For both Canada and China, this is a big diplomatic change. Just last week, Canadian PM Mark Carney sat down with Chinese leader Xi Jinping to provide a much-needed reboot to their relationship. This meeting will be historic! It is the first visit by a Canadian prime minister to China since 2017, highlighting the importance of this new partnership. The leaders released a joint statement laying out their ambitious plans to increase exports to China by 50% by 2030. They held discussions on increasing two-way investments in priority sectors including clean energy, technology, agri-food and wood products.
This latest extension of cooperation comes against a complicated history. Canada’s relationship with China have gone through unprecedented stress over the past few years. Response to arrest of Huawei executive in 2018 In 2018, U.S. authorities arrested Huawei chief financial officer Meng Wanzhou. Immediately following that, China arrested two Canadian nationals, charging them with espionage. Though these are hurdles, both countries seem hopeful about the prospects of better relations and economic engagement.
Key Developments in Trade Relations
In return, and as part of this strategic partnership, Canada has agreed to remove tariffs on Chinese EVs. The new agreement allows for 49,000 Chinese EVs to enter the Canadian market with a reduced tariff rate of 6.1%. This action will help to make Canada’s growing electric vehicle market even more robust. It will help facilitate increased cooperation between the two countries in the burgeoning clean energy economy.
Beyond the EV-related developments, this is expected to be the first step toward a major reduction of Chinese tariffs on Canadian canola seed. China is prepared to reduce its tariffs on Canadian canola seed to less than 15% by March 1. This is a stunning drop from before, when execution rates hovered around 85%. This decrease is likely to spark new investment interests for Chinese joint ventures in Canada’s auto industry.
“Together we can build on the best of what this relationship has been in the past to create a new one adapted to new global realities.” – Mark Carney
The negotiations between Canada and China encouraged advances made in the resolution of outstanding trade concerns through continued engagement. The joint statement showed both countries’ eagerness to address outstanding concerns and work together to build trade relations even stronger.
A Shift from Recent Tensions
The Canada–China relationship is deepening, a worrying turn from recent years’ trends. Until now, G7 countries, including Canada, have shared concerns over China’s international behavior and its reported meddling in democratic institutions and elections. The new deal represents a commitment on both parties’ part to move past what had happened before and work towards economic advantages for both states.
For its part, in 2024 Canada retaliated with its own generalized 100% tariff on Chinese goods, as a counter move in response to rising tensions. This tariff will be eliminated within the framework of the newly formed strategic partnership. Easing or eliminating trade barriers will increase economic cooperation and benefit all parties involved. This step will serve to bolster the multilateral system, which has faced unprecedented challenges in recent years.
“Advance the building of a new type of strategic partnership between China and Canada.” – Xi Jinping
Both leaders emphasized their commitment to making “historic gains” in crucial areas such as agriculture and energy, indicating a mutual desire for sustainable growth that benefits both nations.
Looking Ahead
As Canada and China move forward down this new collaborative course, the effects on the current global trade landscape could be substantial. Partnership Member and local economic development champion, Strengthening our economic bonds through this partnership. It aims to shore up a rules-based, multilateral system that has been under severe pressure.
The deal is expected to open the door for increased collaboration in several areas, including the arts. It seeks to improve bilateral economic relations and settle past disputes. Each country is now navigating uncharted waters. Through these efforts, they seek to establish a more equitable partnership that reflects the new international order and moderate any anti-China backlash.
