Mea culpa: I’m told, by someone who knows, that I’m wrong on free trade with China

This is the third of a series of articles expressing my concerns about China’s rise and Sino-Canadian relations, especially trade relations. Two came yesterday and this is the conclusion … for the moment.

Just yesterday I said that ” We want it to be a trading partner and a fair competitor in the marketplaces of business and ideas.” I have frequently said that we should negotiate a free(er) trade agreement with China or, maybe even better, ask to join the RCEP. But I am being, as I write, forced to change my mind, at least as far a big deal with China is concerned.

Gordon Ritchie was for over 20 years a very senior Canadian public servant. He served as gordonritchieAmbassador for Trade Negotiations and he was one of the principal architects of the Canada/United States Free Trade Agreement. Throughout his career within the federal public service of Canada, he focused on the economic development and international trade files; his senior posts included associate deputy minister of the Department of Regional Industrial Expansion and deputy secretary of the Ministry of State for Economic Development. In 2005, he served as senior advisor to the Government of Canada in that round of negotiations with the USA over trade in softwood lumber. 

In an article in the Globe and Mail he gives Prime Minister Trudeau’s government “high marks” for dealing with, perhaps surviving is a better word, President Donald Trump’s NAFTA or USMCA renegotiations, but, he says, the Trudeau regime has “clearly failed to make the grade in handling our second-most important economic partner: China.

The stage was set,” Mr Ritchie explains by way of background, “when the World Trade Organization admitted China as a member in 2001. In the intervening years, China has taken extraordinary advantage of the resulting opportunities to flood richer markets with low-cost consumer goods, while importing, borrowing or stealing technologies from more developed countries. Concern is mounting in the Asia-Pacific region that this one-way bargain is unsustainable.” Of course the greatest concern about China is being expressed by Washington, but it is only fair to say that the concern is global and even extends to Africa where some leaders fear that China has ensnared them in a “debt trap.

Then, Gordon Ritchie writes: “Enter the Justin Trudeau government. After expressing his admiration for the Chinese system, the Prime Minister mused about some form of trade agreement with the Asian superpower. The potential benefits – China’s huge and rapidly growing new markets for our resources, in particular – were attractive. After a disruptive visit to a Vietnam summit on Trans Pacific Partnership talks, Mr. Trudeau landed in Beijing ready to make a deal – but at that point, and not before, he proposed a “progressive” trade agenda, and the Chinese rebuffed him.” This is something I have discussed before. Essentially, Justin Trudeau seems to not understand that the power imbalance between Canada and China is not dissimilar to that between Canada and the USA; he decided to treat China as he might, say, Norway or New Zealand … that was a serious mistake.

Next Mr Ritchie explained the background of the Huawei situation, saying that the Chinese telecom giant, “Having carved out a substantial share of Canada’s market for its consumer products … [next] … went after the biggest prize: providing equipment for Canada’s 5G network, which would serve as the foundation for the next generation of telecommunications. Bell, one of Canada’s largest telecom companies, quickly came on board, proposing to make Huawei central to its expansion plans, while the Canadian security establishment unconvincingly argued that it could keep the company under control when other countries could not. But competing companies objected, while the security establishments in the Five Eyes alliance issued warnings that under Chinese law, Huawei, like other Chinese companies, would be required to obey the orders of the state. The United States banned the company from the central core of its network, and Australia and New Zealand followed suit; the United Kingdom undertook a critical review, with a negative result widely expected.” Now, there have been a few, generally muted criticisms of the Five Eyes‘ moves, suggesting that, perhaps, the Five Eyes partners are being used as a pawn in the Sino-American trade war and that Huawei is about as much an ‘agent’ of the Chinese government as, say, the Thales Group is an agent of the French government.

Be that as it may, Gordon Ritchie then writes that “That’s when Meng Wanzhou – a Huawei executive and the daughter of its founder – entered the picture. The Prime Minister was apprised of Ms. Meng’s plans to transit through Vancouver, and U.S. authorities demanded her detention and extradition under our bilateral treaty … [and, he says, as I have suggested, that] … A competent government would have found a way, as former deputy prime minister John Manley has suggested, to discreetly warn Ms. Meng off. Instead, despite the ample warning, Canadian officials arrested Ms. Meng at the Vancouver airport … [and, he adds] … To make matters worse, U.S. President Donald Trump proclaimed that he might deign to drop the extradition demand if it helped in trade talks with China. The Chinese were apoplectic, trudeau_in_chicagodetaining two Canadians for spurious reasons, and China’s ambassador to Canada wrote a highly undiplomatic and menacing op-ed in The Globe and Mail … [and he concludes, and I think this is a cardinal error, which proves out that the Trudeau regime, at the very top, the PMO and the PMO, is incompetent and deluded, that] … It appears to have caught Ottawa off guard that China, an authoritarian dictatorship, would play the bully in blatant disregard for the rule of law.Quelle surprise!

Mr Ritchie asks what is “The result of this astonishing ineptitude?” He says that “Canada finds itself in an impossible situation, caught between the world’s two economic superpowers as they go toe to toe in a struggle for supremacy … [but, he says] … It should never have been this way. We should have recognized that we do not call the shots in these kinds of situations. We should instead be alert for the occasional opportunity to maximize our gains and minimize the damage as the major powers seek some shifting accommodation.” In other words, a competent leader of even an inexperienced, semi-skilled team should have seen this coming and should have ducked, at least … but Canada is blessed cursed with Justin Trudeau and Gerald Butts et al so words like competent and skilled, even semi-skilled, don’t apply.

Gordon Ritchie concludes that “We should have shelved naive notions of a free-trade agreement with China. That is not and never was in the cards, at least on terms that were remotely acceptable to Canada. We should instead focus on specific sectoral opportunities to expand our exports to meet Chinese requirements … [and] … A new year offers an opportunity to do better. The file is too important to continue to mishandle.” The key takeaway here, one that suggests that I am wrong, is that Mr Ritchie says that “We should have shelved naive notions of a free-trade agreement with China. That is not and never was in the cards, at least on terms that were remotely acceptable to Canada.” Boom! I have been advocating a free(er) trade deal with China and Mr Ritchies, who knows a lot more about this than I do, says: ‘Nope, not in the cards, never was. Engage, instead, in sector by sector trade deals that are win-win deals for both Canada and China.’ I really hope Andrew Scheer reads this article. For myself, I now have to reevaluate my position, because Mr Ritchie’s analysis and conclusions must be taken very, very seriously and, likely, cease to advocate for a Sino-Canadian big deal and agree with Mr Ritchie that sector-by-sector, case-by-case trade deals are the better choice.

Notwithstanding that I have, most likely, been wrong to advocate a big Canada-China free(er) trade agreement, the best way to ensure that all the global trade files are not mishandled any more is to consign Justin Trudeau and his Liberals to the political trash heap in this year’s general election, and to elect Andrew Scheer’s Conservatives, in their place. The Liberal Party of Canada is a great, even a noble institution that is vital to Canada’s long term political health, but for too many years it has been in the hands of ideologues or of corrupt or, right now, inept leaders. It needs to rebuild while Mr Scheer undoes the damage.

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