China and trade: easy to criticize but not much Canada can do
Updated: Aug 12, 2019
China continues to put up new barriers to trade for Canadian food products. Each action is built on the pretence of a technical issue, contamination in canola seed, and banned products and forged documentation for pork. While there remains some disagreement as to the validity of the complaints, it seems relatively clear from the timing (Meng Wanzho’s arrest and perhaps an upcoming federal election) that politics is playing a primary role in motivating these actions.
There continues to be criticism of the Federal Government for the apparent lack of action and seeming inability to even meet senior Chinese officials. It is, however, not clear that there is much that Canada can do.
Hauwei executive Meng Wanzhou was arrested at the request of the US government. Extradition proceedings are ongoing. The Trump Administration has complicated things by suggesting that her court case could be part of ongoing trade negotiations. Canada has said that it is following the rule of international law and responding to the US arrest and extradition request. We are essentially caught between a rock and a hard place because the US is a significant ally and trading partner and has shown an inclination to take politically motivated actions too.
It is likely that China would at least back off on some of these trade actions (and the detention of Canadians) if Meng was released. This would break Canada’s international commitments and potentially lead to other actions if Canada were to be out of alignment with Chinese interests. Blinking now would invite further action.
It should be noted that there is the potential for additional irritants to come forward in the relatively near future. There is considerable discussion of precluding Huawei from participating in some or all of Canada’s 5G network development. Canada has not made a decision and China has warned of repercussions if Huawei is excluded from participating. The opposition Conservatives have said they would ban Huawei if they win the next election. The US has precluded Huawei from bidding on federal contracts. Australia has banned it from all 5G development.
All of that said, there are some things Canada can do. In the short run Canada should investigate the origin of the forged documents and the provenance of the contaminated shipments. They should also continue to work to understand the technical issues on canola. It is unlikely that this approach will yield satisfactory results but it is worth doing and it could help.
In the long run Canada should diversify in other markets. That is easier said than done and China represents not only a significant market currently but huge potential for growth that Canada is currently locked out of. Regardless, diversifying export markets is always a good strategy, but is a long term action with little potential to ease the short term pain.
We are facing the reality of being a smaller player facing a big power. It is unfortunate but unless we are willing to compromise our international commitments we are relatively impotent in the face of this aggressive trade pressure.
Recommended citation format: von Massow, M. “China and trade: easy to criticize but not much Canada can do”. Food Focus Guelph (40), Department of Food, Agricultural and Resource Economics, University of Guelph, July 5th, 2019.