Canada Embraces Free Trade and Globalization

By Lisa Thomson 

Canada’s economy isn’t in great shape. This past summer, 31,000 jobs were lost when 10,000 new ones were expected and the country’s trade deficit hit a record high of $3.6 billion.

But one thing that is going well for the Canadian economy is an effort to push ahead a pro-free trade agenda. These policies have come to the forefront most recently with the signing of the CETA free trade deal with Europe—in spite of opposition in Belgium—and Prime Minister Justin Trudeau’s announcement that China and Canada would pursue exploratory talks about free trade.

The push toward free trade is bucking an isolationist trend, and in pursuing the option with China in particular, Canada demonstrates why free trade and globalization can be a path to diversity, independence, and maybe even human rights.

One of this year’s most prominent developments has been a retreat from globalization. Across Europe, politicians and citizens alike are rethinking open border and immigration policies while Britain voted in a referendum to withdraw from the European Union in an act of shocking isolationism. Above all, one of the hallmarks of the American presidential campaign has been a rejection of major international trade treaties by both parties’ candidates, mainly threats to tear up NAFTA and can the Trans-Pacific Partnership.

Canada has 11 free trade agreements currently in force, and according to the World Bank, trade accounts for 65 percent of the country’s economy. The oldest deal is NAFTA, which came into effect in 1994 after superseding a previous deal between Canada and the U.S. from 1989.

Trade relations between Canada and the U.S. have long been the bedrock of Canada’s trade policy, with Canada being the U.S.’s second-largest trade partner. In 2015, Canada-U.S. trade in goods and services totaled an estimated $662.7 billion. But by pursuing agreements with other countries, Canada is diversifying its options, which will help buffer its reliance on its relationship with the U.S.

NAFTA is Canada’s only free trade agreement with one of the world’s top 10 GDP countries—the U.S. Canada does trade freely with other countries, including Panama, Israel, Chile, and Peru, but these aren’t exactly huge trade partners. Most of the countries Canada has agreements with have economies that rank in the top third of the world, often a far cry from the top 10.

Although the growth rate of China’s economy is slowing down, it’s the second largest economy in the world, which makes a trade deal appealing for Canada according to Jia Wang, acting director of the China Institute at the University of Alberta.

“Canada is rich in resources and needs capital, and China has a huge population and a huge market, and that’s what Canada doesn’t have,” she said.

In September, Trudeau traveled to China, where he signed $1.2 worth of trade deals, announced new visa centers, and initiated exploratory talks for a possible free trade agreement.

Many in Canada’s business community have welcomed the announcement, including Yuen Dau Woo, president of HQ Vancouver, an organization that helps businesses relocate to Vancouver.

“It’s very significant—it’s what I call the reset of the Canada-China relationship. A relationship that was floundering at best—it was static because of a lack of enthusiasm and really some bad decisions on the part of the previous government. There’s a new tone to bilateral ties and a new willingness to deepen and strengthen trade and investment and people-to-people relations.”

Founded 15 months ago, Woo says HQ Vancouver has since been approached by seven Chinese companies establishing or signaling that they’ll establish North American or Canadian head offices in Vancouver. He is hopeful that increased investment between the two countries will improve trade and cultural relations, but remains cautiously optimistic about the reset and is waiting to see what follows.

Vancouver is possibly one of the best examples in Canada of a city focusing its energy on becoming diverse and global. With over 40 percent of its population of Asian descent, it is often touted as the most Asian city outside of Asia. Woo says Vancouver’s strong cultural ties to Asia have made the city the gateway to North America for many Chinese businesses.

Not only is Canada a gateway to North America, a continent with over half a billion people, but it is also a country with two things China needs: natural resources and both political and economic stability.

Jia Wang welcomes increasing economic and cultural ties between Canada and China, but warns that China is more eager for the deal than Canada. In 2015, Canada exported just over $20 billion worth of products to China, while it imported over three times that.

She also sees the agreement as a way for Canada to extend its global influence on issues such as human rights, saying that it’s better to engage on these issues than to avoid them entirely.

Using trade as a way to move the needle on issues such as human rights has long been one of the underlying benefits of globalization. Rather than isolating nations and leaving them to their own devices, trade brings with it a degree of global accountability. Trudeau has staked much of his reputation on being a moral authority, and if he’s going to hold onto his image as a beacon of human rights, dignity, and equality, then his government will need to make discussions about China’s stance on human and labor rights a central focus of trade talks.

Tracey Ramsey is a member of the NDP, Canada’s opposition party, and is the Critic for International Trade and vice chair of the Parliamentary Standing Committee on International Trade.

“The NDP has serious concerns about human rights, labor conditions, environmental conditions,” she said. Ramsey stressed the importance of improving standards in these areas in any agreements, and emphasizes the importance of raising concerns around human rights violations in China as early as the stage of exploratory talks.

For her, any agreements going forward also need to benefit middle class Canadians. Deals must ensure small- and medium-size businesses will have access to the resources they need to establish trade with China and with global markets more generally. Ramsey recommends more business education that focuses on how companies can position themselves globally.

Xi Jiang, a Chinese-Canadian who lives in Vancouver, says she spends about five weeks each year doing business in China. With strong economic, cultural, and family ties to both countries, she too welcomes the move to improve relations. “People are human and we need to communicate to try to understand,” she said, advocating for efforts to find common interests that will benefit each country.

At a time when it might seem politically advantageous to say no to free trade and globalization, Canada is moving toward it—as it should.



Lisa Thomson is a Canadian journalist and a former editorial assistant at World Policy Journal.

[Photo courtesy of Wikimedia Commons]

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