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China is risky business

Canadian farmers and exporters of agri-foods should focus their attention on regions and countries other than China, says a former ambassador to China.

Yes, China is a huge opportunity but it’s an opportunity that comes with huge risks.

“The (exporting) companies should make full use of the free trade agreements that have been negotiated,” said Guy Saint-Jacques, who was ambassador to China from 2012-16.

“Whether it is with Europe, or the CPTPP (Trans-Pacific trade deal) or with South Korea.”

During a telephone interview with The Western Producer from his home in Montreal, Saint-Jacques explained that China is a dodgy market for a number of reasons.

There is the matter of Meng Wanzhou, the Huawei executive detained in Canada. There’s also the issue of whether the federal government accepts or denies the use of Huawei equipment for Canada’s 5G telecommunications network.

If those situations go sour, the Chinese could shut the door to Canadian goods.

When it comes to Meng, the case could drag on for years, he said.

One possible scenario for a miracle is a comprehensive trade deal between China and the United States

The Americans might drop the extradition case against Meng, if they were able to negotiate an agreement.

Saint-Jacques doubts it will happen.

“I think they (the Chinese) have come to the conclusion that they can’t make more concessions,” Saint Jacques said. “They don’t want to make fundamental changes to their economic model.”

As well, the U.S. Justice Department is loath to abandon the Meng case, Saint-Jacques said.

“I start (with) the principle that the U.S. is a country governed by the rule of law,” he said, noting the charges against Meng are serious. “It’s the first time they went after one of the top officials of the company (Huawei).”

As CNBC reported, the U.S. has accused Meng and Huawei of bank and wire fraud and conspiracy to commit bank and wire fraud in relation to skirting American sanctions on Iran. The U.S. alleges that Meng lied to banks about Huawei’s relationship with an unofficial subsidiary in Iran called Skycom in order to get banking services.

Saint-Jacques said Meng knows the charges are serious. That’s why she has a team of seven, or more, lawyers fighting the extradition.

The Meng situation is critical for Canadian farmers, since China banned the licences of two grain companies to import canola into China and in June banned the import of Canadian beef and pork.

The official reason for the canola ban is pests in shipments of Canadian canola, likely blackleg.

The Chinese are worried about blackleg and contamination of their crops, but that’s not the reason for the ban, he said.

“With canola, it’s true we have a problem with blackleg. I had to deal with that almost continuously during my four years as ambassador,” he said, adding the Chinese are also concerned about ractopamine, a growth promotant, still used by a few hog producers in Canada.

“(But) at the end of the day, I’m convinced the measures taken by the Chinese were strictly related to the case of Mrs. Meng. Why do I say this? Well, Canada is not the first country to pay a price economically, after having done something that the Chinese didn’t like.”

When Saint-Jacques worked at the Canadian embassy, he witnessed how China used phytosanitary regulations to punish other countries.

For instance, it refused to buy smoked salmon from Norway for years after a Norwegian-appointed committee gave the Nobel Peace Prize to a Chinese dissident.

“With China… I’m always skeptical when they (use) Phyto-sanitary reasons,” he said. “I lived 13 years in China, I’ve seen all kinds of (things) in terms of dirty tricks.”

He is skeptical, but China is a real opportunity for Canadian food exporters.

“It will remain a good market. But I would try to be careful and not to rely too much on this market.”

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