Canada bullish on China deal

PUBLISHED : Thursday, 08 September, 2005, 12:00am
UPDATED : Thursday, 08 September, 2005, 12:00am

Air agreement to triple flights between both countries is part of Ottawa's Pacific Gateway strategy

Chinese President Hu Jintao is expected to sign a new bilateral aviation agreement during his state visit to Canada tomorrow that will triple the number of flights available to both countries' airlines, according to Canada's most senior transport official.

The new air services deal will be an addendum to a visit that is expected to see the Chinese delegation focus on the potential of future investment in energy projects, particularly near Alberta's oil sands.

The deal, to be signed in Ottawa, over a three-year phase-in period, will see the combined weekly passenger and cargo flights between the countries triple to 143.

'We have had great interest from the Canadian private sector [for the bilateral agreement], not just from Air Canada but from Harmony Airways and CargoJet,' Canada's Minister of Transport Jean Lapierre told the South China Morning Post.

Mr Lapierre said he signed a supplemental 'technical co-operation' agreement in Beijing this week, which focused on 'the three Canadian specialties: de-icing, safety management systems and accident investigation'.

With neither side likely to quickly fill its full entitlement of flights, the main deal sets the table for their carriers to capitalise on future demand for travel between the two countries.

China recently agreed in principle to add Canada to its list of approved destination status nations, which could triple Chinese visitors to Canada to 250,000 a year, Mr Lapierre said.

'China has agreed and we are negotiating the details. I am hoping they'll move fast on this one because it could boost our tourism revenues by C$450 million [$2.94 billion] a year,' he said. 'We would love to have that in place [for next summer].'

The deals are part of an overall strategy to position the Canadian west coast as a key gateway to North America for China's citizens and the country's manufactured goods.

Trade with China jumped 50 per cent to C$22 billion last year.

Ottawa and the four western provinces are spearheading a Pacific Gateway initiative that calls for a three-port west coast strategy with enhanced inland road and rail infrastructure to transport freight across the Rocky Mountains to cities such as Calgary, Edmonton and the United States Midwest.

A C$500 million container port is being built in two phases at Prince Rupert, 1,500km north of Vancouver, which Mr Lapierre said would cut about three days off shipping times from China.

Vancouver, where the Tung family's Terminal Systems is one of two main operators, is spending C$190 million upgrading its Fraser River port to give it an annual handling capacity of three million boxes by the end of next year.

With US west coast ports too frequently plagued by congestion and in the grip of powerful unions, Asian exporters are looking for viable alternative gateways.

But Vancouver, the biggest port on Canada's west coast, has itself suffered from labour and equipment-related delays, including a five-week truckers' strike that closed the port last month and may have cost the provincial economy as much as C$22 billion, according to the Vancouver Board of Trade.

Mr Lapierre's ministry intervened early last month to provide a 90-day licensing deal that reopened the port. But he knows it is only a Band-aid solution and has set up a taskforce to hammer out a more permanent deal.

'We need a long-term solution because we cannot have a major port shut down because one group decides to blackmail. We must have a common front with labour,' he said. 'We know [the Pacific Gateway strategy] is our chance to be part of [Asia's] economic revolution. Either we get smart now or we miss the boat.'