Negotiating a Canada-China free trade agreement would increase investment, spur exports and create high-value Canadian jobs, a new study says.
The report – “Chasing China: Why an economic agreement with China is necessary for Canada’s continued prosperity” – estimates that a free trade deal would generate $7.8 billion in additional economic activity within 15 years, supporting 25,000 new Canadian jobs.
Commissioned by the Canadian Council of Chief Executives and the Canada-China Business Council, the report was written by Laura Dawson and Dan Ciuriak. A specialist in trade policy, Ms. Dawson is Director of the Canada Institute at the Washington, DC-based Wilson Center. Mr. Ciuriak is former Deputy Chief Economist at the Department of Foreign Affairs and International Trade.
Beyond advocating trade negotiations, the study recommends a number of ways to strengthen Canada’s relationship with China, including:
- Following through on commitments to deepen bilateral communication and cooperation on issues such as foreign relations, energy policy, agriculture and economic governance;
- Joining Australia, the United Kingdom, France and other leading economies in signing on to the Asian Infrastructure Investment Bank, which helps finance infrastructure projects across Asia;
- Encouraging companies to take advantage of Canada’s RMB trading hub, which decreases the cost of doing business between the two countries by directly converting Canadian dollars into Chinese currency; and
- Launching a bilateral green technology project to link sustainable energy and environmental objectives.
The study points out that Australia, which has a resource-based economy similar to Canada’s, launched free trade talks with China in 2005, culminating in an agreement that took effect just last month. The pact will eliminate 95 per cent of tariffs between the two countries over the next decade and is projected to generate AU$18 billion in additional economic activity in Australia.
According to a soon-to-be published survey by Abacus Data, most Canadians support building stronger ties to China, with the majority expecting that the bilateral economic and trade relationship will expand over the next 10 to 20 years.
“There is no better time to begin crafting an economic engagement strategy that will serve Canadian interests for the next several decades,” Ms. Dawson and Mr. Ciuriak write in their report.