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HomeBlogCanada Needs to Capitalize on China’s Economic Recovery

Canada Needs to Capitalize on China’s Economic Recovery

Image credit: Paul Kagame, michael_swan

Canadian exports to China helped Canada soften the blow of its pandemic recession, providing a leeway to compensate for lower trade volumes with Canada’s southern neighbour.

By Pouyan Kimiayjan

The Chinese economy has begun its post-Covid economic recovery, expanding by 2.3% in 2020 and becoming the only G20 country to grow in the last year. The World Bank forecasts that the Chinese economy will grow by 7.9% in 2021. This robust recovery also helped lessen the severity of the global financial downturn. Surprisingly, despite the short-term contraction in the Chinese economy and increased political tensions between Ottawa and Beijing, Canadian firms increased their exports to China. From January to September 2020, compared to the same period in 2019, Canadian exports increased by 4.22%, while exports to other countries were down 15%. The decline in the US economy has led to increased trade activity between Canada and China. For example, amid a slowdown in US economic activity in May 2020, Canadian crude that normally travels to the American West Coast found a new market in China. In other words, Canadian exports to China helped Canada soften the blow of its pandemic recession, providing a leeway to compensate for lower trade volumes with Canada’s southern neighbour.

Meanwhile, the Biden administration’s expected executive orders on blocking the Keystone XL pipeline and strengthening of “Buy American” rules have worried Canadian officials and business leaders. Prime Minister Trudeau has asserted that he will argue for protecting the pipeline while the Canadian Manufacturers & Exporters (CME) association has urged the federal government to engage the new administration to secure access to the US government procurement market for Canadian manufacturers. Protectionist sentiments have become mainstream in both of America’s major political parties and have further necessitated the imperative of diversifying Canada’s export markets.

On the other hand, as of November 2020, the two countries’ goods balance stands at -$2.6 billion, with $2.1 billion in exports and $4.7 billion in imports from China. More exports benefit the Canadian economy and further translate to more leverage in future negotiations with China and the Asia Pacific region as a whole. In this regard, new trade and investment arrangements are needed to facilitate and sustain the recent increase of Canadian exports to China. Moving forward, in order to build on the current level of trade activity between the two countries, Ottawa can adopt the European approach and work towards signing a comprehensive agreement on investment with China that protects Canadian business interests and allows for stable long-term trade relations with the country. The EU-China Comprehensive Agreement on Investment (CAI), signed in late December 2020, provided a more level playing field to European companies in China. For example, the CAI set rules against the forced transfer of technologies, addressing a major Western concern on intellectual property theft. Another example includes China’s commitment to phase out and remove joint venture requirements for the automotive sector, as well as removing joint venture requirements for banking services.

It is worthy of mention that during the Harper government, the two countries signed the Canada-China Foreign Investment Protection and Promotion Agreement (FIPA), which came into force in 2014. While this arrangement broadly addressed intellectual property rights and joint ventures, citing the two countries’ commitments to signed international agreements, FIPA’s legal text lacks CAI’s clarity and detailed obligations that facilitate a more fair playing field for foreign investors. It is imperative for Ottawa to address FIPA’s shortcomings and build on the 2014 investment agreement.

The timing of the EU-China CAI’s signing also demonstrates the European Union’s hopes for capitalizing on China’s post-pandemic recovery. If Canada and China address mutual political concerns, Ottawa can initiate a similar timely initiative. However, prior to any political breakthrough in Sino-Canadian relations, there must be a thaw in diplomatic relations in US-China relations. During the Trump administration, the arrest of Meng Wanzhou for violating US sanctions and the subsequent arbitrary detention of two Canadians, Michael Spavor and Michael Kovrig, negatively impacted bilateral relations between Ottawa and Beijing.

In this respect, there needs to be a shift in US-China relations to help improve Canada-China economic ties. While Joe Biden has refrained from signaling the lifting of tariffs in the short-term, experts argue that there will be an eventual dial-back on tariffs that target Chinese products. The Biden administration will instead focus on coalition building and employing a more diplomatic approach in tackling China’s economic rise. In parallel, Prime Minister Trudeau is expected to engage the Biden administration to help resolve the arrest of Canadians held in China. This diplomatic outreach is an opportunity for the Trudeau government to demand a goodwill gesture from Washington, particularly as the two countries continue to have differences over energy and trade policy. Nonetheless, scaling back the trade war and addressing the case of Meng Wanzhou and the ‘two Michaels’ will improve the broader Western-Chinese political relations, which can allow Canada to seize this opportunity to advance economic diversification, pursue arrangements similar to the EU-China investment agreement, and ultimately benefit from China’s post-Covid economic recovery.

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Panel 4: Pathways to Manage Non-Proliferation in the Middle East (4:30 PM - 5:45 PM ET)

The Western powers have failed to effectively manage the increasing threat of proliferation in the Middle East. While the international community is concerned with Iran’s nuclear program, Saudi Arabia has moved forward with developing its own nuclear program, and independent studies show that Israel has longed possessed dozens of nuclear warheads. The former is a member of the treaty on the Non-Proliferation of Nuclear Weapons (NPT), while the latter has refused to sign the international agreement. 

On Middle East policy, the Biden campaign had staunchly criticized the Trump administration’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iran Nuclear Deal and it has begun re-engaging Iran on the nuclear dossier since assuming office in January 2021. However, serious obstacles remain for responsible actors in expanding non-proliferation efforts toward a nuclear-free zone in the Middle East. 

This panel will discuss how Western powers and multilateral institutions, such as the IAEA, can play a more effective role in managing non-proliferation efforts in the Middle East.  

Panelists:

Peggy Mason: Canada’s former Ambassador to the UN for Disarmament

Mark Fitzpatrick: Associate Fellow & Former Executive Director, International Institute for Strategic Studies (IISS)

Ali Vaez: Iran Project Director, International Crisis Group

Negar Mortazavi: Journalist and Political Analyst, Host of Iran Podcast

David Albright: Founder and President of the Institute for Science and International Security

 

Closing (5:45 PM – 6:00 PM ET)

Panel 3: Trade and Business Diplomacy in the Middle East (3:00 PM - 4:15 PM ET)

Canada’s multicultural social landscape includes prosperous Middle Eastern communities. While such communities are often underrepresented in the Canadian political process, they are significantly impacted by different social, political, and economic developments in the Middle East. Simultaneously, such communities have become financially successful and can help promote trade between Canada and the region. In this respect, multiculturalism can become a tool for advancing Canada’s business interests abroad.

Ottawa’s pro-immigration multicultural policies have helped attract skilled workers from the region, allowing them to integrate and become financially successful dual citizens. The federal government has an opportunity to seize this untapped potential and provide inclusive platforms that can help facilitate trade in the region, advocating business diplomacy between Canada and these immigrants’ home countries in the region.

This panel will investigate the trade and investment opportunities in the Middle East, discuss how facilitating economic engagement with the region can benefit Canadian national interests, and explore relevant policy prescriptions. 

Panelists:

Hon. Sergio Marchi: Canada’s Former Minister of International Trade

Scott Jolliffe: Chairperson, Canada Arab Business Council

Esfandyar Batmanghelidj: Founder and Publisher of Bourse & Bazaar

Nizar Ghanem: Director of Research and Co-founder at Triangle

Nicki Siamaki: Researcher at Control Risks

Panel 2: Arms Race and Terrorism in the Middle East (12:00 PM - 1:15 PM ET)

The Middle East continues to grapple with violence and instability, particularly in Yemen, Syria and Iraq. Fueled by government incompetence and foreign interventions, terrorist insurgencies have imposed severe humanitarian and economic costs on the region. Meanwhile, regional actors have engaged in an unprecedented pursuit of arms accumulation. Saudi Arabia and the United Arab Emirates have imported billions of both Western and Russian-made weapons and funded militant groups across the region, intending to contain their regional adversaries, particularly Iran. Tehran has also provided sophisticated weaponry to various militia groups across the region to strengthen its geopolitical position against Saudi Arabia, UAE, and Israel. 

On the other hand, with international terrorist networks and intense regional rivalry in the Middle East, it is impractical to discuss peace and security without addressing terrorism and the arms race in the region. This panel will primarily discuss the implications of the ongoing arms race in the region and the role of Western powers and multilateral organizations in facilitating trust-building security arrangements among regional stakeholders to limit the proliferation of arms across the Middle East.

 

Panelists:

Luciano Zaccara: Assistant Professor, Qatar University

Dania Thafer: Executive Director, Gulf International Forum

Kayhan Barzegar: Professor and Chair of the Department of Political Science and International Relations at the Science and Research Branch of Azad University

Barbara Slavin: Director of Iran Initiative, Atlantic Council

Sanam Shantyaei: Senior Journalist at France24 & host of Middle East Matters

Panel 1: Future of Diplomacy and Engagement in the Middle East (10:30 AM-11:45 AM ET)

The emerging regional order in West Asia will have wide-ranging implications for global security. The Biden administration has begun re-engaging Iran on the nuclear dossier, an initiative staunchly opposed by Israel, while also taking a harder line on Saudi Arabia’s intervention in Yemen. Meanwhile, key regional actors, including Qatar, Iraq, and Oman, have engaged in backchannel efforts to bring Iran and Saudi Arabia to the negotiating table. From a broader geopolitical perspective, with the need to secure its energy imports, China is also expected to increase its footprint in the region and influence the mentioned challenges. 

In this evolving landscape, Western powers will be compelled to redefine their strategic priorities and adjust their policies with the new realities in the region. In this panel, we will discuss how the West, including the United States and its allies, can utilize multilateral diplomacy with its adversaries to prevent military escalation in the region. Most importantly, the panel will discuss if a multilateral security dialogue in the Persian Gulf region, proposed by some regional actors, can help reduce tensions among regional foes and produce sustainable peace and development for the region. 

Panelists:

Abdullah Baabood: Academic Researcher and Former Director of the Centre for Gulf Studies, Qatar University

Trita Parsi: Executive Vice-President, Quincy Institute for Responsible Statecraft

Ebtesam Al-Ketbi: President, Emirates Policy Centre​

Jon Allen: Canada’s Former Ambassador to Israel

Elizabeth Hagedorn: Washington correspondent for Al-Monitor

Panel 4: Humanitarian Diplomacy: An Underused Foreign Policy Tool in the Middle East (4:30 PM - 5:30 PM ET)

Military interventions, political and economic instabilities, and civil unrest in the Middle East have led to a global refugee crisis with an increasing wave of refugees and asylum seekers to Europe and Canada. Moreover, the COVID-19 pandemic has, in myriad ways, exacerbated and contributed to the ongoing security threats and destabilization of the region.

While these challenges pose serious risks to Canadian security, Ottawa will also have the opportunity to limit such risks and prevent a spillover effect vis-à-vis effective humanitarian initiatives in the region. In this panel, we will primarily investigate Canada’s Middle East Strategy’s degree of success in providing humanitarian aid to the region. Secondly, the panel will discuss what programs and initiatives Canada can introduce to further build on the renewed strategy. and more specifically, how Canada can utilize its policy instruments to more effectively deal with the increasing influx of refugees from the Middle East. 

 

Panelists:

Erica Di Ruggiero: Director of Centre for Global Health, University of Toronto

Reyhana Patel: Head of Communications & Government Relations, Islamic Relief Canada

Amir Barmaki: Former Head of UN OCHA in Iran

Catherine Gribbin: Senior Legal Advisor for International and Humanitarian Law, Canadian Red Cross

Panel 3: A Review of Canada’s Middle East Engagement and Defense Strategy (3:00 PM - 4:15 PM ET)

In 2016, Canada launched an ambitious five-year “Middle East Engagement Strategy” (2016-2021), committing to investing CA$3.5 billion over five years to help establish the necessary conditions for security and stability, alleviate human suffering and enable stabilization programs in the region. In the latest development, during the meeting of the Global Coalition against ISIS, Minister of Foreign Affairs Marc Garneau announced more than $43.6 million in Peace and Stabilization Operations Program funding for 11 projects in Syria and Iraq.

With Canada’s Middle East Engagement Strategy expiring this year, it is time to examine and evaluate this massive investment in the Middle East region in the past five years. More importantly, the panel will discuss a principled and strategic roadmap for the future of Canada’s short-term and long-term engagement in the Middle East.

 

Panelists:

Ferry De Kerchove: Canada’s Former Ambassador to Egypt

Dennis Horak: Canada’s Former Ambassador to Saudi Arabia

Bijan Ahmadi: Executive Director, Institute for Peace & Diplomacy

David Dewitt: University Professor Emeritus, York University

Panel 2: The Great Power Competition in the Middle East (12:00 PM - 1:15 PM ET)

While the United States continues to pull back from certain regional conflicts, reflected by the Biden administration’s decision to halt American backing for Saudi Arabia’s intervention in Yemen and the expected withdrawal from Afghanistan, US troops continue to be stationed across the region. Meanwhile, Russia and China have significantly maintained and even expanded their regional activities. On one hand, the Kremlin has maintained its military presence in Syria, and on the other hand, China has signed an unprecedented 25-year strategic agreement with Iran.

As the global power structure continues to shift, it is essential to analyze the future of the US regional presence under the Biden administration, explore the emerging global rivalry with Russia and China, and at last, investigate the implications of such competition for peace and security in the Middle East.

Panelists:

Dmitri Trenin: Director of Carnegie Moscow Center

Joost R. Hiltermann: Director of MENA Programme, International Crisis Group

Roxane Farmanfarmaian: Affiliated Lecturer in International Relations of the Middle East and North Africa, University of Cambridge

Andrew A. Michta: Dean of the College of International and Security Studies at Marshall Center

Kelley Vlahos: Senior Advisor, Quincy Institute

Panel 1: A New Middle East Security Architecture in the Making (10:30 AM -11:45 AM ET)

The security architecture of the Middle East has undergone rapid transformations in an exceptionally short period. Notable developments include the United States gradual withdrawal from the region, rapprochement between Israel and some GCC states through the Abraham Accords and the rise of Chinese and Russian regional engagement.

With these new trends in the Middle East, it is timely to investigate the security implications of the Biden administration’s Middle East policy. In this respect, we will discuss the Biden team’s new approach vis-à-vis Iran, Yemen, Saudi Arabia, and Israel. The panel will also discuss the role of other major powers, including China and Russia in shaping this new security environment in the region, and how the Biden administration will respond to these powers’ increasing regional presence.

 

Panelists:

Sanam Vakil: Deputy Director of MENA Programme at Chatham House

Denise Natali: Acting Director, Institute for National Strategic Studies & Director of the Center for Strategic Research, National Defense University

Hassan Ahmadian: Professor of the Middle East and North Africa Studies, University of Tehran

Abdulaziz Sagar: Chairman, Gulf Research Center

Andrew Parasiliti: President, Al-Monitor