Former Canadian diplomat Michael Kovrig is sounding the alarm about Canada searching for deeper trade ties with China within the face of growing tensions and uncertainty with the U.S., warning the pivot carries significant risks to Canada’s economic security.
Speaking Tuesday on the Way forward for Business Summit in Ottawa, Kovrig — a longtime China analyst who was arbitrarily detained by Beijing for greater than 1,000 days after Canada detained Huawei CFO Meng Wanzhou — said Ottawa’s latest China strategy is a “dangerous play” that won’t be viewed kindly by Washington and will threaten trade talks.
He pointed to U.S. Commerce Secretary Howard Lutnick’s criticism last week of Prime Minister Mark Carney’s cope with China, announced early this 12 months, which included importing a limited variety of Chinese electric vehicles.
“The essential problem is that China isn’t an answer to most of our problems with the U.S.,” Kovrig said on the Canadian Chamber of Commerce-hosted event.
“Doing deals with China is perceived in the US as Canada being an unreliable ally, right? We might even see it as attempting to have a China card that we will play — you recognize, ‘Look, I got options over here, I can go to my friends in Beijing.’ That’s not going to go well in Washington.”
Kovrig noted the U.S. still stays Canada’s largest trading partner, representing 75 per cent of Canadian exports. China, in contrast, represents about 4 per cent of exports.
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The cope with China goals to spice up Canadian exports by 50 per cent by 2030.
Kovrig said a key difference between the 2 countries is that China is currently “in selling mode, not in buying mode,” and is searching for to make international markets reliant on its cheaper exports.
While Canada has only committed to purchasing as much as 49,000 Chinese EVs, Kovrig said Beijing may seek to extend that quota using economic and diplomatic pressure points prefer it has up to now.
He warned Ottawa to not be driven by “short-term considerations” like consumer demand for inexpensive electric vehicles that may lead to “the long-term strategic implications that path dependence can put us on.”
“Should you’re living in a small town and you’ve gotten just a neighborhood Essential Street with a ironmongery store and so forth, sure, wouldn’t or not it’s nice to have a Walmart move in and give you every kind of cheaper homewares and stuff?” Kovrig said.
“That’s going to be great until … they are available in with super low prices and bankrupt all of your local shops, after which Essential Street looks like a dead zone and all that’s left is Walmart, after which there’s no competition they usually can ratchet up the costs. Chinese makers will give you the option to do the identical thing, and it is going to include the price of geopolitical leverage that the state can weaponize.”
Kovrig said the export strategy mirrors how China has already made Canadian sectors like canola, pork and seafood “excessively” depending on the Chinese marketplace, he added.
“If China cuts off that trade, the people in those sectors face an economic catastrophe and are available running to Ottawa and are effectively attempting to lobby our government to do what the Chinese Communist Party wants it to do,” Kovrig said.
“That’s a strategic vulnerability for the country.”
Canada’s cope with China included reducing tariffs on Canadian canola seed to fifteen per cent and eliminating “anti-discrimination” tariffs on canola meal, lobsters, peas and crabs, while increasing imports of other Canadian agricultural goods.
Kovrig said he doesn’t wish to see Canada cut off trade or engagement with China entirely — “it’s not North Korea,” he quipped — but that any agreement must be “tightly controlled and restricted, and potentially reversible if we discover that it’s being abused.”
“It does mean that we want to consider carefully and strategically about how we trade or invest with it,” he said.
Kovrig gave similar warnings in testimony last week to the House of Commons committee on science and research, which is studying the potential implications of Ottawa’s Chinese EV deal.
Several other witnesses on the committee last week and Monday echoed Kovrig, saying the deal risks negotiations searching for to renew the Canada-U.S.-Mexico Agreement on free trade.
The Liberal government has downplayed concerns concerning the deal and the general efforts to normalize relations with China.
Finance Minister François-Philippe Champagne said earlier this month after travelling to Beijing to satisfy with Chinese counterparts that Canada desires to resolve trade irritants between the 2 countries to be able to expand the trading relationship.
“Our trading relationship is around $120 billion. Should you have a look at the scale of the Canadian economy and the scale of the Chinese economy, it ought to be much higher than that,” Champagne said.
“We are going to have to proceed to push to remove these trade irritants in order that the broader vision of accelerating the trade between our two countries is achieved.”
—With files from The Canadian Press
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