Moving beyond rhetoric: understanding the practical consequence of a Canada-China Free Trade Agreement

Relations with China International trade Economics Free trade Bilateral relations Canada China

With North America’s tumultuous free trade negotiations and Donald Trump’s America-First rhetoric, Canadians may be receptive to the counter-rhetoric coming from those in our policy circles pushing for trade “diversification” in general and a Canada-China Free Trade Agreement (CCFTA) in particular. Our current federal government’s enthusiasm for trade talks with China has been exceedingly high, at least until China’s aggressive response to the arrest of Huawei executive Meng Wanzhou in Vancouver in December 2018.

Unfortunately, those pushing most strongly for a CCFTA seem to forget the conceptual differences between free trade and free trade agreements. They downplay the institutional incompatibility between China and Canada, and tend to mislead the public into believing that China’s potential market size is so critical to our national interest that we couldn’t afford any deep thinking before inking a CCFTA. US President Donald Trump’s unpredictability may have helped reinforce the case of those who wanted a CCFTA. Yet we should remember that the self-disruptive Trump will leave the White House long before the self-coroneted Xi Jinping relinquishes control of China, if he ever does.

Simply put, we need a reality check. Given the Chinese government’s command power over its economy, its persistent violations of World Trade Organization (WTO) rules, and underhanded actions against the interests of its existing FTA partners, Canada should not rush headlong into FTA negotiations with China.

This paper, drawing on Canadian, international and Chinese literature and data, provides its own thorough review of Canadian and Chinese trade and economic policy, and China’s general approach to the FTAs with other nations.

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