Don’t Let Fear of Losing Chinese Market Get in Way of Strong Foreign Policy, Expert Tells MPs

A Chinese Navy warship is seen in the contested waters in the South China sea on Oct. 4, 2023. (AP Photo/Joeal Calupitan)

Canada must overcome fears of potential market loss in China and fortify its foreign policy in the Indo-Pacific, an expert told MPs during a House of Commons committee meeting on Feb. 5.

“Canada should not shy away from making tough foreign policy choices out of fear of losing access to China’s market,” Meredith Lilly, associate professor and Simon Reisman Chair in International Economic Policy at Carleton University, testified before the Special Committee on the Canada–People’s Republic of China Relationship on Feb. 5.

“We must not, at any time, in my view, sacrifice our goals as a country out of fear that China might turn around and reduce market access.”

Ms. Lilly was invited to offer insights during the committee’s review of Canada’s Indo-Pacific Strategy. Introduced in December 2022, the strategy portrayed China as “an increasingly disruptive global power.” In alignment with the strategy’s view of China, the professor urged Canada to take a firm stance against the regime, notwithstanding past instances where Beijing weaponized trade in response to criticism.

“We shouldn’t be afraid to stand up to China, particularly in instances where it is Canada’s national interest at play,” she said. Ms. Lilly added that “China will weaponize trade against Canada,” and that it will continue to import products from Canada “when it wants to [and] when it is in China’s interest to do so.”

This was evident when China banned Canadian canola exports from 2019 to 2022. Ms. Lilly noted that the sanction coincided not only with the dispute over Canada’s arrest of Huawei executive Meng Wangzhou and Beijing’s subsequent detention of Canadians Michael Kovrig and Michael Spavor, but also with China having a significant canola production during that period. This made it “quite convenient” for China to reduce import of Canadian canola, she said.

Taking Leadership

Ms. Lilly highlighted opportunities for Canada to lead in the Indo-Pacific, especially considering the United States’ absence in the regional trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). With Canada taking on the role of CPTPP commission chair this year, she said it has the chance to guide the organization, particularly as both China and the democratic island of Taiwan are seeking membership.

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“I have recommended that CPTPP members apply a clear set of criteria, including the country’s record of economic openness, trade liberalization, and reciprocity,” Ms. Lilly said.

“A successful record must be established prior to entry io the CPTPP—a lesson China itself taught us when it joined the WTO [World Trade Organization] in 2001 without reforming its economy.”

Without significant economic reform, China has intensified tensions, especially with the United States. This includes concerns about the regime’s inadequate labor standards, leading to unfair competition.

Former U.S. President Donald Trump threatened to impose tariffs on Chinese goods, urging Beijing to make significant changes in intellectual property practices and industrial subsidy programs. More recently, U.S. President Joe Biden is also considering limiting imports of Chinese electric vehicles to address rising concerns about data security, as reported by BNN Bloomberg.

Defence Policy Contradictions

Also testifying before the Canada-China committee, Stephen Nagy, a professor at the International Christian University and a research fellow with The Macdonald-Laurier Institute, highlighted contradictions in Canada’s defence policy within the Indo-Pacific Strategy.

He brought up Canada’s conflicting spending commitments, noting the Liberal government’s pledge to invest $2.3 billion over five years in implementing the Indo-Pacific Strategy, all while announcing reductions in the country’s overall defence spending.

In September 2023, senior officials from the Department of National Defence revealed they were told to cut spending by nearly $1 billion as part of a broader initiative affecting various sectors of the federal government.

“These contradictory positions raise inconvenient questions of how Canada is going to sustain its foreign and defence policy within the Indo-Pacific,” Mr. Nagy said.

“I think that these contradictory positions are raising serious concern amongst our allies and partners about where Canada sits in the Indo-Pacific, what kind of resources are going to be deployed in the Indo-Pacific, and can we engage in a sustained, meaningful, and fruitful diplomacy?”