Canada’s trade deal with China shows the way

The Canada-China trade deal by which Chinese electrical vehicles can be sold more easily in Canada and canola oil, which is less saturated fatty oil and contains Omega-3 acids which is healthy, which is grown in Canada and chiefly exported to China will face lower tariffs reflects a new reality of the international trade scene. It can be attributed partly to the tariff wars unleashed by American President Donald Trump, especially against Canada and also China.

So, two of the major countries affected by Trump’s tariff tantrums come together and sign a mutually beneficial trade agreement. It can be seen as a partial rebuff to Trump’s international trade policy. Experts are sure to point out that the details of the trade deal that Canadian Prime Minister Mark Carney had signed with China is really modest, that the number of Chinese EVs that will enter Canada will only see an incremental jump, and that Canada’s gains would be limited as well. But it does show that Canada, which had turned hostile to Canada under Carney’s liberal predecessor Justin Trudeau, is now mended, and that it was Canada’s way of reaching out to China, and it would have happened even without the Trump drama because Canada-China relations follow their own internal dynamic.

It is however evident that Canada wants to chart its own path, and it wants to move out of the shadow of its big neighbour, the United States. Canada is in many ways its own master. It is a member of the Commonwealth, which is a legacy of the British colonial connect, along with Australia at the other end of the globe. Both Canada and Australia acknowledge the British monarch, King Charles III, as the symbolic head of the state, and the governors-general in Ottawa and Canberra are seen as representatives of the British crown.

Though there is an outbreak of republican sentiment in Australia, there is none of it in Canada. So Canada wanting to assert its own identity has a logic of its own. Trump has been threatening to turn Canada into the 51st state of the United States, and he had been berating the northern neighbour as benefiting from the US without contributing anything in return.

It is a fact that the symbiotic relations between Canada and the US mark an international border without any armies guarding them, and moving from each side of the border to the other is without any hassles. Trump has been claiming that a lot of illegal immigration into the US comes from Canada though the scale is much too small compared to that from Mexico in the south.

Canada and China getting closer on the economic front has no security implications either for Canada or for the US. It remains a purely transactional tie-up between the two countries. China is looking for new markets faced with a hostile US, and Canada is willing to absorb China’s exports.

The argument offered by Canada for the easy entry of Chinese EVs is that it will help Canada upgrade its technology and it would also boost Canada’s own car manufacturing sector. This might seem a specious argument to many who believe in preserving economic sovereignty. The truth is that in a globalized world – and trade is a global transaction – technology transfers do not take place through altruism but through trade. Ideas and technologies travelled, they were not transferred. Carney seems to instinctively believe that imports are one way of importing technology, and perhaps the only way. Chinas become the economic power it is today by absorbing technology through imports – intellectual and through merchandise. Despite its many faults, there is something to be said for free markets.