Trade dispute, policy divisions hang over Canadian PM’s trip to China

By David Ljunggren

OTTAWA (Reuters) – Canadian Prime Minister Justin Trudeau will visit Beijing this week seeking deeper ties with China but a trade dispute, government divisions over China policy and the case of a detained citizen could limit his gains.

China welcomed last year’s election victory by Trudeau’s Liberals, recalling fondly that his father Pierre Trudeau was prime minister when Canada formally established relations with Beijing in 1970.

Canada's Prime Minister Justin Trudeau   in Ottawa, Ontario, Canada, August 24, 2016. REUTERS/Chris Wattie

Canada’s Prime Minister Justin Trudeau in Ottawa, Ontario, Canada, August 24, 2016. REUTERS/Chris Wattie

But nostalgia will only go so far in discussions over contentious issues after Trudeau arrives in Beijing on Tuesday at noon in one of his biggest foreign policy tests so far.

China, the world’s second-largest economy, is expected to try to sell Trudeau, who left for China on Monday, on a free trade treaty similar to the pacts Beijing has sealed with Australia and New Zealand.

But there is no near-term chance of agreement, a senior Canadian government official told reporters last week.

“We’re looking to deepen trade with China, though no decision has been made on any kind of formal free trade agreement at this point,” the official said.

Well-placed sources said last month there were divisions inside Ottawa as to how much Canada should open its markets and economy to China. One person directly involved in the matter said this was still the case.

“The government is effectively paralysed over its China policy,” the source said.

Officials say they also need to take into account Canadians’ hesitation about closer links with China.

A poll for the Asia Pacific Foundation of Canada think-tank released on Monday showed that while 46 percent of Canadians supported a free trade treaty with China, only 11 percent backed investment by Chinese state-owned enterprises.

The two nations are arguing about shipments of Canadian canola, with tougher Chinese inspection standards due to come into force on Sept. 1 that threaten C$2 billion ($1.5 billion) in annual exports.

Trade Minister Chrystia Freeland says bilateral ties cannot deepen until the matter is resolved.

Trudeau, who officials said would raise the matter, says Canada wants more foreign investment while ensuring firms enjoy access to Chinese markets.

“These are the interests that we are going to be strongly and carefully balancing as we engage with the economic powerhouse that is China,” he said on Friday.

The two sides are set to announce annual high-level meetings, said another government source.

In a statement, China’s embassy in Ottawa said “we expect the two sides can reach more consensus in the areas of political contacts, trade and economic cooperation.”

Trudeau also says he will raise human rights, an issue of great sensitivity in Beijing.

Although Ottawa is pressing the case of Canadian citizen Kevin Garratt, who was indicted on charges of spying and stealing state secrets earlier this year, the second government source said there was no sign he would be released soon.

($1=$1.30 Canadian)

(Editing by Jeffrey Benkoe and Alan Crosby)



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