What will it take to thaw Canada's cold relationship with China?

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Canada’s relationship with China could get worse before it gets better, depending on the outcome of the U.S. extradition request for Chinese telecommunications executive Meng Wanzhou, according to an expert on Chinese affairs at the University of Alberta.

Farmers in both Canada and the U.S. have been paying close attention to their respective country’s relationship with China,, as agricultural exports to the world’s most populous nation have suffered as collateral damage in a global power struggle.

The U.S. and China recently agreed to a truce with the “Phase One” deal, which includes commitments for major agricultural purchases by China. However, Canada remains stuck in its effort to free Canadians imprisoned in China and to re-open the important Chinese market to Canadian canola.

“It’s normal for Canada to have a somewhat better relationship with China than the U.S., but we’re now in a situation where it’s considerably worse. The relationship is basically frozen,” notes Gordon Houlden, director of the China Institute at the University of Alberta.

Both Houlden, a former Canadian diplomat with multiple postings in China, and Carlo Dade, director of the Canada West Foundation’s  Trade and Investment Centre, sat down with RealAgriculture’s Shaun Haney at FarmTech in Edmonton earlier this week for an in-depth discussion about political and trade issues surrounding China.

So what’s the solution for thawing Canada’s cold relationship with China?

Houlden says Canada’s status with China likely depends on how the U.S. extradition request for Meng Wanzhou plays out. The chief financial officer for Chinese telecommunications giant Huawei remains in Vancouver after being arrested by the RCMP on request of the U.S. government in December 2018.

Letting Meng walk free is technically an option for the Canadian government, as Article 23(3) under the Extradition Act gives Canada’s justice minister authority to end an extradition process at any time, but Houlden says that’s highly unlikely.

“It would be immensely controversial in this country and probably politically undoable.”

That means waiting until this summer or fall for the judge’s ruling in the extradition case, which could be followed by subsequent appeals.

“If she’s going to be extradited and leaves for the United States, we’re probably going to get another kick in terms of our own exports. I would not be surprised if there’s further retaliation,” says Houlden.

Until the legal process is completed, or Article 23(3) is invoked, Canada is likely in for “a medium to longer term hiatus where we’re going to run behind our American cousins,” he says.

Dade believes Meng’s lawyers have made a convincing case against her extradition based on the requirement of dual criminality, arguing Canada isn’t required to enforce U.S. sanctions against Iran.

“The embargo on Iran that she’s accused of breaking is not recognized by Canada,” he notes. “…so it’s hard to see how you would convict Meng for ignoring unilateral U.S. sanctions.”

While Canada seeks a resolution, the U.S.-China relationship appears to have improved, at least temporarily, with the U.S.-China trade deal. The agreement provides  “short-term wins” for both sides, says Houlden.

“It’s a skinny deal. It deals with some of the tariffs, but by no means all of them,” he says.

Dade describes the U.S.-China deal as a result of negotiations that have been happening for the last decade and a half — well before President Trump was elected in 2016.

“So there was the ability to cherry-pick what they had, where they were close before, and in agriculture there have certainly been a lot of discussions between the Americans and the Chinese,” he says. “But what I think is being missed from the Canadian perspective, we’re focusing on the purchase agreements, the quotas, the commitments to buy, but what’s really important are the structural changes. The Americans have got the Chinese to agree to make changes on things that impact non-tariff barriers on agriculture.”

Watch/listen to the conversation below for more with Houlden and Dade from FarmTech, including their thoughts on:

  • the response to the current coronavirus epidemic originating in China,
  • what China’s Belt and Road Initiative means for Canada,
  • the looming decision by the Canadian government on whether to allow Chinese-made Huawei 5G technology,
  • China’s military capacity,
  • the Chinese government’s preferred outcome for the 2020 U.S. election, and more.

Related: China promises to buy more American farm products in Phase 1 of U.S. trade deal

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