Saint-Jacques Right Man for the Job

Ottawa’s choice of Guy Saint-Jacques as Canada’s next ambassador to China [http://www.theglobeandmail.com/news/politics/ottawa-taps-veteran-diplomat-for-ambassadors-role-in-china/article4509122] does not herald a radical new direction in Canada’s relationship with Beijing. That a veteran diplomat, Mandarin speaker and China hand will assume the post from David Mulroney [http://www.theglobeandmail.com/news/politics/harpers-ambassador-to-china-set-to-leave-post/article4170270] won’t transform Canada’s standing in the Middle Kingdom overnight.

After years of distinctly frosty relations with China, the Conservative government has undergone a dramatic about-face. The Global Financial Crisis served as the wake-up call. It found the U.S. and European economies in tatters and China powering ahead as the global economic engine. Mr. Harper came to the logical conclusion that Canada needed to diversify. This from a Prime Minister who when speaking about relations with China once said Canada would not sell out its values for the almighty dollar. [http://www.cbc.ca/news/world/story/2012/01/11/pol-harper-china-trip.html]

It has become clear to the government that China and the fast-growing emerging markets in the rest of Asia are a logical target destination for Canada to concentrate its trade efforts. China recently overtook Great Britain to become Canada’s second-largest trading partner. Canadian exports to China rose by 27 per cent to $17-billion (U.S.) last year from 2010. China’s exports to Canada climbed 8 per cent to $48.6-billion.

Canada’s reliance on the U.S. has declined. America once accounted for more than 80 per cent of Canada’s trade but is now about 68 per cent.

China, India and much of the rest of Asia are returning to their historical position as the drivers of global GDP growth [http://www.economist.com/node/16834943] .

This means that growth in the developed economies of the U.S. and Europe will be much slower. While Ottawa must nurture its trade with these regions (and is currently negotiation a potential free-trade agreement with the EU) it must break new ground in Asia. This entails travel by high-ranking officials for face-to-face meetings. Long-distance diplomacy does not work well in China or much of the rest of Asia.

While trade between Canada and China has increased, Canada’s place among China’s trading partners has not. Canada does not make the list of China’s top ten trading partners and the percentage of China’s trade that Canada accounts for remains relatively small.

Canada still does not have a single free trade agreement with any country in Asia. Early-stage discussions with countries including India and Japan are underway, but a firm deal will take years to hammer out.

When Mr. Harper last visited Beijing, China’s Premier Wen Jiabao appeared to offer Canada the chance to begin talks on a potential free trade agreement. China has only one free trade deal with a western country – New Zealand – but is close to finalizing a pact with Australia.

Canada has yet to respond. It is still trying to finalize a Canada-China Foreign Investment Promotion and Protection Agreement that Mr. Harper announced in February. When asked about the delay, Foreign Affairs Minister John Baird recently suggested that translation and legal issues were to blame.

Ottawa clearly has a long way to go if China and the rest of Asia are to become more important trading partners and a destination for Canadian goods and services. Mr. Harper wants the Northern Gateway pipeline completed so China will be an alternative market to the U.S. as a customer for production from the Alberta oil sands. At the same time, the government faces pressure to closely scrutinize Chinese state-controlled energy company CNOOC Ltd.’s $15.1-billion takeover offer for Canada’s Nexen Inc.

– Globe and Mail