China, Other Autocracies, are Dubious Counterparties in Trade, Other Interaction

Commentary, Economy, Ian Madsen

In what seems to be a never-ending, always-escalating war against Canada to make Ottawa return The Most Valuable Woman In The World, Meng Wanzhou, CFO and heiress to the mammoth and Sino-idolized Huawei Corporation, Beijing has made yet another dubious charge, that canola seed shipped to it by Richardson International, the venerable grain-trading company from Winnipeg, has been contaminated by disease or weed seeds or pests that only China can detect with their superior inspection methods and technology. Canada’s agricultural quality inspectors have been able to find nothing.  

To this may be added the earlier incarceration by Chinese authorities of two Canadian men on spurious grounds regarding “national security”, the hasty retrial of another Canadian man convicted of drug trafficking, elevating his lengthy prison sentence to a death sentence, and the temporary airport detention of another Canadian woman in transit.  

China has also warned its citizens of the supposed hazards of travelling to Canada for tourist or other purposes. Canadians travelling to China to study, see the sights, or explore business opportunities must already have some trepidation about going there, as arbitrary detention seems to be one of its weapons in trying to force Canada, and perhaps other nations, to comply with its edicts and policies.  

Another thing that has become chilled is the prospect of some sort of Sino-Canadian trade pact, of even the most superficial kind. China has apparently put the whole endeavour on ice. It could be wondered what, if any benefit Canada would derive from any sort of trade deal with such a volatile, and hazardous nation with which to conduct any sort of relations. Recent actions make them dubious “friends”.

Australia’s coal exports to China have been cancelled in retaliation for disallowing Huawei to contract in building Oz’s 5G cellphone upgrade. In 2011, a quarrel with Japan over disputed islands in the East China Sea resulted in China’s export restrictions of rare earth elements, “Ree’s,” a business it dominates, which caused soaring prices for REE’s and mayhem in electronics and other high technology sectors for several months, and not just in Japan.

There is a long list of unfair trade and investment practices which the US government is trying to make Beijing come to terms with in its own highly-charged trade negotiations, including forced technology transfer from foreign corporations seeking to invest in the country, outright technology theft, cyber-attacks against commercial and governmental organizations; unequal treatment of foreign companies in China versus local ones; higher tariffs on foreign goods than Chinese goods face in the US and other nations; favoured access, financing, and other things given to Chinese state-owned firms; and regulations which hamper foreign activity within China.  

Apparently some progress has been made on these issues and a deal may be close at hand. However, the massive blunt instrument of punitive tariffs on Chinese goods, and the threat of higher tariffs brought Beijing to the table. Canada has been unable to do this; we need them far more than they need us. It needs to be remembered that China is a communist dictatorship, as well as being a garden-variety authoritarian regime, similar to Russia in many respects.  

The fickleness and untrustworthiness of Russia, which first became blatantly evident in the Yukos, Tenghiz, and Magnitsky affairs of years past, has echoes in other nations where capital, and capitalists, might be in danger – actual physical, as well as financial and legal. Pakistan, Turkey, and Saudi Arabia come to mind. Russia recently detained a US tourist it claimed was conducting espionage. Turkey held a US pastor for years on spurious grounds. Saudi Arabia is holding the husband of a Canadian exile who fled the nation, and cut off relations when our foreign minister criticized them for it.

Trade restriction easing usually benefits both sides of tariff-reduction and standards-recognition deals. Canada will have to be very careful in any terms made in such deals, and to make sure no further commitments are made to despotic regimes that they are unlikely to reciprocate. It is difficult enough to make agreements with transparent, law-abiding countries in the EU and TransPacific alliance work; autocracies are inherently untrustworthy.