Canada must work to save international rules-based order

Our experience with superpower conflict during the Cold War with Russia does not give us much guidance in our new challenges with China.

For all its military might and geopolitical meddling, Russia and its bloc of Eastern European satellite states were never much of an economic power.

China, however, has become the second largest economy in the world and is strongly entwined with the rest of the globe.

Indeed, its rapid growth, its 1.4 billion consumers and its massive foreign investments all make it a desirable target for anyone in the world trying to sell commodities, goods and services.

Its development has been a key driver of global economic growth for the past two decades.

We have become dependent on China buying our stuff just as it has become dependent on the rest of the world buying its stuff.

This gives China a tool that the Russians never had. It can get its way by extending or limiting access to its markets and investments.

Any country that resists China’s will risks economic repercussions. 

Canada and the rest of the world must come up with strategies to force China to play fair. 

The best hope I can see is to convince the rest of the world of the need to revive and strengthen international institutions such as the World Trade Organization that, although they had flaws, were generally built on the idea that if everyone plays by the same rules all will benefit.

There also needs to be greater efforts to have the major economies take a united stand regarding China.

The path many countries have taken in recent years of striking out on their own, from U.S. President Donald Trump’s America-first policy, to Britain’s efforts at Brexit, to election of nationalist governments in Europe and Brazil, weaken international institutions such as the WTO. Indeed, because the organization’s members have not been able to agree on updating its rules and because of America’s blocking nomination of new judges to the WTO’s appellate body, the organization is near paralysis and is threatened by irrelevancy.

Without a strong WTO and with so much of the world taking a “me first” attitude, China is able to play one country against another.

For example, Trump might impose tariffs, but China can greatly lessen the impact because other countries looking for individual advantage are more than willing to step in and fill the trade gap.

Here in Canada we are feeling China’s economic power as it blocks imports of canola and meat to pressure Ottawa to release Meng Wanzhou, the Huawei chief operating officer held on house arrest awaiting an extradition hearing on an American arrest warrant. And we can’t forget China’s brutal bully tactic of arresting and imprisoning Canadians Michael Kovrig and Michael Spavor on trumped up spying charges.

The federal Liberal government so far has tried to limit its rhetoric, treat the matters on technical and legal levels and generally resist ramping up the conflict. 

But the strategy has not had much success and increasingly Canadians want a more aggressive response.

Conservative party leader Andrew Scheer has urged increased inspections of Chinese imports at port and putting tariffs on goods from China, although one must smile at Scheer’s request that the levies go on products that have the greatest possible impact on China but have minimal harm to Canadian consumers, as if it is possible to have both.

And the effectiveness of such actions is questionable given that the United States has imposed vastly larger tariffs on China to little positive effect in its trade disputes with the country.

There is another step that the federal government has taken that is attracting few headlines, but in the long-term is critically important.

Canada is taking the lead to try to strengthen and modernize the WTO. It is chair of the “Ottawa group” of 13 WTO members, including heavyweights such as the European Union, Japan, Brazil and South Korea, that has met several times to come up with reform options to make the organization more effective and regain the support of the U.S.

The goal must be to make the WTO the preferred forum to address differences on trade and to bring China more fully into the international rules-based order.

I hope that whichever party forms the next government after the fall election, it will continue this course and use whatever influence this country has to rebuild and improve the WTO.

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