China Demands Concessions to Advance Canada Free Trade Pact - Global Trade Magazine
  February 18th, 2016 | Written by

China Demands Concessions to Advance Canada Free Trade Pact

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  • A free trade deal with Canada would be China’s first with a North American country.
  • A free trade deal with Canada would supply China with agricultural products and energy.
  • A Canada-China FTA could boost Canadian exports by $5.6 billion by 2030 and create 25,000 Canadian jobs.

Canada will have to make some serious concessions on its foreign investment policies and commit to building an energy pipeline to the coast of British Columbia before China will advance toward a free trade agreement (FTA) between the two countries.

A free trade deal would be China’s first with a North American country, and would supply China with what the country needs most, namely agricultural products and energy, according to Vice-Minister of Financial and Economic Affairs, Han Jun.

“We have a shortage of agricultural products. China is the biggest importer of agricultural products in the world and, also, we are one of the countries with the highest dependency on imported energy from other countries,” said Han in comments reported during his recent visit to the Canadian capital of Ottawa.

A free trade agreement “would be good for both China and Canada” and result in “a flooding of potash, agricultural products and energy products from Canada to the market of China,” he said.

According to the Canada-China Business Council, an FTA could boost Canadian exports by $5.6 billion by 2030 and create an additional 25,000 Canadian jobs.

The country currently sits on a massive trade imbalance with China. Total bilateral trade was C$63 billion in the first nine months of last year, with nearly C$49 billion of that generated by Chinese imports.

The possibility of any future FTA, however, rests on Ottawa’s willingness to remove its restrictions on Chinese state-owned investments in Canada’s oil and gas sector – a holdover from the former Conservative government.

In addition, Beijing’s desire for a Pacific pipeline may prove impossible to achieve as Prime Minister Justin’s Trudeau’s government effectively killed the controversial Northern Gateway oil pipeline when it banned all crude oil tanker traffic on the north coast of British Columbia.

The Northern Gateway project, opposed by several environmental groups and the government of British Columbia, would have created two parallel pipelines running for 731 miles, connecting an inland terminal in the province of Alberta’s oil sands region with a marine export terminal near Kitimat, British Columbia.

The provincial government has also refused to support the C$6.8 billion expansion of the Trans Mountain pipeline (TMPL), the only pipeline system in North America that transports both crude oil and refined products to the Pacific coast.

TMPL moves product from Edmonton, Alberta, to marketing terminals and refineries in the central British Columbia region, the Greater Vancouver area and the Puget Sound area in Washington state, as well as to other markets such as California, the U.S. Gulf Coast.