Ottawa Launches Consultations on Trade Deal With China

After launching exploratory discussions with China last fall, the Canadian government is taking another step toward negotiating a trade deal Canada’s second-largest trading partner.

As part of the March 4th issue of the Canada Gazette, Global Affairs Canada announced it’s asking for feedback on how to proceed with a possible free trade agreement with China.

“With a population of almost 1.4 billion, a GDP of C$14.8 trillion in 2016, and a forecasted average annual economic growth rate of around 5.4% over the next 15 years, China and the Chinese market present opportunities for Canadian companies in a wide variety of sectors. China’s ongoing transition to a more service-oriented, consumer-based economy and its growing middle class have created demand for quality agricultural and agri-food products, advanced manufacturing, reliable sources of energy, financial and professional services, and innovative technologies and service solutions.” – Global Affairs Canada

China is an increasingly important market for Canadian agriculture, however import tariffs and non-tariff barriers are restricting trade, as was highlighted in a detailed report from the Canadian Agri-Food Trade Alliance released on February 22nd (read the “Chasing China” paper here).

Taking canola for example, a free trade agreement with China could create 33,000 additional jobs in Canada from increased exports of canola alone, according to a study commissioned by the Canola Council of Canada.

China currently implements a 9 percent tariff on imported canola seed — three times higher than the three percent tariff applied to soybeans. Dan Ciuriak, the former deputy chief economist for the federal trade department, found that eliminating China’s tariffs on Canadian canola could increase exports by up to $1.2 billion per year — the equivalent of 1.8 million tonnes of canola or about 10 percent of annual canola production.

“Freer trade with China would mean a lot more jobs and growth from Canadian canola,” said Brian Innes, vice president, government relations with the Canola Council, in a news release on Monday. “In these uncertain times for global trade, Canadians should be very encouraged by the opportunity for a more stable and open trading relationship with China.”

Innes also noted a trade agreement with China could address the current uncertainty surrounding non-tariff barriers, including blackleg policy and new trait approvals (three canola traits that have been approved in Canada since 2012 are on hold until they are approved by China.)

“China is an important growth market for canola,” noted Rick White, CEO of the Canadian Canola Growers Association, in a separate news release. “With a rising middle class that is increasingly seeking out healthy food options, China is a market that Canadian canola farmers are well-positioned to capitalize on.”

Global Affairs also acknowledges Canadians may have concerns about China’s environmental, labour, and human rights policies, noting a deal “would not deter Canada from urging and working with China to meet its international obligations in these areas.”

The consultation period will run until June 2nd.

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