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China open to historic free-trade deal with Canada under

certain provisos
Robert Fife - OTTAWA BUREAU CHIEF
The Globe and Mail
Published Thursday, Jan. 14, 2016 11:24PM EST
Last updated Friday, Jan. 15, 2016 6:03AM EST

China wants to forge a historic free-trade deal with Canada, but a senior Chinese official said this will
require Canadian concessions on investment restrictions and a commitment to build an energy pipeline to
the coast.
China sent its Vice-Minister of Financial and Economic Affairs to Ottawa this week for discussions with
senior bureaucrats about the prospect of negotiating its first free-trade deal with any North American
country.

China trade surprise brings relief (Reuters)

The visit comes months before the Prime Minister is expected to lead a trade mission to China and India,
with a particular focus on opening wide-ranging free-trade talks with Beijing.
During the term of Prime Minister Justin Trudeau there are rare, historical opportunities between China
and Canada, Han Jun told The Globe and Mail.
He said a free-trade agreement would be good for both Canada and China.
What is China most in need of? We have a shortage of agricultural products. China is the biggest importer
of agricultural products in the world and, also, we are one of the countries with the highest dependency on
imported energy from other countries, Mr. Han said.
If there is an FTA arrangement between China and Canada, you can see a flooding of potash, agricultural
products and energy products from Canada to the market of China.
China is rapidly developing an urban middle class of consumers with a taste for fish, wine, pork and other
goods produced in Canada. Canadian seafood exports to China alone jumped by 16.2 per cent between
2012 and 2013. Demand will only increase, as the Chinese middle class is projected to reach to 854 million
by 2030.
The Canada China Business Council estimates a free-trade pact could boost Canadian exports by $7.7billion by 2030 and create an additional 25,000 Canadian jobs.
However, Mr. Han said China will come to the table with its own demands, namely the removal of
restrictions put in place by the former Conservative government on Chinese state-owned investments in
Canadas oil and gas sector.
Highly concerned about this, Mr. Han said. I felt we were being discriminated in the process.
Tentative trade talks with the Harper government collapsed almost overnight when Ottawa imposed
stricter investment rules in 2012 after China National Offshore Oil Corp. agreed to purchase Nexen Inc. for
$15-billion.
The Chinese felt that we changed the rules for special state-owned enterprises. They feel the rules that
have been imposed are very difficult. They would like a re-examination of that, said Colin Robertson, a
senior fellow at the Canadian Global Affairs Institute.
China had also opened talks with the Harper government on a maritime energy corridor, which Mr. Han
said is still a priority for his government.
They would like to buy our Canadian oil and gas, but they cant get it there because they dont have the
pipeline, Mr. Robertson said. Basically, they want us to get pipelines, as do the Japanese and Indians, to
the coast so they can get access to oil and gas.

The Chinese desire for a pipeline may prove impossible to achieve. The new Liberal government effectively
killed the Northern Gateway pipeline when it banned all crude-oil tanker traffic on the North Coast of
British Columbia, while the B.C. government has refused to support the $6.8-billion expansion of the
Trans Mountain pipeline. The leading contender now is Energy East, which would deliver oil from
Western Canada to refineries and port terminals in New Brunswick and possibly Quebec, but it is years
away from regulatory approval.
Canada has a huge trade imbalance with China. Total bilateral trade was $63-billion in the first nine
months of last year, but nearly $49-billion of that came from Chinese imports.
In an earlier presentation to Borden Ladner Gervais law firm, Mr. Han said China will be in the market for
Canadian green technology to help cut carbon emissions. In 2014, China spent $89.5-billion on clean
energy.
Mr. Han also offered assurances that the market turmoil in China and slower economic growth do not
indicate that the economy is in trouble. He noted the economy is still forecast to grow at 6.5 per cent, much
faster than growth rates in the United States.
So you dont need to worry that Chinas economy will slide over the cliff, he said.
Follow Robert Fife on Twitter: @RobertFife [https://twitter.com/@RobertFife]

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