On December 3, 2020, the Wall Street Journal and Reuters reported that the US Department of Justice was negotiating a deferred prosecution agreement with the legal team representing Meng Wanzhou, the former Huawei CEO currently stuck in an extradition process from Canada to the United States. (McNish, et al., 2020)
Pundits and observers were quick to point out the significance of this latest development. Should the deal go through, not only would the Trudeau government’s approach of sticking with its fastidious and deliberate extradition process be largely vindicated, new hope will be on the horizons that Michael Spavor and Michael Kovrig, the two Canadians detained and accused of espionage in China merely days after Meng’s arrest in Vancouver, can finally come home to Canada after two years of inhumane treatment. (McNish, et al., 2020)
Nonetheless, there is no guarantee that Spavor and Kovrig would be released. And even if they were to be released, it would be too early and naïve to ponder improving relationship between Canada and China beyond what they enjoyed before the high profile legal cases and diplomatic altercations. This incident has done critical damage to the public perception of China in Canada, and that deteriorating image joins the intrinsic ideological divide, longstanding disputes in a long list of grievances around existing asymmetric integration that argue in favour of gradual diversification from the lopsided bilateral relationship that leaves Canada in a disadvantage with few options of expeditious and potent countermeasures.
Positive engagement with an asterisk: Canada’s China strategy before Meng
Trade is the core drive behind any Canadian attempts to advance its relationship with China. After decades of open hostility and non-engagement after the establishment of the Communist regime in 1949 and the Korean War, the Diefenbaker government launched its “wheat diplomacy” with China in the 1960s, setting the stage for the eventual rapprochement by Prime Minister Pierre Trudeau in 1970. (Burton, 2017, p. 32-35)
Over the course of the next 50 years, successive Canadians governments have largely stayed consistent on a China policy that emphasized positive engagement, despite intervals like the 1989 Tiananmen Incident and other small diplomatic disputes. The engagement strategy is based upon two major assumptions: First, further engagement with China, a major market and economic powerhouse, would benefit the Canadian economy by opening up China’s trade potential and help Canada diversify from its reliance on the United States. (Burton, 2017, p. 36) Second, as China’s trade relations improve with the developed liberal democracies, Canada’s warming relationship with China will have a positive impact on Chinese government policies and social changes that nudge China closer to Canada’s liberal democratic values. (Lefrancois, 2015) Different governments have shown different levels of willingness to engage in direct dialogue over China’s human rights practices, often mindful of changing international context, Canadian public opinion and pushbacks from Chinese diplomats, but Canadian government and diplomats had largely circumvented direct provocation since the 1990s. (Burton, 2017, p. 36-45)
The same trend persisted during the early days of the current Liberal government. Expanding Canada’s trade relationship with China was a top agenda item when Justin Trudeau was elected in 2015. The Trudeau government had high hopes for expanding Canada’s trade relationship with China on the heels of the Harper-era Canada China Foreign Investment Protection Agreement and a few productive trade talk with the Beijing since Trudeau took office in 2015. In 2016, both China and Canada made some diplomatic concessions as friendly gestures in preparation for the free trade agreement negotiations, including Canada agreeing to exploring a bilateral extradition agreement with China, and China dropping a trade dispute over Canadian canola imports worth CA$2 billion a year. Coincidentally, days before the productive 2016 talks, Kevin Garratt, a Canadian detained in China on charges of espionage, was deported back to Canada, a clear move of “hostage diplomacy” uncannily foreshadowing the situations of Michael Spavor and Michael Kovrig.
Yet, when Trudeau visited Beijing in 2017 to kick off the official talks on the prospective free trade agreement, nothing went as planned. Confident as ever in Canada’s proposal, Trudeau predicated the free trade agreement on the drafting of three chapters that would champion progressive values, entailing principles and regulations around labour standards, gender equality and environmental protection. Seeing no incentive to let Ottawa set the prerequisites that China has never granted in any other bilateral trade agreements, the proposal was immediately dismissed by Li Keqiang, the Chinese Premier and Trudeau’s counterpart, who cut the meeting short. (Vanderklippe, 2017)
The entire event is emblematic of the economic and national security risks associated with the larger bilateral relationship between China and Canada. Because of China’s disproportionately outsized state capacity and economic leverage, Canada’s pursuit of further commercial opportunities with China can only be achieved with inordinate concessions from Canada that it may find particularly hard to swallow. Some examples of such concessions may include removal of capital investment restrictions, allowing sensitive technology exports, silencing Canadian government’s criticism of Chinese domestic affairs, or even an extradition treaty with a jurisdiction that executes more death row felons than any other jurisdiction, and does not have an independent judiciary or robust protections for civil rights and liberties. (Burton, 2019, p. 6) and China, under the leadership of Xi Jinping, is not shy about wielding its economic leverages to peddle political influences that suit China’s own political agenda, making China a capricious and undependable trade partner that Canada is already dubiously reliant on.
Asymmetric reliance: a major risk
Since establishing official diplomatic relationship 50 years ago, both China and the bilateral relationship went under major changes. Nationwide poverty is now history, as China stands as the world’s largest economy in terms of GDP at purchasing power parity. (Gowans, 2017, p. 1-2) China alone now accounts for 40% of Asia’s entire GDP and 33% of entire global economic growth in 2018. (Agnew, et al., 2018) China massive economy and expanding trade relationship with Canada made it Canada’s second largest merchandise trade partner behind the United States accounting for 12.1% of Canadian imports and 4.1% of Canadian exports as of 2016. (Gowans, 2017, p. 2)The Foreign Investment Protection Agreement of 2014, the only bilateral trade agreement between China and Canada as of now, propelled both Canadian investments in China and Chinese investments in Canada to a steeper growth as well since 2014. (Agnew, et al., 2018)
While Canada’s reliance on China jumped over the decades, the same story of comparable gravitas cannot be said about Canada’s place in Chinese foreign trade. In fact, both in terms of scale and strategic importance, Canada’s status to China is merely a nicety rather than a necessity. In 2018, Canada was only China’s 16th largest trading partner. The total value of trade was merely $51.7 billion, dwarfed by China’s other major trade partners’ triple-digit figures. (National Bureau of Statistics of China, 2018)
The categories of goods traded between the two nations also speak to China’s advantage in the relationship. Two largest Chinese imports to Canada are electrical products/electronics and machinery/equipment, both hard to substitute and indispensable to Canadian domestic production. (Gowans, 2017, p. 4) Two largest Canadian exports to China are wood pulp and canola seeds. (Gowans, 2017, p. 3) Both products are easily obtainable from China’s other trading partners. In fact, China has blocked two major Canadian canola exporters since March 2019 and all meat product import later citing alleged food safety issues without further explanation, and such action is more logically explained as a whimsical retaliation for Meng’s arrest in Canada. (Burton, 2019, p. 5-6)
Canada’s strategic implications for China are also complicated, giving Canada few strings to pull to compensate for the trade imbalance after years of unfulfilled promises of Canada becoming major energy and natural resources exporters to China. (Jiang, 2005, p.2) First, the most immediate implications seem limited to multilateral engagement and negotiations when it comes to trade deals and international organizations. Canada, the longstanding middle power in global diplomacy, a core member of the traditional western alliance and a beacon for liberal democracy and multiculturalism, does still convey gravitas and persuasiveness. But once taking into account China’s recent diplomatic triumphs like the Asian Infrastructure Investment Bank and the Regional Comprehensive Economic Partnership, Canada’s international clout is no match for how much China’s status has been elevated in multilateral relations.
In certain critical strategic areas for China like energy security and involvement in the Artic, there is also potential for Canada to gain more leverage even though the odds are just as mixed. First, it is hard to tell if Canada will matter at all to China’s energy security. The vast majority of Canada’s crude oil export goes to the United States due to limited pipeline capacity for overseas exports to Asia. Canada’s crude export to China is effectively inconsequential in its current form and not price competitive against the exports from Russia and Saudi Arabia due to higher shipping costs and higher costs processing oil sand and diluted bitumen. (Jiang, 2005, p.2-4)
Second, Canada looms large over China’s Arctic strategy, which delineates how it plans to invest in and take advantage of emerging trade routes and rare earth minerals within the Arctic Circle. Canada’s cooperation is a must for China to achieve its objective of using the Northwest Passage as an alternative to Panama and Suez Canal trade routes, enabling major savings for maritime trade. This opportunity for Canada has not come to fruition, as the Northwest Passage remains unready and untested, and Canada’s territorial claim over the surrounding waters around the Canadian Arctic Archipelago is still disputed. (Lackenbauer, et al., 2017, p.77-80)
The asymmetrical reliance as of now poses limited ramifications for China should it choose to stick with its unfair trade practices and arbitrarily alter aspects of its trade relationship with Canada. Even before the diplomatic relationship worsened in 2018, the Canadian government had a litany of complaints against Chinese non-tariff protectionist policies, unfair subsidization for Chinese SOEs, intellectual property theft, stringent foreign direct investment restrictions and its sustained efforts in commercial and technological espionage, which Canada blames for the wide trade deficit. (Burton, 2019, p. 3-7) And as the diplomatic animosity on Meng’s arrest escalated, China swiftly retaliated by limiting canola seed and meat product import from Canada in a seemingly arbitrary and nonchalant manner. Canada has not yet responded effectively beyond a hardening rhetoric on the issues of Hong Kong and Uighur re-education in Xinjiang. (Burton, 2019, p. 5-6)
In summary, China presented an appealing opportunity for the Canadian economy and its long term goal of diversifying from the United States since the Pierre Trudeau era. But that opportunity was predicated on an ideal international political and social context, and the two countries are on equal footing regarding trade regulations. Canada’s reliance on its relationship with China, and China’s ample room for capricious policy maneuvers are a recipe for major economic disturbances for Canada if the two countries are on a collision course.
Misaligned positions: from small grievances to outright acrimony
Depending on who you ask, pundits would either cast the escalating dispute over Meng’s arrest in Canada an unfortunate one-time disturbance to a mutually beneficial relationship between the Countries, or regard it as a long overdue corollary, symptomatic of a relationship riddled with grievances. This debate is fundamentally derivative from a larger debate over China foreign policy direction and intention. Those who see the present predicament around Meng as nothing more than an coincidental bump have faith in China’s aspiration to fit in the status quo of international relations, while those seeing the Meng’s incident as inevitable tend to see China’s ultimate motivation being overriding the existing international order, and peddle its own political, economic and military influence like a rising hegemon. (MacDonald, 2015)
As the academic debate on how these international relations theories apply to an objectively more assertive China under Xi Jinping’s rule, Canada has apparently already made up its mind. Public opinion was not in favour of closer economic ties with China in the first place, and the Meng controversy has swayed the public further towards an unfavourable or even openly hostile image. Since 2009, percentage of Canadians viewing China in a positive light has never exceeded 50%. The favourability rating dipped to an interim low of 29% in 2015 after the signing of FIPA, briefly recovered to 48% when the Trudeau government put the campaign for a China-Canada FTA into high gear, and plummeted precipitously after the efforts proved futile in the same year, the diplomatic dispute over Meng erupted in late 2018, and the Novel Coronavirus Pandemic of 2020. As of May 2020, only 14% of Canadians have a favourable view of China, according to the Angus Reid Institute. (Angus Reid Institute, 2020)
When asked about the specifics, Canadians exhibited a clear disgust for China’s human rights records and an unwillingness to budge on Canadian values or national security concerns to extract more commercial interests. In 2017, 88% of Canadians are uncomfortable with Chinese SOEs investing extensively in Canada, while 81% were uncomfortable allowing Chinese SOEs to initiate acquisitions of Canadian firms without national security reviews. (Agnew, et al., 2018) In 2020, 82% of Canadians now agree that Canada should reduce its reliance on trade with China and diversify its portfolios. A sizeable minority (38%) even support completely severing trade ties with China, according to Ipsos. Three out of four Canadians, a resounding majority, also agree that Canada should take a more hardline approach to defend civil liberties in Hong Kong against Beijing’s encroachment. (Bricker, 2020)
The political elite class is also slowly catching up to the sea change in public opinion and the repeated disillusionment that, contrary to early predictions, Canada’s worsening relationship with China after the disastrous 2017 meeting and the ensuing plunge following Meng’s arrest were indicative that the two countries are too far apart in terms of visions and values, so much so that to stay in China’s good graces is likely going to break Canada’s bottom line.
The latest manifestation of this sudden cross-party epiphany took place when Michael Chong, Member of Parliament from Ontario and Conservative Critic for Foreign Affairs, tabled a motion in the House of Commons demanding the Liberal government bring a swift conclusion to the government’s equivocation on whether they plan to ban Huawei’s entry into Canadian telecommunications or not, and present a plan to the House of Commons around a potential legislation that would more effectively combat Chinese United Front and espionage activities that are designed to infiltrate political and civic institutions through cooptation and intimidation of Chinese Canadians. The legislation would most likely be modeled after Australia’s Foreign Interference and Espionage Act of 2018. (ourcommons.ca, 2020)
The following floor debate on the motion opened the floodgate for catharsis as members of both the government and the opposition piled on with condemnations. François-Phillipe Champagne, the Minister of Foreign Affairs, swiftly reiterated the government’s condemnations of developments in Xinjiang, Hong Kong and the arbitrary detention of the two Michaels. Peter Julian, the NDP House Leader, was visibly indignant about China’s role in fueling Canada’s fentanyl crisis as fentanyl’s number 1 country of origin. Green Party Caucus Leader Elizabeth May lambasted China-Canada FIPA, accusing the former Harper government of selling out Canadian sovereignty to Chinese commercial interests. Other members kept adding every accusation ever reported in Canadian media, from alleged Chinese involvement in the downfall of Nortel to assist Huawei, to personal stories from Chinese Canadian constituents under constant harassment from Chinese United Front agents and inaction from the RCMP, to China’s botched response to the early discoveries of the novel coronavirus. (openparliament.ca, 2020) The motion passed with opposition solidarity and five Liberal members, and the government mainly dissented on a technical disagreement. (ourcommons.ca, 2020)
Some international relations experts have made the point that negative opinions about China in Canada are often a product of lack of information. And should the Canadian government engage more with the Chinese society on every level possible, and should Canadians learn more about China through these interactions, China’s image problems may just be mitigated. (Dobson & Evans, 2015) The opposite happened. China’s “assertive” behaviours towards Canada has dashed the remaining good will it received in Canada, and its efforts to reassure Canada that it harbours no ill will towards its ideological rivals have failed spectacularly, not that China is particularly concerned about Canada’s changing attitudes. The proposition of establishing a rules based framework to engage with China has been thrown into a disarray, as it is futile to negotiate mechanisms of accountability when the other country arrests Canadians and impulsively shuts down imports of major commodities from Canada against WTO rules just because it wants to and it can.
Conclusion
It is truly unfortunate that Canada-China relationship reached its lowest point since 1989 during the 50thanniversary of Canada-China rapprochement. And it is especially regrettable that the major opportunities for deeper relations that seemed so close to fruition just a few years ago seem like a distant dream. François-Phillipe Champaign, the Foreign Minister, has announced to the media that the Liberal government has abandoned its hopes for a trade agreement with China anytime in the near future. (Reuters, 2020)
But perhaps instead of practicing cynicism, we treat this as a wakeup call and a moment for self-reflection. Perhaps, in light of all the injustices that Canada has tolerated, the $40 billion trade deficit that Canada has accepted, and the concessions that Canada has swallowed, it is time that Canada to sort out its priorities and that confront the reality that an assertive China holds most the cards, and Canada, disadvantageous as ever, is bound to play by China’s rules and cave to China’s authoritarian demands when pursuing a closer relationship if official Chinese hegemonic policies do not change.
Works Cited
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