No free trade deal with China? Much can be done until then
Liberal advisor says Canada needs to take a more proactive approach.
Dominic Barton, chairman of the Liberal government’s hand-picked council of economic advisers, spoke to The Canadian Press about the country’s opportunities to do more business in China – and with its emerging middle class – in the absence of a free trade agreement.
Prime Minister Justin Trudeau is getting ready to travel to China next week for a week-long visit that will include bilateral talks and the G20 leaders’ summit.
Although Trudeau has said he wants to expand trade with the world’s second-biggest economy, an actual free trade deal could still be years away amid concerns in Canada over human rights in China. For its part, China has repeatedly said it wants a free-trade agreement with Canada.
Barton, a sought-after expert who travels the globe helping presidents, governments and big corporations with economic strategy, supports a trade deal with China because it would give a “pretty significant” boost to Canadian exports.
But until then – if that day arrives – Canada has many options to help fuel its weak growth by taking a more proactive business approach with China, added Barton, the global managing director of consulting company McKinsey & Co.
“We need it,” Barton said of a free trade deal. “There’s obviously politics that have to be looked at and how Canadians feel…. But I think there’s a lot that could be done to prepare behind the scenes.”
Barton, a Canadian who spent years working in China and across Asia, recommended Canada get moving in a range of areas when it comes to China, its second-largest trading partner.
He said opportunities include everything from financial and health-care services to agri-food trade, from a co-ordinated effort to entice Chinese students to study at Canadian universities to finding new ways to help small and medium businesses tap into China’s vast market through e-commerce.
Barton also said Ottawa should proactively encourage China to make capital investments in Canada – an approach that would be more politically acceptable than wholesale takeovers of Canadian firms by Chinese state-owned enterprises, which have proved highly controversial in the past.
For example, he predicted food demands from China’s middle class would grow in the coming years, which could lead to the expansion of Canada’s rail network. Barton said China could invest capital in related equipment, such as rail cars.
“I think that part is not talked about a lot, but I actually think that part is more significant than the company-takeover-type operation,” said Barton, who suggested Canada create an agency dedicated to attracting foreign direct investment.
Barton explored more ideas:
• Work harder to attract Chinese students, who pay higher tuition rates, to Canadian universities. “Could we have a more-co-ordinated approach across the universities to say, ‘Let’s get more than our fair share’?”
• Help Canada’s small and medium firms access the Chinese market. For example, Barton said he hopes Canadian companies can one day plug in to China through e-commerce giant Alibaba, which has Canadian Michael Evans as its president.
• Promote Canada’s research and development. He said Canada could establish tech clusters, maybe around clean energy, that could bring in Chinese investment money or venture capital.
On balancing human rights concerns with business potential, Barton argued Canada would wield more influence in Beijing with closer economic links.
“I think it’s very difficult to admonish people with no relationship because it’s kind of like, ‘Why should I listen to you?’ ” he said.
“I think there’s a very natural role for Canada to play in helping guide, gently suggest, shift. But I think to do that you have to have a ticket to the game… it’s not about chucking our values out the side of the door just to do business.”
Trudeau told a news conference in Sudbury, Ont., that he intends to pursue business opportunities with China and voice his concerns during next week’s visit.
“What we want to do is set a very clear and constructive relationship with China that, yes, looks at the potential economic benefits of better trade relationships, while at the same time ensuring that our voice is heard clearly on issues of human rights, of labour rights, of democracy, of environmental stewardship,” he said.