contacts. In fact, Harper returned to Canada with two panda bears, a gift popular with the Canadian public. It was one of Beijing’s traditional ways of signaling ‘friendship.’

Burton looks forward to a Sino-Canadian joint report to appear in May. He added that, “It will explore how complementary the economies for beneficial trade. But free trade is another matter. Look at the North American Free Trade Agreement (NAFTA). It has a terrific number of provisions. If you stacked up those documents, they come to two meters.”

A star project in the offing is China’s participation in Canada’s Northern Gateway plan to lay an oil pipeline to super tankers anchored the latter’s West Coast. They will ship the fuel to China. Burton explains, “It needs China’s expertise in areas like infrastructure. China is eager to get oil from more stable countries than its present suppliers such as Iran. We have seen US$18 billion in Chinese state owned firms’ investment in Canada’s top eight oil projects in the past two years.”

China’s point man Li is optimistic. After enthusing that the agreements with Harper unprecedently raised Sino-Canadian trade ties, he exclaimed that there is a “long way to go” for full maturation. Speaking before Canadian executives who accompanied their leader, Li explained that, “China is facing mounting resource pressure.”

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