Trudeau has come under fire for advancements of trade with China.
NAFTA (North American Free Trade Agreement) is at a critical stage. The U.S.A, which is coincidentally the most powerful negotiator in NAFTA, wants to break away from it or at least make major amendments to the deal. This poses a huge threat for Canada in particular. 20% of Canada’s GDP comes from goods exported to the U.S.A. (1) This increased dependency has been taken in a negative light by the current Liberal government who are trying to diminish Canada’s reliance on the U.S.A. They are doing so by looking towards the other major powerhouse in world trade, China.
The implications of this can already be seen. Chinese construction firm CCCI has already made a bid to buy Canadian construction firm Aecon for $1.5 billion. (2) Prime Minister Trudeau has said that “he welcomes the prospect of investment” although the security concerns around the deal will be thoroughly assessed and rigorously solved.(3) This decision by the Liberal government has been severely criticized by their Conservative counterparts. James Moore, a former member of the Canadian NAFTA council, has explicitly stated that free trade with China would give President Trump more “ammunition” to badmouth Canada. He went on to say that cheap Chinese goods dumped into Canada would make their way to the U.S.A and would further deprecate their manufacturing sector.(4) This doesn’t have a positive aftermath on the Canada-US relationship.
NAFTA meetings have Canada, US and Mexico at the forefront but are very rarely able to achieve results.
Although the risk of damaging trading terms with the U.S cannot be denied, the prospect of diversification in trade is certainly a lucrative one in the 21st century. In an increasingly globalized world, dependence on a few countries seems to be naive at the least. Diversification in trade makes countries less likely to get affected by fluctuations in price, changes in political atmosphere and domestic issues of other countries. These are the arguments highlighted by Liberals and many other academics like Paul Evans, Professor at the School of Public Policy and Global Affairs at UBC. He claims that currently Canada is being held “hostage” by the United States when it comes to negotiating about NAFTA since the US is well aware of its significance in Canadian trade. Trade deals with other countries would inevitably strengthen Canada’s position in NAFTA and improve its terms of trade with the US as well. (5)
The “correct” decision to make in this scenario is one that is affected largely by political stance and economic thought. However, one thing is for certain. In the short run Canada will have to bear hiccups and losses to re-establish its trading position if it chooses to move away from the US. It will then have to use its new trading position to re-negotiate deals more suited to its goals. This requires the use of unparalleled democracy and charisma. Something PM Trudeau has tried his best to show he possesses.
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Works Cited:
(1) USTR, https://ustr.gov/countries-regions/americas/canada
(2) The Canadian Press, Chinese construction firm CCCI to buy Canadian Aeconn for $1.5B, http://www.cbc.ca/news/business/aecon-ccci-takeover-1.4372766
(3) Reuters Staff, Canadian review of China bid for Aecon to look at security: PM, https://ca.reuters.com/article/businessNews/idCAKBN1CW2S4-OCABS
(4) Katie Simpson, Trudeau dismisses concerns free trade with China will hurt Canada-U.S. relationship, http://www.cbc.ca/news/canada/calgary/china-aecon-purchase-warnings-trudeau-liberals-1.4377577
(5) Canadian Press, Chinese bid for Calgary’s Aecon construction comes with warnings for Trudeau Liberals, http://www.cbc.ca/news/politics/james-moore-china-nafta-plan-1.4374026