China trade mission alters economic future: expert
Canada is not turning its back on the United States in favour of trade with China, but rather being prudent by diversifying its economy, a trade expert says.
"One thing that is absolutely certain is that at least for my lifetime and that of my son, the United States will be the number one economy for Canada," Peter Harder told CTV's Question Period Sunday.
"But the other new reality is that China will be number two," the president of the Canada-China Business Council said. "The question is, ‘How big will number two be?'."
Harder has been at the centre of government decision-making for three decades, served five prime ministers and was on this week's trade mission to China with Prime Minister Stephen Harper.
Asked if the trip amounted to snubbing the Americans after U.S. President Barack Obama shut down the Keystone XL pipeline project, Harder said that's not his perception.
"I'm hearing that we need to diversify, not turn our backs on the Americans, and diversify means finding the emerging markets, which are the growth markets and they are in Asia," he said.
He called the trade mission a success and said it laid the groundwork for bigger deals in the future, possibly a free-trade agreement with the Asian economic giant.
It also follows up on Harper's trip to China in 2009 that led to government ministers shuttling back and forth between the two countries looking for areas of economic co-operation.
Nearly $3 billion in agreements were inked this week between Canadian companies and China, including Bombardier, Telus Corp. and Bell Canada. Trade between the two countries hit $50 billion in 2011.
China has also invested about $16 billion in Canada's energy sector in the last two years.
But a key deal reached on the mission was the Foreign Investment Protection Agreement that protects investors in both countries. It's been on the table for nearly two decades, and now only requires a legal review and ratification.
"What this week represents, I think, is the harvesting of that investment as we seek to diversify and China seeks to secure its supply of resources and other technologies as it expands its domestic economy," Harder said.
"I think both sides have sought over the last number of years to find ways of strengthening the economic relationship," he added.
Agreements signed on the trip could be a precursor to an "economic framework" that could be used to start free-trade talks, he said.
"I think it's actually a very positive thing," Harder said.
"But at the end of the day, of course, it will be very complex, it will be controversial and it will take some time to negotiate, but we won't sign anything that isn't in Canada's interest," he said.
Unlike the free-trade agreement signed with the U.S. in 1980s, China is an emerging economy and there would be significant advantages to linking with Canada, he said, particularly its need for energy.
And, it's critical Canada make trade connections outside of the U.S. and Europe because by mid-century, three of the four-largest economies in the world will be in Asia, Harder said.
He's convinced this week's mission will be remembered as one that provided significant opportunities for Canada and opened a window to the economy's future.
"It shifted the conversation amongst Canadians with respect to China to a new level of engagement,' Harder said.
"(We) really saw the opportunities of Asia as being ones we had to seize for our future."