Gains and losses . . .
Both the U.S.-China trade war and the December 2018 arrest of Huawei CFO Meng Wanzhou have had serious repercussions for some Canadian sectors. In 2018, China imported 40 per cent of Canadian canola, with Canadian canola seed exports to China valued at around C$2.17B. But in 2019, China blocked imports of Canadian canola. Then, in late June, China also blocked imports of Canadian pork – a big blow to Canada as China was Canada’s biggest pork market. Meanwhile, other Canadian sectors, such as wheat and lobsters, have benefited from the trade war. According to the US Department of Agriculture, Canada’s share of Chinese wheat imports rose from 32 per cent in 2017-2018 to more than 60 per cent in 2018-2019, a gain that has come at the expense of American and Australian wheat farmers. The value of Canadian lobster exports to China from January to June 2019 was nearing US$200M – a sharp rise from 2018 when lobster exports to China amounted to US$223M for the entire year. This spike is a direct result of plunging U.S. lobster exports to China following China’s newly imposed tariffs on the flavourful crustaceans.
Caught in a geopolitical conflict . . .
With the Trump administration treating China as both an economic and strategic rival, Canada is paying the price. Article 32.10 in the USMCA, the new NAFTA, gives the U.S. a veto over Canada and Mexico’s future free trade agreements with China. In addition, Canada’s arrest of Huawei’s Meng was in response to a US request – an event that triggered Chinese retaliatory measures against Canadian canola and pork imports to China.
Wanted: A federal government strategy . . .
Canadian farmers are facing uncertainty, not sure whether to grow more wheat or canola for next year, and they also need to think seriously about other export markets as alternatives to China. Meanwhile, the federal government does not have a clear strategy to resolve the conflict. However, the appointment today of Canada’s new ambassador to China, Dominic Barton, former Senior Partner with McKinsey & Company and its Asia Chair from 2004 to 2009, ends a months-long gap without a top Canadian diplomat in China. Barton is well-connected in China and might be in a position to put Canada-China relations back on track.