Is more trade with China really a good idea?

Key Concepts

• Trade Weaponization: China’s history of using trade as a political tool.
• Canola Trade: The significant reliance of Canadian canola exports on the Chinese market and recent disruptions.
• EV Tariffs: The potential implications of removing tariffs on Electric Vehicles (EVs) for Canada-US trade relations.
• National Security Concerns: Risks associated with increased trade and investment from China, particularly regarding intellectual property and espionage.
• Indo-Pacific Strategy: Canada’s strategy to diversify trade relationships beyond China, focusing on countries in the Indo-Pacific region.
• USMCA: United States-Mexico-Canada Agreement, and potential impacts of trade decisions on this agreement.
• Transnational Repression: Interference in domestic affairs by foreign governments, specifically referencing Chinese activities.

Canada-China Trade Relations & Diversification Efforts

The Prime Minister’s recent visit to China aims to address trade issues, particularly concerning tariffs on Canadian canola and seafood. However, the discussion highlights a complex relationship marked by China’s history of using trade as leverage. Currently, 67% of Canadian canola exports go to China, creating a significant vulnerability. China has previously imposed trade restrictions on canola in 2016, January 2019 (coinciding with the arrest of the “Michaels”), and continuing into the present, impacting Canadian farmers. A recent positive development is the first canola shipment to Pakistan in many years, demonstrating efforts towards diversification.

Potential Trade Gains & Risks

While progress on lifting canola and seafood tariffs is anticipated, it’s described as an “ongoing discussion” with significant preparation already undertaken by officials. A key concern is avoiding actions that could “build a wedge” between Canada and the United States. Specifically, removing tariffs on Electric Vehicles (EVs) is viewed as problematic. Former President Trump has stated he would not allow Chinese vehicles to enter the US through Canada, and Mexico has similarly restricted Chinese manufacturing.

Margaret McQuade Johnston suggests an alternative approach: inviting Chinese investment in Canada’s conventional energy sector, aligning with China’s import needs.

National Security Considerations

Despite pursuing trade opportunities, the Canadian government is portrayed as proactive in addressing national security concerns. Examples cited include the arrest of a spy stealing secrets from Hydro Quebec, the interception of Chinese individuals in the Northwest Passage, and investigations into transnational repression and electoral interference. Canada is also described as having the “tightest measures” of any democratic country to protect university research from theft by Chinese, Russian, and Iranian sources.

Diversification Beyond China: The Indo-Pacific Strategy

The interview emphasizes the importance of diversifying trade beyond China. Canada’s Indo-Pacific strategy, implemented three years ago, involves increased diplomatic engagement and investment in countries like Malaysia, Australia, New Zealand, Japan, South Korea, and Vietnam. Global Affairs Canada is actively deploying ambassadors and officials to these regions to foster stronger relationships. While acknowledging continued trade with China, the focus is shifting towards building partnerships with “like-minded” countries and identifying opportunities even within communist nations like Vietnam, where common interests exist.

Data & Statistics

• 67%: Percentage of Canadian canola exports that currently go to China.
• 3 years: Time since the implementation of Canada’s Indo-Pacific strategy.

Notable Quotes

• “China has used trade as a weapon…that’s a real exposure that China can use as leverage to try to get Canada to change its policies.” – Margaret McQuade Johnston
• “We have to be very careful to avoid falling into China's trap of dropping the EV tariffs or having manufacturing.” – Margaret McQuade Johnston
• “For our research protection in Canadian universities, we have the tightest measures of any democratic country protecting ourselves from research being stolen by the Chinese military.” – Margaret McQuade Johnston

Logical Connections

The discussion flows logically from the Prime Minister’s visit to China, to the historical context of trade weaponization, the potential for gains and risks, national security concerns, and finally, the broader strategy of diversification within the Indo-Pacific region. The interview consistently links specific trade issues (canola, EVs) to larger geopolitical considerations (Canada-US relations, national security).

Synthesis/Conclusion

The interview paints a picture of a cautious approach to trade with China. While acknowledging the potential for incremental gains, the emphasis is on mitigating risks and diversifying trade relationships. Canada is actively pursuing alternative markets in the Indo-Pacific region, prioritizing national security, and carefully navigating the complex dynamics between China, the US, and its allies. The key takeaway is that Canada is seeking to balance economic opportunities with strategic considerations, avoiding over-reliance on any single trading partner.