Emerson floats Free-trade prospect
Globe and Mail, Toronto
Emerson floats Free-trade prospect
Frosty relations are a barrier to talks
By Steven Chase
29 May 2007
OTTAWA — Canada’s ultimate goal in its deepening economic relations with China will be a free-trade deal with the Asian juggernaut, International Trade Minister David Emerson said yesterday.
"I just would say flat out that free trade is where Canada’s bread and butter has to be," Mr. Emerson said an interview after meeting with Chinese Commerce Minister Bo Xilai. "The question is, what is the path you follow to get there."
Mr. Emerson said he and Mr. Bo agreed to try to speed up talks on a foreign investment promotion and protection agreement (FIPA) - a deal that safeguards investor rights in both countries and is viewed as a stepping stone to a full-fledged free-trade accord.
Beyond that, he said, "at some point there will be a need for, I expect, a bilateral free trade type of negotiation."
He said how far apart China and Canada are on the FIPA will depend on how soon they can overcome differences on dispute resolution.
One obstacle to free-trade talks with China would be the Harper government’s chilly relationship with Beijing, where Conservatives, including the Prime Minister, have openly chided the Asian nation on human rights abuses.
But Mr. Emerson said he thinks Ottawa-Beijing relations are improving, especially after a string of Harper cabinet ministers, including Finance Minister Jim Flaherty, toured China in recent months.
"All of that is starting to create a critical mass, if you like, at the second [political] level that has been helpful," Mr. Emerson said.
He said both Ottawa and the Chinese believe they’ve failed to build strong enough ties.
"They, like we, believe that we haven’t done enough with the relationship," Mr. Emerson said.
"Canada has had a position in Chinese hearts and minds that has really given us a privileged opportunity over the years - and to be candid, we have not taken advantage of that privileged opportunity."
Canada’s relationship with Communist China dates back to the 1930s, when Canadian Dr. Norman Bethune helped Communist forces in their struggle against Japanese occupiers.
Mr. Emerson said barriers to global trade are not so much about just stripping away trade tariffs as about harmonizing regulations and investment rules so that companies can build so-called global supply chains where they buy materials in one country and manufacture products in another.
He did not offer a schedule for when China and Canada might enter free-trade talks but said bilateral negotiations could end up being about something other than dropping tariff rates.
Bilateral talks might ultimately focus on other sorts of trade liberalization, Mr. Emerson said, especially if multicountry talks such as World Trade Organization negotiations end up lowering global or regional tariffs first.
"But by the time we get there it may not be nominal tariffs you are focusing on.
"It may be other impediments where you have to get dirtier and deeper," Mr. Emerson said.
China is on track, under some analysts’ forecasts, to become the world’s largest economy by 2025 and has become Canada’s second-largest trading partner.
Canadian merchandise exports to China have more than doubled between 2000 and 2006, and the Asian nation is now Canada’s fourth-largest export market.
