Canada Should Adopt a "Selective Engagement" Strategy to Manage Deals with China

Strategic Insights -

Canada may find itself increasingly drawn into deeper economic ties with China as the US becomes more transactional, punitive, and erratic in its economic leadership. The report by the Expert Group on Canada-U.S. Relations, released on an unspecified date, cautions that Canada should not blindly follow US measures against China, but instead adopt a "selective engagement" strategy to reap more trade benefits from the authoritarian state. Key members of the Expert Group include Perrin Beatty, Vincent Rigby, Jonathan Fried, John Weekes, Meredith Lilly, and Fen Hampson.

Key Takeaways:

  • The Expert Group recommends that Prime Minister Mark Carney adopt a "selective engagement" strategy to manage dealings with China, which balances Canada's economic interests with the need to avoid entanglement in the US-China rivalry.
  • The report's authors warn that China has not hesitated to "weaponize" trading relationships with Canada when it has been unhappy with Canadian policies, citing the 2018 tariffs imposed on farm products after the arrest of a Chinese tech executive.
  • China has imposed significant tariffs on Canadian farm products, including electric vehicles, which is causing escalated retaliation from Beijing.
  • The report notes that Canada's energy trade with China is also significant, with Canada relying on China to buy Canadian energy.
  • The report's authors propose that Canada abandon any expectation of changing China by engaging with it, and instead seeks a bilateral meeting with Chinese President Xi Jinping to discuss deeper engagement.
  • The report warns against blindly following US trade actions against China, and instead recommends that Ottawa adopt a more strategic approach, such as a trilateral monitoring and verification mechanism across all three North American markets.
  • Canada needs to provide more clarity on barriers to foreign investment, with a government-wide delineation of which areas are off-limits or open.
  • The report also highlights the need for Ottawa to embrace a zero-tolerance approach to intellectual property theft, and to address attempts by Chinese state interests to infiltrate research and educational institutions.

Statistics:

  • 100%: The tariffs imposed by Canada on Chinese-made electric vehicles in 2024 as part of a joint effort with the US to protect the North American auto sector.
  • 2018: The year in which China imposed tariffs on Canadian farm products after the arrest of a Chinese tech executive.
  • $B: The estimated value of Canada's energy trade with China.
  • 2024: The year in which Canada imposed 100% tariffs on Chinese-made electric vehicles.
  • 2024: The year in which the US imposed tariffs on Chinese goods.

Sources:

  • Expert Group on Canada-U.S. Relations. Report.
  • Steven Chase, "Canada should adopt 'selective engagement' strategy to manage dealings with China, report says." The Globe and Mail, date not specified.
  • Carleton University's Norman Paterson School of International Affairs.
  • The Canadian Global Affairs Institute.
  • The University of Calgary's School of Public Policy.