CANADA WON’T SIGN CHINA FREE TRADE AGREEMENT

Written by Michael Thervil

CANADA WON’T SIGN CHINA FREE TRADE AGREEMENT | PHOTO BY MATHIEU BELANGER | REUTERS

[Canada China Free Trade Agreement] In a turn of events, Canadian Prime Minister Mark Carney squashed the worldwide notion that Canada was seeking to sign a free trade deal with China and instead issued the public statement that:

“Canada respects our engagements over our commitments. We have commitments under CUSMA not to pursue free trade agreements with non-market economies without prior notification. We have no intention of doing that with China or any other non-market economy. What we’ve done with China is to rectify some issues that developed over the last couple of years.”

While there will be no formal free trade agreement signed with China, there appears to be a silent informal free trade agreements made with China in respect to agriculture, fish, electric vehicles, with other guarantees between the two countries. CUSMA or the Canada-United States-Mexico Agreement was established on Friday, November, 30, 2018 under the previous Trump Administration which “imposed an exemption under the International Emergency Economic Powers Act (IEEPA) (i.e., border and fentanyl) tariffs for goods imported from Canada that qualify for duty-free preferential treatment under the Canada-United States-Mexico Agreement (CUSMA). As of August 1, goods imported from Canada are subject to 35% U.S. IEEPA tariffs, with energy and potash subject to 10% U.S. IEEPA tariffs. There is no CUSMA-compliant exemption for U.S. sectoral tariffs imposed on imports of autos, steel, aluminum, and copper under Section 232 of the Trade Expansion Act”. 

Some geopolitical analysts are taking the position that Prime Minister Mark Carney capitulated because of president trump's threat to apply 100% tariffs on all Canadian goods, products, and services. While this may appear as a blanketed analysis for many, it appears to be not without warrant. Some geopolitical analysts are pointing out that Prime Minister Mark Carney re-pun his approach when it came to China and choose the path of a “win-win-win” solution. This means that the Americans win because Prime Minister Mark Carney did not sign a free trade deal with China.

Then China wins because they obtain the ability to sell more EV’s and agricultural products to Canada which rings the alarm bells of the Trump Administration. Then Canada wins by still retaining their ability to pivot to China in a way that does violate their previous commitment to CUSMA, thus avoiding the upsetting of the Trump Administration; as well as increasing the momentum of pushing the notion of diversifying their business dealings with other countries, hence decreasing their dependence on America.

OUR POSITION AT VEDA WORLD NEWS

While we can see the point of view that the Prime Minister may have capitulated to the will of the Americans, we are choosing not to refer to the actions of Prime Minister Mark Carney as that and that’s since Canada is bound to honor the CUSMA agreement. If he simply disregarded the CUSMA agreement, Canada would appear to be just as unstable as America is under the Trump Administration on the world stage. However, we praise Prime Minister Mark Carney's ability to maintain a balancing act between itself, America, and China because he was able to successfully increase the amount of trade Canada is engaged in with China while decreasing Canada's reliance on the Americans while recognizing and navigating through a now multi-polar world.

We believe that Canada is on the fast track to immediate success going forward as it secures its own geopolitical and economic interests. The shell game we would recommend Canada play is to secure a free trade agreement with China via India to significantly boost its ambitions in the free market.