Canada needs a free trade deal with China, says Teck Resources CEO

Don Lindsay holds up the trade agreement recently signed between China and Australia as a model for a Canadian deal. But that trade deal isn’t so free

Shanghai Free Trade Zone

Security guards patrol the Shanghai Free Trade Zone. (Eugene Hoshiko/AP)

Amid the uncertainty around Canadian companies’ access to the U.S. market, Teck Resources CEO Don Lindsay has added his voice to those calling for a free trade agreement between Canada and China. Speaking at a mining exploration conference in Vancouver this week, he pointed to Australia’s bilateral pact with China, which came into effect a year ago, as a model.

“Australia has successfully completed a trade deal that has eliminated 95% of trade tariffs between the two countries,” Lindsay said. “Meanwhile we have duties on our coal.”

Whereas U.S. President Donald Trump has proposed spending US$1 trillion on infrastructure over 10 years, Lindsay noted, “China spends a trillion on infrastructure in about 11 months.” He also referred to a 2016 white paper by the Canada-China Business Council and the Canadian Council of Chief Executives that projected such a deal would increase Canada’s GDP by $7.8 billion, boost exports by $7.7 billion and create 25,000 jobs by 2030.

“Australia recognized 15 years ago that its economic future lay with Asia in general and with China in particular,” Lindsay said. “The stronger our relationship with our industry’s top market by far, the better off we all will be.”

Negotiations on “ChAFTA,” as the China-Australia deal is known down under, started in 2005 and concluded in 2014. It reduces tariffs on a range of Australian agricultural products, eliminates tariffs on coal and enhances market access for service industries including financial services, professional services, education, health, hospitality and construction. While Australian companies in some of these industries are restricted to setting up shop in the Shanghai Free Trade Zone, others, such as hotel chains and operators of care homes, can do business anywhere in China. The deal offers no tariff relief, however, for products including sugar, rice, wool, cotton, wheat, corn and canola.

ChAFTA also promises up to 5,000 visas per year for Chinese business and leisure travellers in Australia and limited ability of Chinese companies to use Chinese temporary workers. Companies from either country have a limited ability to sue governments in the partner country for arbitrary policy changes in contravention of the pact.

China also concluded free trade deals with New Zealand in 2008 and South Korea in 2015. The New Zealand agreement will be fully phased in by 2019.

Chinese Premier Li Keqiang and Prime Minister Justin Trudeau announced that Canada and China had launched exploratory talks towards the possible negotiation of a trade deal during Li’s visit to Ottawa in September. In the past, though, Canadian officials have expressed reservations around the issues of labour standards, environmental protections and state-owned enterprises. Candidate Maxime Bernier has championed a Chinese trade deal in the Conservative Party leadership race.

Teck Resources, a miner of base metals and coking coal based in Vancouver, was the best-performing large-capitalization stock in the world in 2016, with a gain of 419%, according to Bloomberg.