Wednesday, May 10, 2017

‘China-Canada Free Trade’ Talks Could Hurt US Lumber Prices

With Canada's softwood lumber industry facing tumultuous trade relations with the United States, it may want to "seize" the opportunity to export more products to China, says Canada's new ambassador to China.

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"With trouble on the U.S. front in that sector, it's more natural for Canada to turn to China as a partial recipient of Canadian forest products," said John McCallum, who spoke to a Chinese delegation meeting with Alberta business leaders in Edmonton on Tuesday.

McCallum has been on the job in China for just five weeks, while the Alberta government — which hosted the Chinese delegates — recently returned from its own trade mission to China.

The ambassador stressed that the United States "will always be Canada's number one trading partner.

"But the point is we're also trying to diversify our trade. And my mission is to increase Canada-China ties, notably in trade. There's an official commitment to double trade in 10 years."

Alberta, like the rest of the country, relies on the United States to buy the vast majority of its softwood lumber exports.

Earlier this week, Alberta hired Gary Doer, Canada's former ambassador to the United States, to act as its advocate to resolve the softwood lumber dispute with the Trump administration.

Meanwhile, McCallum, a former cabinet minister and MP for Markham, Ont., said he has been working on the forest products file for more than 10 years in China. Builders in that country have traditionally used concrete for buildings, so the adoption of wood buildings requires a "cultural shift' that has already begun.

"We are moving fairly aggressively to expand our markets for forest products in China and I think there's a substantial Chinese appetite for Canadian forest products."

Canada-China free trade talks on the table

In his talk, McCallum stressed opportunities for Canadian industries, including forestry, tourism, clean energy and agri-food businesses, to increase their trade and investment with China.

While he also mentioned the oil and gas sector, it did not receive the same prominence in his remarks.

Economic Development and Trade Minister Deron Bilous, who has conducted several trade missions to China, said there remains significant Chinese interest in this province's oil and gas sector, despite slumping prices.

"In all of our meetings the premier and I had last year, there is significant interest in our energy. So news of the approval of TransMountain (pipeline) was very, very welcome. Asia is hungry for secure sources of energy," he said.

But in speaking about energy, both Bilous and McCallum mentioned the interest they see in China for clean energy technology to go along with any oil and gas developments.

"I also know that China is super serious about the environment," McCallum said. "Yes, they are the world's largest emitter of CO2, but they're also by far the world's largest investor in renewable energy. That is a major opportunity for Canadian companies."

The Chinese delegation visiting Edmonton included representatives of three oil and gas companies. The group is from the Shandong province, which has a population of almost 100 million people.

Also among the group was Lin Qiang, from Siwin Foods. The company set up its North American operations in Alberta, with support from the Edmonton Economic Development Corporation and other government groups.

The Chinese businessman said there is interest in "high-quality foods" by the ever-expanding Chinese middle class, which creates opportunities for all levels of the food supply chain in Canada.

Canada and China have entered "exploratory" talks on a free trade agreement, although formal negotiations are not on the horizon.

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