Donald Trump has vowed dramatic change to the U.S. position on the world stage, threatening new antagonism with China even as he pledges to scrap the Trans-Pacific Partnership, a massive trade deal that promised to drive down tariffs and impose a Western order around the Pacific rim.
It is a moment of upheaval, trade enthusiasts say, that Canada should seize by abandoning its qualms and embracing China in a way it has never done, as Beijing positions itself for a more prominent position of global leadership.
“The whole world is wondering what Mr. Trump is going to look like,” in terms of the policies and priorities he will pursue, said Derek Burney, former chief of staff to Brian Mulroney and ex-ambassador to the United States
. “Well, we don’t have to wait. We could be moving right now to forge a closer relationship with China.”
Prime Minister Justin Trudeau has already sought warmer ties with Beijing and, in September, placed Canada on a path toward a free-trade deal with China, with the two sides agreeing to exploratory talks. But that can be a slow process. It took Australia nine years and 21 rounds of negotiations to conclude a free-trade agreement with China.
If the Trudeau government pursues it strongly enough, Mr. Burney believes a Canadian deal can be done in two years, by cribbing from Canada’s approach three decades ago in negotiating the 1987 free-trade agreement with the U.S. – an approach that included a special cabinet committee dedicated to concluding a deal.
Critics say Canada should take Mr. Trump’s rise as a cautionary tale about the dangers of forging ahead with international deals that can damage local communities.
But Mr. Trump’s election has suddenly thrown into question the long-established leadership role of the U.S. in trade and other matters, creating an opening for China to gain new influence in keeping global goods moving – a possibility the country has embraced.
“We have been compelled to take the lead in the economic globalization effort,” Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, added at a Caixin Media summit earlier this month. “If we don’t, China’s interests will be hurt tremendously.”
China has already claimed renewed interest in its own Regional Comprehensive Economic Partnership, a less-ambitious regional trade deal that it leads, and local experts say it is prepared to take a larger role elsewhere, too.
“The globalization infrastructure like the World Bank, IMF or WTO, G7 or G20 – they should all be maintained and sustained and also improved,” said Wang Huiyao, president of the Centre for China and Globalization, a Chinese think tank.
If the U.S. “has backed off, we have to have other countries to support those systems.” Otherwise, he says, “the world will fall apart.”
Canada, of course, need not only look to Beijing. A largely completed free-trade deal with Japan is gathering dust. Ottawa could use the language of the Trans-Pacific Partnership, which Mr. Trump wants to toss out, as the basis to speed talks with Southeast Asian nations.
And critics point to Mr. Trump’s rise – and the surge of nationalism that propelled the Brexit vote in Britain and rising populist movements across the world – as new reason to question exuberance for trade. Canada “is arguably better off without” the TPP, said Scott Sinclair, a senior research fellow with the Canadian Centre for Policy Alternatives.
New scholarship adds grounds for skepticism. In “The China shock,” a recent academic article, an international team of researchers showed that the extraordinary rise of Chinese exports since 2001 eradicated millions of U.S. jobs with only “extremely modest offsetting employment.” In other words, they found, after the decade of frenzied trade that followed China’s accession to the World Trade Organization, “U.S. net welfare gains are close to zero.”
It suggests the need for “a more balanced view about the benefits and pitfalls of free trade,” said Victor Shih, a China scholar at the School of Global Policy and Strategy at the University of California, San Diego.
Another point of caution lies in China today, which has pushed a plan called Made in China 2025 to massively grow domestic capacity in robots, aeronautical equipment, rail and advanced medical products, among others – some of which overlap with Canada’s areas of expertise.
“It may not make so much sense to rush headlong into lowering trade barriers with China, because across a large number of sectors the Chinese government is heavily subsidizing industrial goods producers,” Prof. Shih said.
“Politicians and voters really have to think about this carefully.”
Canada has tensions to resolve with China, too, including around the steel industry. “Trade dumping. This is a serious issue in Canada,” said NDP international trade critic Tracey Ramsey. “Any trade deal that we’re going to enter, we need to take our time.”
There are other realities, as well. If Mr. Trump also makes good on his promise to re-examine NAFTA, Canada’s trade negotiators may be consumed by keeping trucks moving to the U.S.
But it’s important for Ottawa to maintain close ties with Beijing, so it can remain “the voice of reason,” said Guy Saint-Jacques, Canada’s recently retired ambassador to China – particularly if the U.S. under Mr. Trump shies from calling on China to uphold international standards of conduct.
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With Trump presidency, some see chance for Canada to embrace China
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