China soon could strike a free-trade deal with Canada making it the first such agreement between Beijing and a North American country.
Before it can move forward, however, China requires Canada to meet certain conditions such as the removal of restrictions on China’s state-owned investments in Canada’s oil and gas sector.
Beijing is also calling on Ottawa to produce an energy pipeline to the coast.
Han Jun, Vice-Minister of Financial and Economic Affairs, recently visited Ottawa to discuss the provisions with Canadian bureaucrats.
“What is China most in need of?” asked Hun. “We have a shortage of agricultural products. China is the biggest importer of agricultural products in the world and, also, we are one of the countries with the highest dependency on imported energy from other countries.
“If there is an FTA arrangement between China and Canada, you can see a flooding of potash, agricultural products and energy products from Canada to the market of China.”
The communist nation is seeing a rapid expansion of its urban middle class along with its demand for Canadian-produced goods such as pork, wine and fish.
Between 2012 and 2013, Canadian seafood exports to China rose by 16.2 percent.
During a presentation to the Borden Ladner Gervais law firm, Han said China is also seeking green products from Canada to cut its carbon emissions. China spent 89.5 billion on clean energy in 2014.
Han estimates a free-trade deal between China and Canada would mean a $7.7 billion increase in Canadian exports and the creation of 25,000 Canadian jobs.
These statistics could seem very appealing considering that $49 billion out of the $63 billion in bilateral trade between the two countries during the first nine months of last year came from Chinese imports.
Nonetheless, Ottawa has some hurdles to overcome.
Canada’s former conservative government placed strict investment rules on Beijing after China National Offshore Oil Corp. agreed to purchase Nexen Inc. for $15 billion.
Colin Robertson, a senior fellow at the Canadian Global Affairs Institute, says the Chinese felt dismayed by these restrictions.
“The Chinese felt that we changed the rules for special state-owned enterprises,” Robertson told Canada’s The Globe and Mail. “They feel the rules that have been imposed are very difficult. They would like a re-examination of that.”
China also wants Canada to ease potential oil trade by building a pipeline to the coast.
“They would like to buy our Canadian oil and gas, but they can’t get it there because they don’t have the pipeline,” Robertson said. “Basically, they want us to get pipelines, as do the Japanese and Indians, to the coast so they can get access to oil and gas.”
This concession could be very difficult for Canada to meet.
The new liberal government essentially squashed the possibility of the Northern Gateway Pipeline after it banned crude-oil tanker traffic in the North Coast of British Columbia. The future of a pipeline now lies with Energy East, which could take oil from Western Canada to refineries and port terminals in New Brunswick.