Canada ready to shift focus to trade talks with China, Trudeau says

Canada is open to doing more business with China now that a trading agreement with the United States and Mexico has been finalized, says Prime Minister Justin Trudeau.

“Obviously, China is the world’s second-largest economy and growing, and will remain an important place to do business and to look for opportunity,” Trudeau told the Fortune Global Forum in Toronto on Monday.

Trudeau says he will continue to look at Canada’s trading relationship with China in “thoughtful ways” and that the world’s second largest economy remains an important place to do business and look for opportunity.

“We will continue to look (at increasing trade), but we will continue to do it in the way Canada always has, mindful of the challenges, both of scale and of different approaches to business, in a way that is thoughtful about drawing benefit and protections for Canada.”

Under the newly agreed U.S.-Mexico-Canada Agreement (USMCA), all countries need to notify their trading partners if they engage in a free trade agreement with any “non-market economies”, including China.

The prime minister noted that Canadian officials have been working over the past year to grow trade relations with China.

He said that under the newly agreed U.S.-Mexico-Canada Agreement (USMCA), all three countries now need to notify their trading partners if they engage in trade talks with any “non-market economies”, including China.

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But he noted that the “reciprocal” clause does not stop Canada from doing business with whom it pleases.

China has openly criticized Section 32.10 of the new USMCA, arguing that it is an attempt by the U.S. to thwart its trading relationships with Canada and Mexico.

The White House is currently involved in a trade war with China and has slapped tariffs on hundreds of billions of dollars worth of Chinese goods, prompting retaliation from Beijing.

In an interview on the stage at the start of the three-day conference, he described a tumultuous, and at times, testy negotiation process to get USMCA inked.

“I think what people will remember is where we ended up,” he told a crowded room of Canadian and international business leaders.

Prime Minister Justin Trudeau meets with CEO of China and Co-CEO of Asia Pacific for Morgan Stanley Wei Sun Christianson at the Fortune Global Forum in Toronto on Monday, October 15, 2018. THE CANADIAN PRESS/Chris Young

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“In negotiations, people have different styles in their approach. We focused on staying constructive, thoughtful, present, at the table, patient.”

“Obviously, China is the worlds second-largest economy and growing, and will remain an important place to do business and to look for opportunity,” Trudeau told the Fortune Global Forum in Toronto on Monday.

Trudeau said many had doubts about whether his government was going to be able to finalize the trade deal, which he touted as having reduced uncertainty for the Canadian economy.

“We have secured access to the U.S. market, quite frankly, at a time when a lot of investors that I have talked to around the world were wondering if we would be able to secure that,” he said.

The deal includes labor provisions long-sought by Democrats. Combined with Republican support for the president, Congressional approval should a breeze , but little is certain in the current political climate, according to Curtis Ellis, a senior policy advisor for America First Policies (AFP), the group behind the ad campaign.

“Obviously, the U.S. is going through, as it does from time to time, a bit of a protectionist phase and being able to ensure that investments in Canada will continue to have preferential access to the extraordinary market that is the United States is a big and important thing.”

President Donald Trump campaigned on a promise to undo NAFTA, calling it “the worst trade deal ever made.” The White House negotiated for a revised deal for more than a year before reaching a two-party deal with Mexico that Canada joined hours before the deadline.

Earlier this month, Ottawa announced that it had reached an 11th-hour deal with the United States and Mexico to modernize the North American Free Trade Agreement.

“No matter what. If its the single greatest agreement ever signed, theyll say, ‘Well, you know, Trump likes it, therefore were not going to approve it because that would be good for the Republicans. So, therefore, we cant approve it.”

The trilateral pact, which still faces hurdles in implementation, is anticipated to protect billions of dollars of daily trade and support millions of Canadian jobs.

“In a normal world and a normal time, there would be absolutely no dispute over the virtues of the USMCA. It addresses concerns about labor provisions, protection of intellectual property, it encourages manufacturing innovation in the United States.”

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A conservative nonprofit is rolling out a $1 million ad campaign on Oct. 14 to push the Congress to approve the United States–Mexico–Canada Agreement (USMCA), the new name for the renegotiated North American Free Trade Agreement (NAFTA).

Prime Minister Justin Trudeau poses for a portrait after an exclusive interview at The Globe and Mail in Toronto on Oct. 15, 2018.

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Ottawa is turning its attention to trade talks with China and wont be deterred by language in the tentative United States-Mexico-Canada Agreement that targets future pacts with Beijing, Prime Minister Justin Trudeau says.

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The commitment by Mr. Trudeau comes as he disclosed for the first time that China was the focus of a clause in the trade agreement dealing with non-market” countries. Canada resisted a U.S. push for much stronger rules that would have hampered Canadas ability to do future trade agreements with China, the Prime Minister said.

They put forward a proposal in the USMCA originally that was very, very rigid on trade with China, Mr. Trudeau said in an exclusive interview Monday with The Globe and Mail. The final agreement is different: We got them to a place where we agree to mutually discuss trade negotiations we might make with China, which is positive for us, he said.

Mr. Trudeau did not elaborate on how Canadian negotiators managed to get the United States to soften its demands. But the USMCA, reached on Sept. 30, obliges Canada, the United States and Mexico to give one another three months notice before starting free-trade talks with a non-market country” – a clause widely seen as directed at China. The United States has refused to recognize China as a market economy, 17 years after the Asian country joined the World Trade Organization.

The enhanced emphasis on bilateralism is a part of a broader geo-economic strategy of the US as it is looking for a consensus among the old quad of WTO members – the European Union, Canada, Japan and the US – to place new rules at WTO. While the US is yet to place its proposal on reforming the WTO, the proposals put forward by the EU and Canada are to be looked at in this context. This (EU and Canada proposals) and the EU-Japan-US trilateral initiative to address Chinas unfair advantages stemming from the operations of its state-owned enterprises can potentially lead to some convergence of ideas for reforming the WTO.

The USMCA also gives signatories the right to withdraw from the agreement within six months of one of the countries signing a trade deal with a non-market economy such as China.

This is one of the major reasons why it emphasised on the inclusion of provisions that go beyond trade, which are expected to exert pressure on other countries to take careful calls for new trade deals, particularly those with China. In that respect, one may say that the USMCA reflects a paradigm shift in the trade policy stance of the US with mercantile interest ruling the roost. Same was the case with Trans Pacific Partnership deal from which the Trump administration had pulled out. Features from that have also been pulled into the USMCA.

Last week, Chinese Foreign Minister Wang Yi told his Canadian counterpart, Foreign Affairs Minister Chrystia Freeland, that Beijing invited Ottawa to advance the establishment of a China-Canada free-trade zone.

Thus, it is now clear that the US trade policy under the Trump administration has shifted from multilateralism to bilateralism as it believes that it can use its power to shape trade agreements to align with its own economic interests. There are clear indications that it will use its hard power to arrive at more favourable trade deals for advancing its domestic economic goals. How well this new geo-economic strategy of the US aligns with its geo-strategic objectives, particularly in the Indo-Pacific region, is a debatable question.

Nearly a year after efforts to formally launch free-trade negotiations with China stalled, Mr. Trudeau said Canada is ready to intensify talks.

Thirdly, it is believed that its stringent rules of local content requirements will have a knock-on effect on global supply chains spread across the world. In case of the automobile sector, the potential gains from the USMCA will hinge on how provisions on steel and aluminium interact and influence the cost of production in this sector. This may have far reaching implications for many Asian countries including India, which are linked with automobile supply chains led by North American companies.

Lets talk about where we can work together, in areas that make sense for both of us that will benefit Canadians, Mr. Trudeau said.

Workers and our communities deserve an agreement which protects our right to a decent and environmentally sustainable living and has enforcement mechanisms to insure that sovereignty, democracy, and justice can be defended from corporate actions which benefit the 1% at the expense of the 99%. Currently, theres little chance of major revisions passing before the Republican-controlled Congress seals the deal via Trumps fast-track authority. Even if the House flips to Democratic control in November, and even if minor progressive revisions are later tacked on, according to Arthur Stamoulis, coordinator of the Citizens Trade Campaign, enforceability wont be enough to warrant support from grassroots groups. In any case, free-trade deals have been actively promoted by both Republicans and Democrats in recent years. So the final outcome depends now on the political momentum activists marshal to pressure Congress. Still, with a congressional shakeup potentially on the way and a left-leaning administration ascending in Mexico, Stamoulis argues: To my mind, the more immediate question is whether labor will be united enough to get the Democrats united enough to effectively advance a clear strategy with clear demands. The new NAFTA might hit some feel-good political notes. But, as always, the real-life impact of its protections for labor, the environment, and human rights comes down to the political will to wield the law to support those communities—a political will that is rooted in the rights that free-trade deals inevitably leave out: the peoples power to defy a rigged system. Michelle ChenTwitterMichelle Chen is a contributing writer for The Nation.

Certainly, discussions are continuing with China on moving forward on various trade opportunities,” he said, although he did not give specifics.

Mr. Trudeau, who was in Toronto on Monday meeting Canadian and foreign business leaders, said one of the lessons of the long and contentious negotiations to salvage the North American free-trade agreement is that Canada is too reliant on the United States – the destination for nearly three-quarters of Canadian exports.

I think weve all recognized that diversifying our trade is extremely important and were happy to continue to engage with the Chinese, theres no question about that, Mr. Trudeau said.

“They capitulated on access to Canadas dairy market,” Andrew Scheer, leader of Canadas Conservative Party, said in parliament Monday. “They capitulated on pharmaceuticals, agreeing to Donald Trumps plan for higher drug costs for Canadians. And they actually agreed to limit Canadas diary exports to other countries so that American farmers can fill that space.”

There are early signs that Canadian companies are already heeding the call to find new customers in China. From April to August of this year, the value of Canadian merchandise exports to China rose 23 per cent, a surge of nearly $2-billion over a period that coincides with the period of greatest tariff escalation between the United States and China.

Freeland, the top negotiator for the USMCA deal, replied that the government was tough “when it mattered” and got a good deal for Canada. She said that Trudeaus government was still pursuing lifting the steel and aluminum tariffs, noting it had announced 25 percent steel tariffs against the US last week as a counter-measure the Trump administrations tariffs.

Mr. Trudeau cautioned that whatever comes of its trade talks with the Chinese, Canada will be mindful of protecting national security and other Canadian values.

We know there are real challenges involved in trade with China, and being alert to those and thoughtful about those is completely logical, Mr. Trudeau acknowledged.

“Can [Foreign Affairs Minister Chrystia Freeland] explain: Did she get, in exchange for those concessions, an end to the steel and aluminum tariffs?” he asked.

Speaking later at a Fortune magazine economic conference in Toronto, Mr. Trudeau reiterated the need to forge closer ties with the worlds second-largest economy.

We have been over the past years, increasing our trading relationship with China, and we will continue to, in thoughtful ways, he said.

In his interview with The Globe, Mr. Trudeau highlighted how the USMCA has lifted a cloud of uncertainty that has hung over the Canadian economy. Having that off the table as a concern is a very big thing, he said.

Canadian businesses have complained for months that uncertainty over NAFTAs future has put a damper on investment decisions. Renegotiating the now-renamed deal will help ease those concerns, the Prime Minister said.

The decision earlier this month by LNG Canada to press ahead with a long-planned liquefied natural project in the northern B.C. community of Kitimat is a concrete illustration of the message Ottawa has been sending resource companies for nearly three years, Mr. Trudeau said.

If you want to get a project done and be safe from court challenges and get that public support, you need to be really thoughtful about environmental impacts and about Indigenous partnership, and that is something that LNG Canada has really done right, he said.The $18-billion Kitimat marine terminal is the centrepiece of a $40-billion investment by LNG Canadas five co-owners – Royal Dutch Shell PLC, Malaysias state-owned Petronas, PetroChina, Japans Mitsubishi Corp. and South Koreas Kogas.

Mr. Trudeau also vigorously defended his governments approach to getting pipelines and resource projects build – by forcing provinces to put a price on carbon and bolstering the federal review process.

That trade-off is as essential as ever, even as the Trans Mountain oil pipeline expansion remains stalled and several provinces, including Ontario, are balking at Ottawas imposition of a carbon tax.

I havent met many Canadians that have actually said, You know what, we do want to make a choice between whats good for the economy and whats good for the environment, Mr. Trudeau said. Every single person Ive ever spoken to, at the highest or the most basic level, wants us both to protect our environment for future generations and create good jobs now and into the future.

Canada ready to shift focus to trade talks with China, Trudeau says