Canada-China Relations and the DPRK Dilemma: What can Canada really do?
by Yany Siek
As world leaders continue to debate the best response to North Korea’s rapidly progressing nuclear and missile programs, the question likely circulating amongst policymakers in Ottawa is what role, if any, Canada can and should play in contributing to a potential solution. Disregarding the question of should, there are options for Canada. As a middle power, Canada’s ability to contribute is often overshadowed by the influence of more powerful states, creating the misperception that Canada can do nothing, but ride the waves of great power politics. Is this really the case?
The North Korean conundrum can be viewed from a myriad of lenses, each of which suggests a unique response. From the perspective of defence policy, Canada could reconsider its position on ballistic missile defence, abandoning long-standing Liberal resistance most evident in the Martin Liberals’ 2005 opposition to participation. If one adopts the perspective that Canada’s foreign policy interests are best served by staying out, then it’s probably ideal to keep a low profile and downplay any efforts to muddle ourselves in an intractable problem.
The Canadian government’s current efforts to engage China and deepen bilateral relations offers a unique opportunity for Canada to contribute, while not getting itself too deeply invested. Most analysts and individuals monitoring developments in North Korea acknowledge that any long-term solution to the threat of the regime’s missile and nuclear ambitions will require China’s support. China is North Korea’s largest trading partner, biggest source of development assistance, and has historically, negated the effects of what would otherwise be, devastating sanctions. Essentially, the regime survives because China wills it.
Trying to tackle North Korea through China could be a viable strategy given that the current Liberal government is already deeply focused on enhancing and deepening bilateral relations with the latter. In addition to exploring a free trade agreement, there is a clear change of tone in Ottawa that starkly contrasts with that of the Harper era. Officials in China are cognizant of this shift, making it easier for Canada to raise issues such as North Korea in bilateral discussions; Canada could nudge China to do more. This would not require making North Korea the focus of engagement, but it could become a side project that would necessitate minimal resources. Furthermore, the North Korean issue is far less of a sensitive topic than debates over human and civil rights, making it far more palatable.
Given the brevity of this blog, it would be impossible to provide a detailed outline of a Canadian strategy to engage China on the North Korean challenge (that’s for another time and place). Other options such as serving as an intermediary between North Korea and the United States exist, but the China option is consistent with current efforts to strengthen relations with Beijing. Trudeau’s invitation to attend the East Asia Summit, a key forum for addressing global security challenges, also serves as mechanism to engage China and other East Asian nations on the North Korean issue; Canada should take full advantage.
Yany Siek is a second year Master of Arts student at the Norman Paterson School of International Affairs, specializing in Security and Defence Policy. He holds a BA (Hons.) in Political Science from the University of Alberta and his research focuses on Canadian foreign policy vis-à-vis the Asia-Pacific, particularly China, South Korea, and Japan.
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Canada’s potential Free Trade Agreement negotiation with China : A strategic planning of SWAA analysis
by Thomas Liu
The SWAA analysis is one of several strategic planning tools that are used by both commercial and governmental organizations to ensure that there is a clear objective defined for the project or venture, and that all factors related to the effort, both positive and negative, are identified and addressed. John Montanari and Jeffrey Bracker (1986) propose a variation on the private-sector “strengths, weaknesses, opportunities and threats’’ (SWOT) framework, which they call SWAA, examines strengths and weakness in much the same way as SWOT but includes an emphasis on ‘‘advocacies’’ and ‘‘adversaries’’ in the form of stakeholder groups. Based on this theoretical framework, in the following parts I would elaborate my founding regarding Canada China FTA exploratory negotiations.
There are three major strengths of the Canadian Federal government in this FTA negotiation with China. First, Canada has many previous trade negotiation experiences. Second, Canada now has a Liberal government which China would have a more soften attitude (compared to the previous Conservative government). Third, Canada has established stable and multiple communication channels with China. Throughout time, Canada has made 91 bilateral or multilateral trade agreements with most of the major economies of the world, excluding China. Giving up-to-date examples, there are broader sets of negotiations that are associated with a new generation of trade agreements which Canada has been negotiating or negotiated, such as the TPP and the CETA. These agreements have the merit of setting up frameworks that are forward-looking and respond to a range of trade barriers that have emerged as a function of growing complexity in inter-state economic transactions. Canada’s previous FTAs will form the basis to frame negotiations and targets to achieve in a CCFTA. Drawing from those experiences, Canada can push for more ambitious services access in areas such as: financial services, telecommunications services, legal services, education services, and health and aged-care services. These experiences are the strength of Canada in negotiating CCFTA with China. Moreover, a Liberal Government of Canada now is another strength in negotiating CCFTA with China.
Liberal party has a better and longer relationship with Chinese government compared with Conservatives and NDP. Former Prime Minister Pierre Trudeau recognized People’s Republic of China and established diplomatic relationship with China. Justin Trudeau inherited his father’s political legacy, which is conducive to fostering friendly cooperation with China. Another important Liberal politician is the former Prime Minister Jean Chrétien who has win the trust of Chinese leaders for decades. Right now, PM Justin Trudeau has a widespread of popularity in China. His way of leadership, young and passionate political image, and of course his policy, have been the strength of Canada in developing its relation and FTA negotiation with China. Communication is crucial in the public-sector environment and must target key stakeholders. Canada has good communication skills with China which is not very common among Western countries. Canada has established stable, frequent, and multiple communications with China. This is an important strength of Canada. Communication with China per se, is a strength compared with other states who does not have good communication with China. Among G7 countries, Canada first established communication mechanisms with China, such as the annual dialogue between the two prime ministers, the annual meeting of the two foreign ministers, bilateral economic and financial strategic dialogue, and bilateral high-level national security and rule of law dialogue, and recently both sides agreed to establish two ministerial-level dialogues between respective departments of environment and clean energy.
Weaknesses are the qualities that prevent us from accomplishing our mission and achieving our full potential. There are three main weakness of Canada in negotiating FTA with China. First, Canada’s electoral system and its potential shifts of leadership would add uncertainty to CCFTA. Second, Canada lacks of good acknowledgment of the Chinese context, both government and society. Third, Canada’s is currently in a disadvantaged economic and trade situation with both China and the United States. The election cycle in the Canadian federal system poses a considerable challenge to CCFTA negotiation. Governments are more reluctant to take controversial or tough action as they move through their mandates and come closer to election campaigns. This seems not to be a eminent issue for the Liberal Government now. However, FTAs take years to negotiate, and full implementation will be after decades. Leaderships would definitely be shuffled and it has already happened. For instance, former foreign affair minister Stephen Dion replaced by the former trade minister Christina Freeland. This might even be a good sign of getting a trade deal with China. However, the leadership may change again and no one know what would be the consequences in terms of future FTA negotiation with China. Indeed, leadership shifts not only happens in Canada. Nevertheless, the wrong political judgments and acts that have been taken for the sake of the election can easily lead to the breakdown of the negotiations, and honesty, this political strategy/phenomenon is not rare. This instability and unpredictability of leadership and Canada’s electoral cycle, would have a direct influence on public administrators, which would be a potential weakness of Canada in negotiating CCFTA.
The Canada-China Business Council’s recent survey highlighted that the major obstacles to doing business with China are a market knowledge of China. A lack of China’s market knowledge after 47 years of diplomatic relations is a reflection on Canada’s own superficial knowledge to China — and is also not a regulatory obstacle. Without a good grasp of Chinese context, which include its economy, politics, society, culture, Canada’s high decision makers may not be able to make accurate judgement of its trade policy. Sometimes those information about China may even be misleading. As part of the formation of this national business plan, Canada needs to better understand the systemic reasons in China and in Canada for the current trade deficit. Additionally, Canada’s disadvantageous trade situation is also Canada’s weakness of FTA negotiation with China. Too much reliance on the United States market could lead to deepening the complexity of the negotiations. The current NAFTA negotiations with US and Mexico are stalled, China therefore would have more leverage in FTA with Canada since Canada has to focus more on other emerging markets. Yet, perennial trade deficit with China would possibly deepen the difficulty of the negotiations. Two-thirds of Canada-China trades are made up of China’s exports plus exports. As a result, Canada has always hoped to improve market access for Canadian businesses to China by signing FTAs while ensuring that Chinese state-owned enterprises adhere to uniform trade rules. This situation, in fact, would be a weakness of Canada since it has much less leverages in terms of trade negotiation compared with China. Canada actually wants more FTA than China. However, China may not want to transfer or decrease its in-hand profit by compromises.
Advocacy means the force of support. In the CCFTA context, I focus on those supporting arguments, discourse, opinions, and ideas. According to data of National Post, they indicate that the public’s acceptance of China-China FTA negotiations and the pursuit of a free trade between Canada and China is more acceptable than ever. In the past year, Canadian attitudes toward greater economic engagement with China have improved. Asia Pacific Foundation of Canada’s National Opinion Poll 2017 shows that Canadians’ support for an FTA with China has increased over the years. In the 2017 survey, 55 per cent of Canadians supported a Canada-China FTA and 36 percent opposed it, whereas in 2014, 36 percent supported and 50 percent opposed. Also, 76 percent and 70 per cent of Canadians believe that greater engagement with China will lead to more opportunities for Canadian businesses and youth, respectively. The essence of a CCFTA will better position Canada to achieve greater economic prosperity and middle class by increasing opportunities for the growth of Canadian businesses in China and attracting more job-creating investment in Canada. Economic considerations are the most important factors shaping Canadians’ attitudes towards an FTA with China. The perceptions that expanded trade with China would encourage business investment in Canada and would bring greater economic prosperity to Canada. Supporters of an FTA with China, meanwhile, are more likely agree that it would give Canada a competitive edge in the global market, whereas Canadians who are uncertain about China’s economic prospects tend not to support an FTA with China.
The global political dynamics is another important factor for Canadians’ attitudes to a Canada-China FTA. Canada perceived importance of expanded trade with China in the context of rising protectionism; Canada also perceived the fluctuation of Canada-U.S. relations as a result of expanded trade with China; and, more importantly, Canada perceived influence of Canada on China’s non-economic dimensions due to expanded trade. Concerns about rising protectionist sentiments in the West make Canadians more supportive of an FTA with China. Such concerns have a stronger effect than concerns about political and culture differences between Canada and China. The role of China as a global leader on security issues also has some effect on Canadians’ attitudes towards a CCFTA. Canadians who see China as a stronger global leader would more likely to support an FTA with China, although this has a minor effect. As China has demonstrated a stronger leading role in global affairs and its capacity to deal with multi-dimensional issues of global community, expanding trade with China may be seen as posing less of a threat to Canadians.
Similar to advocacy, adversary in this context means the opposing opinion and arguments of CCFTA. Notwithstanding a majority of support, Canadians do acknowledge some key concerns. According to APF survey 2016, 71 percent are concerned that greater economic engagement will lead to greater vulnerability due to volatility in China’s economy and 64 percent believe Canada will be more susceptible to pressure from the Chinese government. Concerns over negative economic impacts, such as a widening trade deficit with China, increased control of certain sectors by Chinese state-owned enterprises (SOEs), and intensified competition in the labour market for mid-skilled and less educated Canadian workers in particular. Particularly, the belief that expanded trade with China would lead to an influx of cheap Chinese goods is the most important factor that is discouraging people from supporting an FTA with China. There are also contagion from the anti-trade sentiment in the U.S. and Europe. People who believe that expanded trade with China would cause problems for Canada-U.S. relations are more likely to oppose than to support an FTA with China. Much of the debate about an CCFTA is considered overtly political and uncommercial in its focus public opinion in Canada. Much of the current debate in Canada is focused on the political and social differences with China. Some Canadians are discomfortable with dissimilar political cultures/values, particularly when it comes to human rights issues, the rule of law, and labour rights; However, according to the APF survey, concerns about political/cultural differences influence attitudes towards an FTA with China, but they carry less weight than economic factors. The effects of these non-economic factors are not as strong as expected. There are no significant differences in attitudes toward an FTA with China between those who believe human rights issues should be the number one priority for Canada government, and those who do not.
We found Canada has its strengths, weakness in its FTA negotiation with China. Moreover, we found there are difference opinions in supporting and opposing the FTA negotiation. We should notice that, among the government and society, the question, and even concerns, are not about whether we should establish an FTA with China, but rather what kind of agreement we should pursue to secure the best interests of the Canadian public. There would eventually be an Canada-China FTA, and now it is all about what kind of agreement that Canada wants
Strength can become weakness, advocates can also become adversaries. Canada’s weakness in terms of the CCFTA context can be improved by understanding more of the Chinese government and society. This would help Canada in its negotiation of CCFTA. Observing and predicting the potential changes in Chinese leadership and their possible impact on Canada China relationship its crucial. Identifying rising leaders helps to anticipate emergent elements of strategy or at least their possible sources. For instance, Canada should work closely with the National Development and Reform Commission (NDRC) in China to execute projects in areas where our economies complement each other. Additionally, when it comes to negotiating an FTA with China, there appears to be a gap between the public’s perception of what it wants the Canadian government to push for in an FTA and what can actually be achieved in a trade negotiation. This presents unique challenges for how the Canadian government can address the Canadian public’s concerns, while at the same time pushing for a robust and quality agreement. More importantly, Canada should be well aware of the political and culture difference with China and be prepared to reach a unique and untraditional FTA with China, compared what Canada has negotiated with other countries. While Canada could approach the negotiation by proposing that the goal be a traditional FTA that focuses mainly on tariffs reduction, a different strategy should be considered.
Still, there is a long way to go for Canada in negotiating the FTA with China. Normally FTAs take years to negotiate and only reach full implementation decades after they enter into force. If the Canadian government begins FTA negotiations with China, it needs to take into account not only the political, economic, and social forces that are transforming the world we live in today, but also those that will shape the world we will live in tomorrow. These analysis of strengths, weaknesses, advocacies, and adversaries, may change dramatically, and new challenges would also occur. Canada, therefore, should get prepared in its strategic planning for its future economy and also a healthy and robust Canada-China relation.