Canada strengthens ties with China, but trade deal remains uncertain

Progress on a potential China-Canada trade agreement appears to slowly be inching forward, with Canadian Prime Minister Justin Trudeau saying a deal with China is a “big thing” and that Canadians understand how vital it is to “get it right.”    Canadian Prime Minister Justin Trudeau and Li Keqiang, Premier of the State Council of the People’s Republic of China, agreed to continue exploratory discussions towards a comprehensive trade agreement.
   Trudeau, who is in China from Dec. 3-7, announced on Monday new joint partnerships with China after concluding the second Annual Leaders’ Dialogue with Li.
   Although the two countries have been in talks through Monday on whether to launch full negotiations on a trade deal, they did not reach an agreement, a Canadian government official said, according to a report from Bloomberg. However, talks are ongoing and full negotiations could still launch before Trudeau’s trip ends Thursday, the official staid.
   “Moving forward on a trade agreement with China is a big thing, not a small thing,” Trudeau said in a speech in China this week. “Canadians understand how important it is to get it right, and we are ensuring that in the progress we made today in discussions, we are going to be able to continue to keep moving forward in a responsible way.”
   China is Canada’s second largest trading partner, and Canada’s merchandise exports to China reached nearly $21 billion in 2016, up 4 percent year-over-year, with top exports being forest and agricultural products, copper and iron ores, and motor vehicles, according to a press release issued by Trudeau’s office.
   Canada and China this week committed to fully implementing the 2016 agreement to expand market access for Canadian frozen bone-in beef, along with Chinese filled grain products, and also agreed to launch a pilot project for the export of Canadian chilled beef and pork.
   “While in Beijing, Premier Li and I had discussions on a range of issues, from growing trade and investment, to combating climate change, to the importance of free expression,” Trudeau said. “I look forward to continuing discussions towards a comprehensive trade agreement, which will open up greater opportunities for people on both sides of the Pacific.”
   The news comes in the wake of the fifth round of North American Free Trade Agreement (NAFTA) renegotiation talks between Canada, the U.S. and Mexico, which were held in Mexico City from Nov. 21-26, being rather uneventful.
   Following the round, U.S. Trade Representative Robert Lighthizer said he remained concerned about the lack of headway made. “Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement,” Lighthizer said. “Absent of rebalancing, we will not reach a satisfactory result.”
   Just this Monday, the National Foreign Trade Council (NFTC) applauded a bipartisan group of state governors who are calling on NAFTA negotiators to raise the de minimis levels in NAFTA renegotiations.
   Ahead of intersessional meetings on NAFTA that will be held in Washington, D.C. in mid-December, the governors sent a letter on Nov. 21 to U.S. and Canadian negotiators, highlighting how raising the de minimis levels would cut red tape at borders that often slow deliveries and increase costs.
   “Low and outdated de minimis and informal clearance levels are hindering the flow of low-value shipments coming from U.S. exporters to consumers in Mexico and Canada, while, at the same time, Mexican and Canadian exporters benefit from state of the art customs procedures and a de minimis threshold of $800 in the United States,” the NFTC said Monday.
   Although inter-sessional meetings are being held this month, the next formal round of NAFTA renegotiations is not scheduled until Jan. 23-28 in Montreal, Canada.