How to Trade With a Dragon

How to Trade With a Dragon

Momentum to ratify the Trans-Pacific Partnership (TPP) froze thanks to the tone and tenor of President Trump. An “America first” approach driving a renegotiation of the North American Free Trade Agreement and the recent ratification of the Canada-European Union Comprehensive Economic and Trade Agreement are at the forefront.

The appointment of a new Canadian ambassador to China (the Honourable John McCallum) and the news that Canada was amongst the group of 12 TPP countries (along with China and South Korea) that attended a March 2017 Chile Pacific trade meeting have observers speculating that our Asian international relationship may receive heightened attention. The possibilities include a bilateral trade agreement with China.

Canada’s Trade Priorities with China

Ms. Cyndee Todgham Cherniak an international trade lawyer with LexSage suggests that significant issues in any Canada-China trade negotiations would likely include market access for Canadian goods in China. Sectors of interest include natural resources, softwood lumber, oil and gas, inputs used to make steel. Market access for services such insurance, banking, engineering, law firms, telecommunications, government procurement would also be necessary.

China’s International Trade and Investment Priorities

Philip Sutter, Director, Strategic Analysis, Global Trade Management, Livingston International, stated, “Canada and China share a mutual interest in multi-lateral or bi-lateral trade agreements. China is also concerned with being a full card carrying member of the world trading community”.

Trading successfully with a dragon also requires insight into China’s other international priorities.

Sutter observed that China was leading the pan-Asian Regional Comprehensive Economic Partnership (RCEP) that was conceived as a counterweight to the Trans-Pacific Partnership. Sutter noted that international trade experts will be watching closely to see of this initiative be opened to others to join now that President Trump has expressed a lack of support for the TPP.

Chinese Premier Li Keqiang in March 2017 address indicated that China would continue to open its markets to the world through the continuation of the Belt and Road Initiative. Li also said China will speed up the development of overland corridors and maritime hubs and will simplify customs clearance procedures.

For Canadian exporters, a bi-lateral trade agreement with China could help offset both NAFTA-related trade challenges and address China’s One Belt, One Road policy of building stronger economic ties with Euro-Asian and African countries since these developments have the potential to influence Canada’s maritime trade. If China focuses more on Asia and the Indo-Pacific basin for its commodity needs, this could reduce demand Canadian exports.

Trade and Investment with Asia: Present Tense, Future Friendly?

Moving beyond the present tense to a future that is friendly to increasing international commerce and investment requires both a strategic and practical perspective. To overcome the challenges of moving goods to markets requires focusing our efforts on identifying areas that would allow each party in our international supply chains to thrive.

The lesson from Brexit and the American election is that a failure to tangibly demonstrate the benefits of international commerce has the possibility to lead to an outcome that is detrimental to maritime of a small open economy like Canada. Recognizing that Canada is at the early stages of a possible new trade and investment relationship with China, shippers, and transport service providers have an important voice to contribute to the discussions. Thus, it is incumbent on everyone to learn how to trade with an ASEAN, or Chinese dragon.

Downloald the full article that appeared in the June 2017 issues of BC Shipping News.


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