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Justin Trudeau says trade talks with Beijing must consider role of China’s state-owned firms

Discussions must reflect ‘challenges, opportunities, advantages’ when different systems try to collaborate, Canadian PM says

PUBLISHED : Thursday, 07 December, 2017, 4:12pm
UPDATED : Thursday, 07 December, 2017, 4:27pm

Canadian Prime Minister Justin Trudeau said on Thursday that any trade talks with China would have take into consideration the role of state-owned enterprises.

In 2012, Canada’s former Prime Minister Stephen Harper imposed restrictions on the acquisition of oil-sands companies by state-owned enterprises after China’s CNOOC Ltd bought Nexen Inc, of Calgary.

Speaking in response to a question at the Fortune Global Forum in China, Trudeau said Beijing’s involvement in strategic industries was “characteristic of their approach”.

“That has particular implications when you have state-owned enterprises competing in the same sphere as private enterprises,” he said.

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“Any discussion on trade as we move forward needs to reflect on the challenges, the opportunities, the advantages and the inconvenience when two systems that are different are trying to collaborate, so we can create benefits for both groups of citizens.”

The prime minister was in the southern city of Guangzhou to wrap up a five-day visit to China. His comments followed the unexpected breakdown in Canada’s efforts to launch free-trade talks with China, with officials saying the two sides would continue discussions.

As of midday Thursday, it appeared that Trudeau would be leaving China without a breakthrough. Canada’s Trade Minister Francois-Philippe Champagne spent two extra days in Beijing to pursue talks about the eventual framework of the agreement with Chinese Commerce Minister Zhong Shan and other officials, a Canadian government spokesman said.

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Champagne was expected to head back to Ottawa with Trudeau on Thursday evening, as the Liberal government regroups on its next trade move.

“We believe a free-trade deal will benefit both Canada and China,” Gao Feng, a spokesman for China’s commerce ministry, told reporters on Thursday in Beijing.

“China will keep working with the Canadian side in practical and open attitude to promote the China-Canada free-trade zone, creating conditions to begin the trade talks as early as possible.”

Also on Thursday in Guangzhou, Trudeau said he would consider one-on-one talks with the US on trade, if negotiations to update the North American Free Trade Agreement failed.

“We will always look at different opportunities,” he said. “We’re ready for anything, when things come forward. The new administration has shown a willingness to disrupt the patterns of past behaviour and look for new models, and we’re willing to entertain next steps forward.”

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The prime minister said the 23-year-old Nafta “needs to be updated” and warned that cancelling the pact would harm Canadians.

While Trudeau reaffirmed his desire to save Nafta, which underpins US$1.2 trillion of trade, his comments are likely to fuel speculation that Canada is preparing to move ahead without Mexico. The remarks come just weeks after other members of the Trans-Pacific Partnership criticised Canada for upending efforts to resurrect the trade pact without the US.

The Canadian government has repeatedly said it was committed to working with Mexico to renew Nafta, but officials have sometimes signalled a willingness to consider a two-way pact of the kind US President Donald Trump prefers.

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Starting talks with China could strengthen Trudeau’s hand in Nafta negotiations, showing that the US’s second-largest trading partner has other options. But a personal visit to Beijing – the second in as many years for Trudeau – was not enough to overcome Chinese concerns about the “progressive” trade provisions Canada insists must be part of any deal.