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Why Canada Needs Dialogue With China, Especially When We Disagree

Written By:
This commentary is published as part of IPD’s project, Canada’s Interests in a Shifting Order.

Canadians await their government’s Indo-Pacific Strategy this month. Minister Mélanie Joly’s November 9 speech gave us a preview, essentially that trade will continue, but business is on its own and should know the risks.

Rest assured, Canadian business is well aware of China risks and has been focused on diversification even without official exhortation to do so. Any company that wants to be globally competitive is already diversifying. But companies must follow their customers, and whether business-to-business or selling to consumers, global customers are in China. Recently, a Canada China Business Council (CCBC) member was told by a large client, “if you can’t supply to me everywhere I do business in the world, including China, I’ll have to find another supplier.”

In a 2020 survey, CCBC members voiced a desire for Canada to have a China strategy – even a hardline one – as it reduces uncertainty. Other countries take hardline approaches to China but still maintain relationships that allow for two-way communication. Canada has many bilateral dialogues with China, all of which have been frozen for nearly four years, meaning that we can’t communicate our dissatisfaction on any issues, from Taiwan to trade. This prevents us from fighting for fair treatment in China for our companies, which are losing ground to competitors from like-minded Western countries.

Canada has many bilateral dialogues with China, all of which have been frozen for nearly four years, meaning that we can’t communicate our dissatisfaction on any issues, from Taiwan to trade. This prevents us from fighting for fair treatment in China for our companies, which are losing ground to competitors from like-minded Western countries.

Despite all the uncertainty, goods trade between Canada and China steadily increased between 2019 and 2021, and trade in services grew prior to COVID’s impact on tourism and education. Canadian exports to China grew 14 percent year-over-year in 2021 – a new record. COVID lockdowns in China make 2022 less robust, but demand exists and will return. Even in a rough geopolitical environment, other nations are also trading more with China. Except for certain high-tech supply chains, US trade with China continues to grow. And China has surpassed the US to become the EU’s largest trading partner in goods. So, it is critical that Canada stay engaged, lest we risk falling behind.

Unfortunately, data shows that Canada is indeed already falling behind. Despite 2021’s export growth, for many industries, business with China is not going well, as shown by CCBC’s 2021 business survey. Canadian companies are less profitable and optimistic than those from the US, Europe and the UK. Companies in those countries are being granted market access and are breaking down barriers, while Canadian companies have little hope of catching up while bilateral channels remain frozen. China’s zero-COVID policy, which disrupts regular business travel, also disproportionately impacts Canadian firms, many of which rely on travel for business development. Companies with teams and operations in China are faring better.

My US counterparts tell me that U.S.-China relations are worse than they’ve ever been, yet the US sends 9% of its exports to China, while Canada only sends 4.5% of our global exports there. While 4.5% of Canadian exports going to China doesn’t sound like a lot, it is 7x our exports to India. The ranks of middle-class Chinese are growing and consuming, so demand in China outstrips that anywhere else in the world. As companies diversify, they also know that finding demand equivalent to China’s is not easy.  If trade with the world involves a series of open windows, China’s is currently large and open wide for many sectors, while the windows in other Asian countries are small and just starting to open.

Key products demanded by China’s growing middle class, like pet food and meat, are moving smoothly from the US but blocked from Canada. The pet food industry alone is losing tens of millions of dollars this year, with fears that in a sector with 13.5% growth, Chinese pet owners will shift preferences from Canadian pet food to US brands, causing a massive loss of the advantage Canada has gained in this market. Year-to-date pet food exports to China are down nearly 40%.

There is no good reason for these market access issues, but as US officials frequently meet with their Chinese counterparts, Washington is demanding its voice be heard and Ottawa is not. Resumption of bilateral discussions is the only way Canada can hope to catch up. Many of the frozen dialogues allow us to voice concerns on security, interference, and other issues. One of the easiest – and for the business community, the most important – is the resumption of the Canada-China Economic and Financial Strategic Dialogue, which will help both governments address a growing list of commercial challenges, many of which can easily be crossed off the list if such dialogue takes place. This dialogue was established in 2016, with the first official round in 2018 yielding a variety of agreements.  Bilateral tensions began just weeks afterward with the detentions of Meng Wanzhou, Michael Kovrig and Michael Spavor, resulting in the freezing of such mechanisms.

China is a complicated country, with many issues on which Canada rightfully disagrees. Canada needs to make a conscious choice to engage and use the relationship with China to explain our point of view, to push on issues we feel strongly about, but also to build Canada’s prosperity. A bilateral relationship with such a large country needs to encompass multiple tracks, including channels that allow us to share with China why Canada sees things differently.

Speaking out on issues is important, but even more important is speaking with China on these issues.

A bilateral relationship with such a large country needs to encompass multiple tracks, including channels that allow us to share with China why Canada sees things differently. Speaking out on issues is important, but even more important is speaking with China on these issues.

We can fight for what we think is right, while also fighting for our own position. If we’re falling behind our competitors in profitability and market access in China, it will impact our competitiveness everywhere in the world. This month’s G20 summit in Bali may have featured an uncomfortable interaction between Prime Minister Trudeau and President Xi. But this does not affect the fact that Canadian leaders must meet with their Chinese counterparts at these sorts of multilateral gatherings as a first step toward restarting dialogue.

Written By:
Sarah Kutulakos
Sarah Kutulakos is Executive Director and COO of the Canada China Business Council (CCBC).
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.  


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)

What is the current economic landscape in the Middle East? While global foreign direct investment is expected to fall drastically in the post-COVID era, the World Bank reported a 5% contraction in the economic output of the Middle East and North African (MENA) countries in 2020 due to the pandemic. While oil prices are expected to rebound with normalization in demand, political instability, regional and geopolitical tensions, domestic corruption, and a volatile regulatory and legal environment all threaten economic recovery in the Middle East. What is the prospect for economic growth and development in the region post-pandemic, and how could MENA nations promote sustainable growth and regional trade moving forward?

At the same time, Middle Eastern diaspora communities have become financially successful and can help promote trade between North America and the region. In this respect, the diaspora can become vital intermediaries for advancing U.S. and Canada’s business interests abroad. Promoting business diplomacy can both benefit the MENA region and be an effective and positive way to advance engagement and achieve foreign policy goals of the North Atlantic.

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


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.



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. 


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. 



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.


Ferry de Kerckhove: Canada’s Former Ambassador to Egypt

Dennis Horak: Canada’s Former Ambassador to Saudi Arabia

Chris Kilford: Former Canadian Defence Attaché in Turkey, member of the national board of the Canadian International Council (CIC)

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.


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.



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