Not so long ago, Canada seemed poised to have free-trade agreements in place with about 1.5 billion people around the world. The alphabet soup of deals like NAFTA, TPP and CETA would give Canadian companies strong access to markets across North America, the Pacific region and the European Union.
But then some of those populations voted for leaders staunchly opposed to such deals. U.S. President Donald Trump has imposed tariffs on his country’s traditional trading partners, including Canada, and talks about turfing NAFTA in favour of separate deals with Mexico and Canada.
The Comprehensive Economic Trade Agreement (CETA) with Europe took force in 2017, giving Canadian companies better access to European Union countries. It means some 98 per cent of Canadian goods can enter the EU without tariffs — on a provisional basis. Cracks started to show when the parliament of Wallonia, Belgium, briefly rejected it. Still, more than two dozen EU countries must vote on CETA. Latvia was first to approve it in 2017, but in 2018, Italy said it might reject CETA. It’s not clear when (or if) CETA will be cemented as a permanent trade deal.
Canada was ready to sign the Trans-Pacific Partnership to reduce tariffs and increase trade in that region, but Trump’s America pulled out. The remaining 11 countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) this year. Even without the U.S., CPTPP creates a market of about 500 million people with national borders on the Pacific Ocean.
Canada has yet to ratify the deal. Reached in his Glace Bay office, Geoff MacLellan said Nova Scotia’s top concern right now is securing NAFTA. MacLellan holds cabinet positions covering trade, tourism and business — all areas affected by the trade deal.
“Clearly, NAFTA is of a critical nature because it is an agreement that’s already in place. We’re looking at the expansion of markets, the expansion of opportunities with the trans-pacific [deal] and with CETA as well. But given that NAFTA has been in place so long, and that the U.S. is our number one trading partner, that one is critical,” he said. “The looming pressure of NAFTA is being felt, and we’re hopeful. There are some signals of progress that we can get this behind us and we can put together a NAFTA agreement all three nations can live by.”
MacLellan travelled to Washington in late 2017 to talk to American lawmakers about NAFTA. While he didn’t land a meeting with Trump, he did talk to governors, members of Congress, and other leaders of states that do significant business with Nova Scotia.
“For myself to sit with a number of critical state governors and hear their reassurance and their appreciation that the NAFTA discussion is very much a two-way street — they don’t want major changes,” he told Business Voice. “Knowing we’ve got alliances on the other side of the border, it’s good to have it from an advocacy perspective.”
The idea is he bends the ear of his counterparts in the U.S., and they bend the ears above them, and eventually it reaches the White House by decision time. He thinks the newer CETA and CPTPP deals will increase trade for products made in Nova Scotia, such as tires and seafood.
“Seafood is a product that is highly regarded for its quality, for the processes by which it’s harvested and processed and the fact that the shipping routes are increasingly becoming more efficient,” he said. “We have open opportunities for expansion in those markets.”
While Halifax clearly stands to benefit from increased international trade entering and exiting its ports, MacLellan hopes rural Nova Scotia will also profit. He points to Michelin Tire’s three Nova Scotia plants employing 3,700 people, Oxford Frozen Foods and fisheries operations across the province as sectors poised for big expansions under the new trade deals. IT and high-tech companies will also grow, he predicts.
But NAFTA, CETA and CPTPP all leave out one giant player on the international scene: China. MacLellan travelled to China in late 2017 and saw the expansion there of Nova Scotia’s seafood, lumber and related products. The sheer size of the market thrills people, as 18 per cent of the global population — about 1.4 billion people — call China home.
“They have fallen in love with Nova Scotia, from our tourism complement and what we are as a destination, to the world-class level of our seafood, our natural resources — anything that has a Nova Scotia label is highly sought after in China,” MacLellan said.
The province has hired an in-house tourism liaison in China to represent Nova Scotia at travel trade shows, seek development opportunities and improve relationships with governments over there. The federal government has been meeting with China to discuss a freetrade agreement. In April, China rejected an attempt by the Trudeau government to include higher labour standards and other such issues into a trade deal.
In 2012, Stephen Harper’s government signed the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA). It was designed to protect and promote Canadian investment in China, and to promote Chinese investment in Canada.
Dennis Campbell worked to get a foot in the China market for years. As CEO of Ambassatours, Gray Line, he sought to attract Chinese tourism agencies to try his fleet of touring buses.
“We tried to convince them to put their group on a double-decker bus, or one of our other products. We just didn’t have anything they wanted,” he said
That changed when Ambassatours merged with Murphy’s on the Water in 2014. “They absolutely love lobster and they love the Harbour Hopper,” he said of Chinese travellers.
Campbell quickly realized that Chinese tourists had been playing a big part in Murphy’s success and sought to increase it. “Murphy’s didn’t have any Mandarin-speaking staff. Today we have seven Mandarin-speaking staff on call all season long,” he said. “They’re all university students. It’s really made an amazing difference. We get a lot of Mandarin-speaking groups.”
He thought he understood a bit about China, but that changed on a recent one-week trip to the ancient country on a trade mission that saw him stop in Beijing and Hangzhou (two cities that are home to roughly the population of Canada).
“It was amazing. For me as an entrepreneur in a tourism business, I thought I had a good idea of what China is really all about and wow — you have to go there to see it and believe it,” he said. “Being there, in among many other people in the same [tourism] industry on the other side of the planet, you start to understand much better why it is that the Chinese are coming to Canada in the numbers they are, which is very significant.
“The trajectory is amazing, and yet they’re telling us they’ve only opened the doors a little bit. They’re saying to us: get ready for it.”
Campbell founded Ambassatours in the 1990s. It’s now the largest sight-seeing company in the region. He thinks it can grow even more by tapping into the Chinese market. While in China, he learned how many Chinese families send their children to school in Canada — grade school and university.
“We heard many Chinese officials speak to us at various events throughout the week, and they all had very similar messages: We love Canada, we want to send more people to Canada and it’s important to get ready for it,” he said.
English is not widely spoken in China, and many Chinese tourists in Canada don’t speak English. “So whenever they’re at a place where someone speaks their language, you can see it — they love that.”
Campbell was stunned by the natural beauty of China and stung by Beijing’s notorious smog problem. “When you say, what are some of the features you like [about Canada], they say the blue sky and the clean air,” he said. “I didn’t quite get it until I was there. We love fresh air and blue skies, but you really value it when you don’t have it.”
He also learned Chinese people tend to like long trips abroad, including older Chinese people. The number eight is lucky in China, so 88 days is a popular target. That means when they come to Canada to visit their children at university, or friends and relatives who have moved to Canada, they can be persuaded to tour the Maritimes or other regions. And maybe even hop on a double-decker bus.
MacLellan said while the highest levels of national governments work on the big trade deals, business continues to expand. “And that’s just the beginning,” he said. “While the formal agreements take place and materialize over time, in the meantime trade continues to grow in China.”
What’s the big deal?
Canadian companies trade with hundreds of countries, but the three big trade deals cover most business. Here’s a look at what they entail.
CETA
The Comprehensive Economic Trade Agreement between Canada and the European Union was signed in 2016 and came into effect in 2017. The 28 countries of the EU (27 if you remove the Brexiting U.K.) make up Canada’s second-largest trading partner, after the U.S. The government of Canada says the EU’s annual imports are worth more than Canada’s GDP. Before CETA, 25 per cent of Canadian goods entered the EU duty-free. Now, 98 per cent do.
Tariffs are basically taxes applied at national borders. It meant the cost of Canadian frozen mackerel rose by 20 per cent when it entered the EU, thus increasing the cost to the consumer and stifl ing demand for Canadian goods. The deal is expected to benefit Canadian companies, but it was written in what could turn out to be disappearing ink. National parliaments in the EU, plus some regional ones, must approve CETA for it to take full eff ect for the EU’s 500 million people.
NAFTA
The North American Free Trade Agreement was big news when Prime Minister Brian Mulroney signed it with U.S. President George Bush and Mexican President Carlos Salinas de Gortari in 1992. By 1998, it had eliminated tariff s on a wide range of goods traded between Canada and the U.S., and with Mexico in 2008. The Canadian government still calls it a deal that creates economic growth and job creation for the 480 million people living in North America. It says trilateral trade grew three-fold under the deal, reaching US$1 trillion in 2016. But the U.S. government has been talking about tearing it up and replacing it with different deals for Canada and Mexico, or with a short-term deal.
CPTPP
Canada signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership with 11 other countries in March 2018. It created one of the largest trading blocks in the world, covering some 495 million people. It was supposed to have one more country: the U.S. But Trump ditched that plan within days of taking office. Canada had some concerns, too, but signed the re-branded deal.
It creates a free-trade agreement among Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
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