The agreement.
Amid unstable and over politicised global trade Canada and China have announced a preliminary agreement that is primarily aimed at resolving longstanding economic disputes with the goal of fostering new opportunities. The deal fosuses heavily on the electric vehicle industry and agriculture products such as Canada’s canola. Canada is set to benefit substantially in several ways such as job creation and consumer end cost savings. But, most notably it is a first step for Canada to better diversify their strategic positioning to counter their over-reliance on the US market.
Agricultural Exports.
At the core of the proposed agreement Canada is posed to better develop their market access which will help boost Canadian exports. China through the agreement has committed themselves to specifically cutting tarrifs on Canadian canola seed from 84% to approximately 15%. The change in tarrifs on canola seed is projected to bring in an estimated $4 billion annually which will heavily boost profit and incomes for Canadian farmers and Canadian agriculture. China has also promised to lift tarrifs on other agriculture products such as canola meal, lobsters, crabs, and peas which is estimated to bring in nearly an additional $3 billion in export revenue. Therefore, in total there is a potential for the Canadian economy to bring in $7 billion from new markets which will further boost Canadian businesses and help stabalise trade flows.
EV Imports and Innovation.
Canada has agreed to reduce their 100% tarrif imposed on Chinese electric vehicles to only 6.1%, and allow for the import of an estimated 49,000 Chinese made electric vehicles on an annual basis. Although, the number of imports only ammounts to an estimated 3% of Canada’s total new vehicle market the purpose is to drive new joint-venture investment in cooperation with Chinese based firms. Furthermore, this is set to create new domestic manufacturing jobs in Canada and help strenghten both Canada’s electric vehicle supply chain systems and their intended transition to clean energy. It has been agreed to further assist Canada’s goal of furthering their green energy development that by 2030 at least 50% of the imported Chinese electric vehicles must be priced under $35,000 to help further consumer affordability. In turn, this has the potential to further competitive pricing which would benefit the consumer while cultivating innovation the green technology sector.
Strategic Resilience.
The deal helps reduce Canada’s current situation of being overreliant on the US market, which is even more important due the Trump administrations protectionist policies. Through the deepening of ties with China which is already Canada’s second largest trade partner behind the United States with a $130.9 billion worth in bilateral trade in the previous year could better help secure long-term stability for Canada’s economy. There is also the further potential for cooperation in energy, clean tech, and climate initiatives. It also helps position Canada as a bridge between China and the West if collaboration is developed further.
Conclusion: Path towards Prosperity.
Although there are plenty of issues that still remain such as geopolitical issues relating to Canada’s current reliance on the US in terms of security and trade, a move towards developing a pragmatic partnership open a new path of self-reliance. Canada can leverage this dialogue with China to develop better trade relations with other countries most notably members of BRICS to further diversify their global trade.
BakuTiflis 