Key Takeaways
- Canada and China have released a series of agreements aimed at boosting bilateral trade and investment, despite ongoing tariff disputes.
- The agreements cover a range of areas, including energy, tourism, lumber, animal health, and global trade.
- A new "economic and trade co-operation road map" outlines areas for potential collaboration and investment, but does not resolve the tariff dispute.
- The agreements signal a desire to revitalize institutional mechanisms and explore co-operation, but the political environment remains uncertain.
- The Canadian government has emphasized the importance of navigating talks with China while also managing concerns from the US.
Introduction to Canada-China Relations
The relationship between Canada and China has been strained in recent years, with ongoing tariff disputes and concerns over foreign investment. However, in a recent development, the two countries have released a series of agreements aimed at boosting bilateral trade and investment. The agreements, which were announced during a visit by Canadian Prime Minister Mark Carney to China, cover a range of areas, including energy, tourism, lumber, animal health, and global trade. According to Vina Nadjibulla, vice-president of the Asia Pacific Foundation, the agreements reflect an openness and desire to explore co-operation, but the political environment remains uncertain.
The Tariff Dispute
One of the biggest sticking points in the Canada-China trade relationship is the ongoing tariff dispute. Canada has imposed tariffs on Chinese electric vehicles, aluminum, and steel, which prompted Beijing to retaliate with duties on Canadian canola, seafood, and other agricultural products. Despite expectations that the tariff dispute might be resolved during Carney’s visit, no deal was reached. However, Nadjibulla noted that it is unusual for tariff talks to continue so late into a prime minister’s visit, suggesting that there may be movement on the issue in the future. Beijing has said it would drop the canola tariffs if Canada scraps its EV levy, but Ontario Premier Doug Ford has insisted that the tariffs protect domestic jobs in the auto sector.
Economic Co-operation
The agreements between Canada and China include an "economic and trade co-operation road map," which outlines areas for potential collaboration and investment. The document promises mutual investment in agriculture, energy, and consumer services and goods, and welcomes Canadian investment in aerospace and advanced manufacturing in China. However, it does not foresee Chinese investments in these sectors in Canada, reflecting Prime Minister Carney’s concerns about sensitive sectors. The document also vows to improve transparency for foreign investments in accordance with domestic legal frameworks, which could inform how Canada navigates talks on the continental trade deal while managing Washington’s concerns about China.
Energy Co-operation
The main economic document puts trade in energy, both clean and conventional, at the forefront of co-operation efforts. China and Canada have signed a memorandum on energy, which calls Canada "an important potential partner" for oil, liquefied natural gas, and petroleum imports. The document recognizes that conventional energy continues to play an important role in the energy transition, but also wants to explore opportunities in renewable energy co-operation, including offshore wind. Energy Minister Tim Hodgson noted that there is an appetite in China for more Canadian energy products, as it seeks reliable trading partners that don’t use energy for coercion.
Tourism and Cultural Exchange
The agreements between Canada and China also cover tourism and cultural exchange. The two countries have agreed to work on enhancing tourism, with a focus on promoting nature, sister cities, and events like the 2026 FIFA World Cup. A joint committee on cultural heritage will meet every two years to discuss projects such as co-operation between museums, theatres, foundations, and major cultural festivals. In August 2023, China lifted a pandemic ban on group tours to numerous countries, but kept its tourists effectively barred from group visits to Canada. The Chinese embassy in Ottawa said at the time that this measure was in response to the Trudeau government having "hyped up" the issue of foreign interference and an increase in anti-Asian discrimination.
Lumber and Forestry
British Columbia’s Forests Ministry has signed a memorandum of understanding with Beijing to boost research, development, and promotion of modern wood construction for creating green buildings in China. The five-year agreement, which is not legally binding, involves Natural Resources Canada and China’s housing and development ministry, with both sides pledging to explore practical approaches for green developments. The agreement is framed around both countries aiming to eventually become carbon neutral, and the B.C. government said it is a response to American tariffs.
Animal Health and Sanitary Oversight
One of the agreements touches on sanitary oversight of pet food and animal health, areas where Canada has long complained about trade irritants. Since February 2022, Canadian exports of heat-treated dry pet food with poultry have been halted due to China’s avian flu trade restrictions. Ottawa has been frustrated by Chinese officials’ limited willingness to engage on these files, which have stymied some agricultural exports. Canadian industry groups have argued that they want to sell more pet food to China, noting Australian exports have gone up as China’s growing middle class adopts more cats and dogs.
Global Trade and WTO Reforms
The main economics agreement between Canada and China says both countries support rules-based trade with the World Trade Organization at its core, and both support WTO reforms. However, Nadjibulla noted that this phrasing is largely symbolic, and that both sides understand the caveats and unspoken assumptions behind the statement. The document also notes China’s continued interest in joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, a major trade bloc spanning Canada, Australia, Peru, Japan, and Southeast Asia. However, Canada has long held that economies looking to join the bloc need to meet high standards on labor rights, environmental protection, and intellectual property, which could be difficult for China to satisfy.