TTP could benefit Canada-China trade relations : Analysts,CanCham上海加拿大商会微信公众号文章

Dramatic change is unlikely, but it opens the door for new initiatives

The formation of the Trans-Pacific Partnership this week could spur further economic relationships between Canada and China despite Beijing not being a member of the 12-nation trade pact, observers and experts said Tuesday.

But, they added, it is too early to tell exactly how Canada’s involvement in the TPP will affect its economic links with China — Ottawa’s second-largest trade partner — either through existing TPP mechanisms or Beijing’s potential counter-response of pursuing more bilateral trade agreements.

Many observers view the TPP, which reached an agreement on Monday in Atlanta, as a U.S.-led economic initiative to counter the growing influence of China in regional and global trade regulation and governance. The TPP agreement could potentially create a free-trade block including Canada, the U.S., Japan, Mexico and Australia that would account for 40 per cent of the global economy.

But Yves Tiberghien, director of the University of B.C.’s Institute of Asian Research, noted TPP negotiations have been highly visible for at least five years, and Beijing has already adopted a number of counter-initiatives, such as the Asian Infrastructure Investment Bank (AIIB), the One-Belt-One-Road (OBOR) strategy and the establishment of the Shanghai Free-Trade Zone.

As such, dramatic changes to Canada’s relationship with China in light of the TPP would be unlikely, he said.

“No one’s surprised by the TPP,” Tiberghien said. “Politically, there’s no massive effect. The TPP has been a dominant reality for more than five years. A lot of the Chinese reaction has happened already. The issue is really not with Canada but a larger, global game between the United States and China.”

Tiberghien did note, however, that the TPP will give China more incentive “to accelerate their countermoves” in pursuing trade deals, a notion with which Andreas Schotter, professor of international business at the Ivey Business School in London, Ont., agrees.

“China already has many individual agreements with TPP members but will certainly feel more pressure now to secure new deals,” Schotter said. “Both (the AIIB and OBOR) are very likely to get more serious consideration.”

Schotter added that Canada can gain more trade with China through this process, but Ottawa cannot rely only on the TPP to drive trade with Asia.

“Canada, in my opinion, has greatly underperformed in regards to effective China trade relations,” he said. “I see a danger that this deal will cause more complacency on the Canadian side. I strongly suggest to more actively pursue bilateral trade deals with China.”

Eva Busza, vice-president of research and programs at the Asia Pacific Foundation, said China’s initiatives such as OBOR have been underway for some time, and changes to them are unlikely even with the TPP in place.

“China’s OBOR initiative is proceeding along its own timetable,” Busza said. “Much research and exploratory work is already underway, and I doubt that it will be much affected by the TPP timetable.

“What we may want to be watching is whether the China led Regional Comprehensive Economic Partnership (RCEP) initiative will gather new steam and whether in the case of Canada, China will be signalling its continued interest in accelerating discussion on a Canada-China free trade agreement.”

She noted also that, even though many view the TPP and China’s efforts as competing forces, there may be interest from both sides for Beijing to eventually join the TPP.