Former Canadian diplomat Michael Kovrig is sounding the alarm about Canada seeking deeper trade ties with China in the face of growing tensions and uncertainty with the US, warning that the pivot threatens Canada’s economic security.
Speaking on Tuesday at a conference on the future of business in Ottawa, Kovrig – a long-time China analyst who has been unjustly detained by Beijing more than a thousand days after Canada arrested Huawei CFO Meng Wanzhou – said Ottawa’s new China strategy is a “dangerous game” that will not be viewed kindly by Washington’s trade negotiations and could threaten.
He drew criticism from US Commerce Secretary Howard Lutnick last week about Prime Minister Mark Carney’s deal with China, announced earlier this year, which included importing a limited number of Chinese electric cars.
“The basic problem is that China is not the solution to many of our problems with the US,” Kovrig said at an event hosted by the Canadian Chamber of Commerce.
“Making deals with China is seen in the United States as Canada as an unreliable partner, right? We might see it as trying to have the China card to play – you know, ‘Look, I have options here, I can go to my friends in Beijing.’ That will not go down well in Washington.”
Kovrig noted that the US is still Canada’s largest trading partner, representing 75 percent of Canada’s exports. China, by contrast, represents about four percent of exports.
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The deal with China aims to increase Canada’s exports by 50 percent by 2030.
Kovrig said the key difference between the two countries is that China is currently “in selling mode, not in buying mode,” and wants to make world markets rely on its cheap exports.
Although Canada has committed to buying up to 49,000 Chinese EVs, Kovrig said Beijing may want to increase that share using economic and diplomatic pressure points as it has in the past.
He warned Ottawa that it could be driven by “temporary factors” such as consumer demand for low-cost electric vehicles that could lead to “long-term impacts on road dependence.”
“If you live in a small town and you have a local highway with a hardware store and stuff, sure, wouldn’t it be great if Walmart could come in and give you all kinds of cheap household items and stuff?” Kovrig said.
“That will be fine until … they come in at very low prices and lose all your local stores, and then Main Street looks like a dead place and all that’s left is Walmart, and then there’s no competition and they can raise prices.
Kovrig said the export strategy shows how China has already made Canadian sectors such as canola, pork and seafood “extremely” dependent on the Chinese market, he added.
“If China cuts off that trade, people in those sectors face an economic crisis and come running to Ottawa and successfully try to persuade our government to do what the Chinese Communist Party wants it to do,” Kovrig said.
“That is the danger of the country.”
Canada’s deal with China includes lowering Canadian canola seed tariffs to 15 percent and ending “anti-discrimination” tariffs on canola meal, lobsters, peas and crabs, while increasing imports of other Canadian agricultural goods.
Kovrig said he doesn’t want to see Canada cut off trade or engagement with China entirely — “it’s not North Korea,” he laughed — but said any deal should be “strictly controlled and limited, and possibly reversed if we find it’s being abused.”
“It means that we have to think carefully and be strategic about the way we trade or invest,” he said.
Kovrig gave similar warnings in testimony last week to the House of Commons science and research committee, which is studying the potential impacts of Ottawa’s Chinese EV deal.
Several other witnesses at the committee last week and on Monday sided with Kovrig, saying the deal jeopardizes negotiations to renew the Canada-US-Mexico Free Trade Agreement.
The Liberal government has downplayed concerns about the deal and overall efforts to mend relations with China.
Finance Minister François-Philippe Champagne said earlier this month after visiting Beijing to meet with Chinese partners that Canada wants to resolve trade issues between the two countries in order to expand trade relations.
“Our trade relationship is around 120 billion dollars. If you look at the size of the Canadian economy and the size of the Chinese economy, it should be much higher than that,” said Champagne.
“We will have to continue to push to remove these irritants in order to realize the broader vision of increasing trade between our two countries.”
-From files from The Canadian Press
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