Key Takeaways:
- Prime Minister Mark Carney is visiting China to address diplomatic tensions and trade irritants, including Canada’s tariffs on Chinese electric vehicles and China’s retaliatory tariffs on agricultural products.
- Canada expects to make progress on these issues, but not a definitive resolution, during Carney’s four-day trip to Beijing.
- The visit marks a milestone in Canada-China relations and a big test for Carney, who must strategically decide what deals to make and how to manage the risks.
- The trip may impact talks with Washington to renew the Canada-U.S.-Mexico agreement (CUSMA) and could lead to new agreements on trade, petroleum, and liquefied natural gas (LNG).
- Experts warn that Canada must be cautious and realistic about China’s motives, and that the country needs to put in place protective safeguards to counter foreign interference.
Introduction to the Visit
Prime Minister Mark Carney is embarking on a significant diplomatic mission to China, aiming to move past years of tension and make progress on key trade issues. The visit, which marks the first by a Canadian prime minister since 2017, is seen as a crucial step in re-engaging with China and diversifying trade away from the United States. Carney’s trip is expected to focus on resolving the steep tariffs on Chinese electric vehicles and the retaliatory tariffs China imposed on Canadian agricultural products. China’s ambassador to Canada has indicated that if Canada scraps its EV tariffs, China would be prepared to drop its retaliatory tariffs.
Expectations and Risks
A Canadian official, speaking on condition of anonymity, stated that the government expects to make progress in Beijing, but not secure a "definitive elimination" of China’s "unfair" tariffs. Vina Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation of Canada, echoed this sentiment, saying that while progress is likely, a complete resolution is unlikely. Nadjibulla also warned that Carney’s visit is a major test, requiring the prime minister to strategically decide what deals to make and how to manage the risks. The visit may also impact talks with Washington to renew the Canada-U.S.-Mexico agreement (CUSMA), and Canada has other options, such as exploring the "European route" and imposing tariffs on specific EVs manufactured in China.
Trade and Economic Opportunities
The Canadian official noted that Carney is expected to meet with China’s President Xi Jinping and sign new agreements, including those related to trade, petroleum, and liquefied natural gas (LNG). Saskatchewan Premier Scott Moe, whose province has been affected by China’s tariffs on canola and other agricultural products, is expected to join Carney for part of the trip. Nadjibulla highlighted the opportunity for China to expand its already growing appetite for Canadian crude, particularly in light of U.S. military action in Venezuela, a major fossil fuel supplier for China. However, Dennis Molinaro, a former national security analyst, urged caution, stating that more should have been done to detect and counter foreign interference in Canada before Carney’s visit.
Foreign Interference and National Security
Molinaro emphasized the need for a foreign agency registry and foreign interference commissioner to be in place and ready to go, citing concerns about China’s proxies and diplomatic officials influencing the diaspora community. Michael Kovrig, who was detained in China for nearly three years, called the trip a positive development, saying that Canada needs open communication channels with Beijing. However, Kovrig also warned that Canada needs to be realistic about China’s motives and desire for access to the Canadian market, driven by its massive manufacturing overproduction and vicious competition in the domestic marketplace.
Conclusion and Next Steps
Carney’s visit to China marks a significant milestone in Canada-China relations, and its outcome will have implications for trade, national security, and diplomatic relations. As Carney heads to Qatar and then Switzerland for the World Economic Forum, Canada must be cautious and strategic in its approach to China, balancing the need for economic cooperation with the need to protect its national interests and counter foreign interference. The success of Carney’s visit will depend on his ability to navigate these complex issues and make progress on key trade irritants, while also ensuring that Canada’s engagement with China is guided by a clear understanding of China’s motives and a commitment to protecting Canadian values and interests.