IN THIS EDITION: the Wuhan Coronavirus, the US-China trade deal (and what it means for Canada), and the Special House Committee on Canada-China relations.

“Others have recommended a ‘tough on China’ approach, such as withdrawing from the Asian Infrastructure Investment Bank, banning Chinese athletes from training in Canada for the next Olympics or strengthening ties with Taiwan. The reality is that none of those actions would intimidate the Chinese into releasing the hostages. We are simply not in a David and Goliath situation because, in these circumstances, David doesn’t even have a slingshot.” – Eddie Goldenberg, The Globe and Mail, January 16, 2020

In the last two weeks a lot has happened between Canada and China. Let’s get to it:

US-China sign a ‘phase one’ trade deal

• The Deal: The United States and China have signed a “phase one” trade agreement, relieving some of the trade tensions between the two giants that have impacted global trade for nearly two years. China will make purchases of $200 billion worth of American goods over two years, including $40 billion in agricultural goods, and made other concessions in intellectual property and other areas. The United States will call off or roll back some (but not all) tariffs imposed during the trade war.

• The United States also got the removal of a number of non-tariff barriers (things that restrict trade that are not tariffs), including beef, poultry, pet food, and a number of agricultural products.

• What does this mean for Canada?

• Overall, this is expected to give brief respite from some uncertainty the global economy has faced, but analysts say that’s unlikely to last.

• Impacts for Canadian agriculture: This could have a negative impact for Canada’s agriculture sector, because China committed to buying $40 billion of agriculture products from the US – some of this could be at the expense of Canadian agriculture products.

• The trade deal has a list of U.S. products that will benefit from China’s purchase commitments – this includes soybeans, pork, beef, wheat and barley. Canada typically sells significant quantities of all of these products to China.

• There is optimism in the beef industry that Canadian beef could benefit from the phase one deal. The deal does away with some Chinese restrictions on beef that are different from international standards that make selling beef in China more difficult. There is hope that these changes will be extended to Canada because of the tightly integrated US-Canadian beef supply chain.

• Additionally, some are worried that this will damage any influence we have with China – if China buys more agriculture products from the US and less from Canada, this will mean Canada has even less leverage in the diplomatic arena.

Keep your eyes peeled for work from the Canada West Foundation team on what the agreement will mean for Canada.

Meng Wanzhou extradition hearing (and the two Michaels)

• The first round of extradition hearings for Meng Wanzhou took place last week in a Vancouver courtroom, where the Crown and Meng’s defense team argued over whether Meng should be extradited to the United States to be tried for fraud.

• “The future of Sino-Canadian relations is being put to a historic test” with this case – the fraying of Sino-Canadian relations, numerous trade problems with China, and the arrests of Michael Kovrig and Michael Spavor are thought to all be tied to the arrest of Meng, CFO of Huawei.

• The extradition hearings are likely to take months.

• Michael Kovrig and Michael Spavor, arrested in China shortly after Meng was arrested in Vancouver, have now been imprisoned for 400 days. Trudeau recently ruled out a prisoner exchange with China, releasing Meng in exchange for the return of the two Michaels.

The Wuhan Coronavirus

• The coronavirus crisis that originated in Wuhan, China, has rapidly grown in the last week. Eleven cities in China have had travel restrictions placed on them, which in total have about the same size of population as Canada. Every region of China (except Tibet and Qinghai) has been impacted by the disease. Cases of the virus have also been found in Nepal, Singapore, Vietnam, Thailand, Taiwan, South Korea, Japan, Australia, Cambodia, France, Malaysia and the United States.

Canadian impact/involvement

• There are two people in Ontario described as having “presumptive cases” of the Wuhan Coronavirus.

• Four major Canadian airports – Vancouver, Calgary, Toronto and Montreal – have made preparations to deal with anyone infected with the virus, if they land in their airport.

• A lab in Saskatoon has been given permission from the Public Health Agency of Canada to join the global effort to develop a vaccine for the virus.

Special House of Commons Canada-China relations committee

• The new parliamentary committee sat for the first time last week (see this China Brief for more background on the committee).

• The main order of business was deciding to call Canada’s Ambassador to China, Dominic Barton, to appear before the committee. This will happen before February 7.

China joins Canada’s efforts on a new WTO dispute settlement

• Canada and the European Union announced an interim arrangement to resolve trade disputes with each other last July; since then, 15 more countries have joined – including, very recently, China.

• Many of the countries involved are major agricultural products traders and share a common goal of liberalizing trade.

• The countries that have joined Canada and the EU are: Australia, Brazil, China, Chile, Colombia, Costa Rica, Guatemala, South Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland and Uruguay.

• The interim arrangement will apply to any disputes that happen between these countries and will remain in effect until the WTO dispute mechanism is once again functional. This interim arrangement will “replicate as closely as possible” the WTO dispute settlement (which is now currently non-functional due to American refusal to appoint judges).

Everything Else

Those are the biggest stories, but that’s certainly not everything interesting that’s happened in the last two weeks:

• The federal government has said that, in its decision on whether Huawei can build some of Canada’s 5G network, geopolitical considerations will also be considered in addition to security considerations.

• The authors of this piece argue that Canada is rapidly missing the boat on China’s Belt and Road Initiative.

• This piece argues that Canadian businesses that want to do business in Asia need a political primer.

• At least some pro-Meng protestors outside the Vancouver courthouse this week were, in fact, actors who thought they were being paid for a movie acting gig.

– Sarah Pittman, policy analyst

The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.