Prime minister Pierre Trudeau made history in the fall of 1970 when he established diplomatic relations with communist China.
It’s been 45 years, but the Chinese have not forgotten.
“The Chinese are very sentimental about historical milestones,” said Sarah Kutulakos, executive director of the Canada China Business Council.
“Trudeau (represented) … the first major western country that recognized China.”
Canada’s relationship with China may improve now that Trudeau’s son, Justin, is prime minister, which could revive a concept that’s been on the shelf for more than three years: free trade between the two nations.
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Chinese and Canadian officials released a joint document in 2012 called the Canada-China Economic Complementarities Study. It identified seven sectors, including agriculture, where increased bilateral trade would benefit both countries.
Kutulakos said China was eager to build on the study and pursue free trade, but Canada was a reluctant dance partner.
“Unfortunately that was a time when Canada was unwilling for a variety of reasons…. (The government) was busy with agreements with South Korea and Europe,” she said. “(But) over the last three years China has continued to say, ‘let’s start.’ ”
In November, Chinese president Xi Jinping signalled in a lengthy news release at the G20 summit that China is keen to work with Canada’s new prime minister.
“Forty-five years ago, your father, prime minister Pierre Trudeau, made the historic decision of establishing diplomatic relations with the People’s Republic of China, showing extraordinary political foresight,” the release said.
“Under the new situation, China and Canada should enhance political mutual trust and strengthen exchanges and contacts be-tween their leaders to develop a long-term, sound and stable strategic partnership.”
Kutulakos said Trudeau’s election victory could reignite free trade negotiations, but Canada’s new government should also be motivated by global competition.
“The Australia agreement, I believe, was a big wake up call,” she said, referring to the free trade deal Australia signed with China last year.
“There are so many similarities in our economy and the complementarities that exist in agriculture and in resources. All of a sudden, in a variety of sectors … Australia has a quantifiable advantage.”
According to an Australian government fact sheet on the deal, the country already dominates a few categories of Chinese food im-ports.
Australia exported 128,000 tonnes of beef to China last year, which as 50 percent of China’s beef import market. It is likely to grab an even larger share of an expanding protein market as China eliminates 12 to 25 percent tariffs on Australian beef.
A tariff advantage can be a difference maker in a low margin business such as meat.
Claire Citeau, executive director of the Canadian Agri-Food Trade Alliance, said South Korea is a case study of how Canada can quickly lose out in a key market.
The United States signed a free trade deal with Korea in 2012, creating a schedule to reduce Korean tariffs on many products, including pork. Meanwhile, Korean tariffs on Canadian pork remained at 22 to 25 percent.
Exports of Canadian pork to South Korea took an immediate hit, dropping from $223 million in 2011 to $129 million in 2012 and $76 million in 2013.
The federal government signed a free trade deal with Korea last year, restoring the competitiveness of Canadian meat exports to the Asian country.
Kutulakos said China may eventually join the Trans-Pacific Partnership trade deal, but Canada can’t wait that long. There is an opportunity to sell agricultural products and provide environmental services to China, she added, but the window won’t remain open forever.
“(Opportunities) are there, right now, for the taking,” she said.
“But once China solves those problems … we are not nearly as appealing.”
- This has been a stellar year for Canadian beef exports to China. According to Canada Beef, exports to China were up 169.3 percent from January to the end of August, compared to the same period last year.
- In 2014, Canadian beef exports to China were 4,986 tonnes between January and August. In the same period this year, beef exports to China were 13,429 tonnes.
- By August of this year, Canada had nearly doubled its entire beef exports to China for 2014.
