As Canada gets set to host round three of NAFTA talks in Ottawa this weekend, Canadian government officials insist the American deadline for a new North American free trade deal by year’s end or early 2018 is within reach.
Even so, the federal Liberal government has aggressively pursued other trade opportunities — the Canada-European Union deal took provisional effect Thursday — and will decide whether to launch formal negotiations with China after three rounds of so-called “exploratory talks” have wrapped up.
Canada’s ambassador to China, John McCallum, said in an interview with the Star Thursday it will be up to the federal cabinet to decide whether to take talks toward a free trade agreement with China up forward, although, he added, a decision is not imminent.
Another session for further exploratory talks with China has not been scheduled.
Prime Minister Justin Trudeau, in a brief comment to the Star this week, said he looks forward to receiving a recommendation on how free trade talks with China should proceed.
Trudeau said he does not see continuing NAFTA talks as an obstacle to diversifying trade with other countries, and pointed to his government’s efforts to seal the EU deal, to pursue further trans-Pacific trade talks even after the U.S. withdrawal from the Trans-Pacific Partnership agreement, and to Canada’s current engagement on trade with China.
McCallum would not reveal what his advice to Trudeau’s cabinet is.
He acknowledged there are “pros and cons” to pursuing a formal Canada-China free trade deal. He said there would inevitably be opposition from certain unions, companies, and non-governmental organizations, and he noted Ottawa would have to consider the fact that our biggest trading partner, the U.S., views China as a trade rival, not an ally.
But McCallum said the economic benefits of deeper ties and more trade with China are clear.
“With or without free trade, the potential for job creation inside Canada of doing more with China is huge, whether it’s tourism or nuclear reactors or beef exports or clean tech or many, many other sectors,” said McCallum.
“China is an economic powerhouse and we’d be crazy if we didn’t latch onto it. That doesn’t necessarily mean free trade, but it does mean nurturing our relationship with or without free trade.”
The continuing NAFTA talks could play a role in Canada’s decision, if only on the timing of it.
McCallum said China is a very important market for Canada, “but the United States is obviously much more important, so anything we do with China, we automatically have to consider the U.S. side of it.”
McCallum declined to speculate how China might react if Ottawa refused to proceed to formal negotiations on free trade. But he emphasized “we are in an opportunity we have not had in years, if not decades, in that Canada clearly wants to do more with China or else I wouldn’t be there.
“And everything I see and hear in China suggests that the Chinese want to do more with us, and it’s partly because the U.S. is withdrawing from environment, climate change, trade, that they’re more interested in Canada.”
A free trade agreement with a G7 country “would be a feather in the cap for China, so there’s no doubt that China is enthusiastic about entering into free trade negotiations with Canada,” said McCallum, who added that “if we don’t (negotiate a trade deal with China), there’s still lots we can still do . . . in terms of trade.”
On the eve of the next round of negotiations on North American talks, Foreign Affairs Minister Chrystia Freeland will meet with the original Canada-U.S. and North American free trade deal architects and negotiators in Toronto, including former Progressive Conservative prime minister Brian Mulroney, his former U.S. ambassadors Derek Burney and Allan Gotlieb, former finance minister Michael Wilson, former NAFTA negotiator John Weekes, and Don Campbell, former deputy minister of foreign affairs and international trade.
Freeland will also meet her NAFTA advisory council which includes former Conservative interim leader Rona Ambrose and James Moore, former industry minister in the Stephen Harper-led Conservative government.
Also in Toronto Friday, Navdeep Bains, Liberal innovation, science and economic development minister will sit down for a roundtable meeting with representatives of the autoworker sector in Toronto.
Canadian government sources downplayed pessimistic predictions from some industry sources that the timeframe to reach a deal is too tight, given the lack of agreement to date, after just two rounds of meetings between negotiators.
One said it is premature to suggest any aspect of the talks has gone off the rails, because, in fact, progress has been made in areas of common ground, although negotiators have not finalized text, even for those chapters.
As round three kicks off Saturday in Ottawa, with teams from Washington, D.C. and Mexico City arriving for negotiations scheduled to continue until Wednesday next week, officials say all the separate negotiating tables are still open.
They said progress was made in Mexico City and expectations at the senior levels of the Canadian government are that more progress will be made in Ottawa, although all three parties at the table have agreed not to make public statements on specific areas of agreement without sign-off by their counterparts.