by Chris Fournier and Josh Wingrove
Justin Trudeau saw a third way for trade, preaching “progressive” values as a fix to a global order put on the defensive by populists like Donald Trump. But this week in China, he got a crash course on how difficult it is to sell.
The Canadian prime minister wrapped up a visit to the Asian powerhouse Thursday without launching free trade talks, despite high expectations. He’s been pushing both the U.S. president and China’s Xi Jinping to adopt provisions like labor, gender and environmental guarantees to calm working-class anxiety and keep trade flowing. Instead of a receptive audience, he found a culture clash.
“It’s a little unrealistic for Canada to use a ‘one-size-fits-all’ approach in trade talks with countries whose conditions and aspirations are greatly different,” said He Weiwen, deputy director of the Center for China and Globalization in Beijing and a former commerce ministry official. Both countries “have a positive attitude” toward a potential free trade deal, “however practicality needs to be applied when it comes down to actual negotiation.”
Trade is one avenue where Trudeau and Xi -- a champion of the status quo and pared-down deals focused on tariff reduction -- have been moving to fill a void as the U.S. turns inward by scrapping existing deals and tightening its borders. But the Canadian leader, who relies heavily on his own popularity and charm abroad, himself acknowledged there was no point in launching talks unless they stood a reasonable chance of culminating in an agreement.
Failure to Launch
China is just the latest stumble for Trudeau’s trade agenda. It’s largely Canada that’s been delaying a deal to revive the Trans Pacific Partnership after Trump withdrew, to the chagrin of Japan and others. Trudeau is also pressing for progressive elements to be added to the North American Free Trade Agreement, and his chief negotiator told lawmakers this week in Ottawa the U.S. opposes the measures.
“We did put forward a very ambitious proposal on labor,” Canadian NAFTA negotiator Steve Verheul said Monday at a parliamentary hearing. “The U.S. is resisting that proposal.”
The trip began in Beijing, where Trudeau and Chinese Premier Li Keqiang abruptly canceled a joint press conference Monday after they were unable to set a framework to launch formal trade negotiations. Talks continued throughout the week to no avail.
Trudeau is in uncharted territory. Canada wants a new class of trade agreement altogether -- and that’s not something that China has experience with, according to Eva Busza, vice president of research at the Asia Pacific Foundation of Canada. “There’s probably going to have to be a lot more dialog around this and many other issues,” she said in an interview.
The prime minister spent the trip’s last day refining his globalist message and emphasizing his approach. “If we move forward with simply straight and classic trade deals that focus only on tariffs and barriers and don’t think about the impact it’s going to have on citizens and communities and people, then we are going to find ourselves in a world where protectionism and inward thinking is the only option,” Trudeau said Thursday at the Fortune Global Forum in the southern city of Guangzhou.
China is a family affair for the 45-year-old prime minister, building on ties his father began half a century ago. Pierre Trudeau and a friend traveled to the country in 1960, writing a book about the experience called “Two Innocents in China.” It lauded Chinese hospitality and described communes where rice was provided free as the country adjusted to post-revolutionary life. Pierre went on to be prime minister, and Xi has hailed his legacy.
Now Justin Trudeau, who also traveled to China as a young adult, is being seen by some observers as doe-eyed in his approach to the world’s second-largest economy. Canadian media coverage also raised hackles and was seen as “irritating and ridiculous,” according to an op-ed in the Global Times. The prime minister, asked later about the criticism, hailed the “essential role” of a free press.
Trudeau and his Chinese counterparts nonetheless extended exploratory talks and announced small developments on beef, climate change and clean technology. They also agreed to cooperate in areas including law enforcement, youth engagement and education.
“We believe a free trade deal will benefit both Canada and China,” commerce ministry spokesman Gao Feng said Thursday at a press conference in Beijing. “China will keep working with the Canadian side with a practical and open attitude to promote the China-Canada free trade zone, creating conditions to begin the trade talks as early as possible.”
Trudeau’s visit reveals an impasse globally between some of the biggest economies. The U.S. is championing protectionism, Japan is struggling to get its flagship deal past Canada, China is balking at “progressive” demands and Theresa May is occupied by Brexit. Canada had been something of a bridge -- pursuing the TPP and completing an EU trade deal all while trying to talk Trump off the ledge to save NAFTA -- and now is doubling down on a new brand of trade that, so far, few others are buying.
Returning home empty handed, Trudeau downplayed the failure to launch talks. “There were never any illusions that this would be quick or easy, ” he said. The end result could still be a matter of delay, rather than death. Any talks would take years. The TPP, since re-branded as “comprehensive and progressive,” could also still be achieved, and NAFTA talks have been scheduled through March.
Despite similarities with Australia -- with which China has a free-trade deal -- Canada would be a prize for Beijing’s leadership, according to the Center for China and Globalization’s He. “It’d help open the North American market and Canada would be the first G-7 country China has a free trade deal with.”
With Canada set to host the Group of Seven summit next year, John Kirton, head of the University of Toronto’s G-7 and G-20 research group, said he suspects Trudeau took seriously Xi’s repeated pledges this year to be a champion of the global trading order. Instead of an outright rebuff, Kirton said the thinks the Chinese were “trying to test” the Canadian leader. “It will take some time for the two to come to some reasonable accommodation on how deep, as well as broad,” a trade deal should be.
--With assistance from Ting Shi and Miao Han.
To contact the editors responsible for this story: Rosalind Mathieson at [email protected]
Stephen Wicary, Theophilos Argitis
© 2017 Bloomberg L.P