Prime Minister Carney plans to meet with Chinese leader at APEC

Key Concepts

• Canada-China Trade Relations
• Canada-US Trade Relations
• Trade Diversification
• Tariffs (100% on Canadian seafood, canola, agricultural products; potential 10% on Canada)
• Asia-Pacific Economic Cooperation (APEC) Forum
• National Interests
• Protectionism
• Long Game Approach to Diplomacy

Canada-China Meeting at APEC Forum

Prime Minister Mark Carney is scheduled to meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) Forum in South Korea. This meeting is significant as it marks a rare high-level discussion between the two countries after a period of strained relations. Jacques Shore, a government affairs and trade partner at Gowing WLG, highlights the importance of these discussions, noting that Canada needs to reassess its position with China every five years.

Key Points of Discussion and Challenges

The upcoming meeting will likely address several critical areas:

• Tariffs: Canada is seeking to discuss the removal of 100% tariffs imposed by China on Canadian seafood, canola, and agricultural products. These tariffs have significantly impacted Canada's agricultural sector.
• Chinese EV Market: Conversely, China is expected to raise the issue of electric vehicles (EVs), as they have vehicles to sell at a considerably lower cost than competitors.
• National Interests: Both countries will be focused on their respective national interests. For Canada, this includes navigating the complexities of its trade relationship with the United States while simultaneously engaging with China.
• US Scrutiny: Canada is mindful of how its dealings with China are perceived by the United States, given the current geopolitical climate.

Canada's Trade Diversification Strategy

Canada is actively pursuing trade diversification, aiming to reduce its heavy reliance on the United States.

• Current Trade Landscape: Approximately 80% of Canada's trade is with the United States, a relationship characterized by a high degree of tariff-free trade (93% of goods).
• Diversification Efforts: Canada is looking to strengthen trade ties with Europe and is actively engaging with countries like Japan, particularly in areas such as LNG exports.
• "Growing the Pie" Mentality: The goal is not to diminish trade with the US but to expand overall trade volume by developing new partnerships.

Impact on Canada-US Relations

The meeting with China is being approached cautiously to avoid negative repercussions from the United States.

• Measured Approach: Prime Minister Carney is expected to adopt a measured and long-term strategy in his discussions with China.
• Avoiding Retaliation: A primary concern is to prevent any retaliatory measures or negative sentiment from the US regarding Canada's engagement with China.
• Broader Alliance Context: Canada's actions are being carefully considered against the backdrop of its relationships with other allies who are facing similar challenges in their dealings with China.
• Protectionist Trends: The current US administration's protectionist tendencies are a significant factor influencing Canada's diplomatic and trade strategies.

Perspectives on the Canada-US Relationship

There is a strong sentiment that the Canada-US trade relationship is exceptionally important and beneficial to both nations.

• Historical Importance: Reference is made to President Reagan's 1987 speech, emphasizing the value and warmth of the Canada-US trading partnership.
• Mutual Benefit: The argument is made that both countries benefit from joint manufacturing and strengthened opportunities across the border.
• Long Game: The approach to managing these complex trade relationships is described as a "long game," requiring careful progression through stages, akin to innings in a baseball game.
• Political vs. Trade Negotiations: The current trade discussions are viewed as more political negotiations than traditional, highly specific trade negotiations, reflecting the broader geopolitical context.

Conclusion and Takeaways

The upcoming meeting between Prime Minister Carney and President Xi Jinping at APEC is a crucial step in recalibrating Canada's relationship with China. Canada is balancing the need to address existing trade grievances, such as Chinese tariffs, with the strategic imperative of diversifying its trade portfolio. This diversification is being pursued cautiously, with a keen awareness of the impact on its vital trade relationship with the United States. The overarching strategy emphasizes a long-term, measured approach to diplomacy and trade, aiming to grow the economic pie while preserving and strengthening existing alliances.