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Prime Minister's economic diplomacy key to advancing Canadian exporters' interests, says CME

Published by Steve Coleman on February 08, 2012

OTTAWA - Canadian Manufacturers & Exporters (CME), Canada's leading trade and industry association, welcomes Prime Minister Harper's leadership in providing economic diplomacy on behalf of Canadian companies looking to expand their business in China, and looks forward to his state visit advancing Canada's commercial interests with its most important trading partner after the United States.

"The Prime Minister's visit to China sends a strong signal that Canada's government is committed to enhancing our political and trade relationship with the world's second largest economy," says Jayson Myers, President & CEO of CME. "China's rising economic prominence and the strong role its government plays in China's domestic market are important reasons to vigorously engage Chinese leaders with respect to our mutual commercial interests".

Two-way trade between Canada and China totaled $57.7 billion in 2010, up from $36.7 billion in 2005.

The upcoming series of bilateral meetings between Canadian and Chinese leaders constitutes a unique opportunity to further position Canada as a strategic partner for China, and to raise priority issues on behalf of Canadian business. Such issues include:

Investment promotion and protection: The Prime Minister's visit presents a unique opportunity to showcase Canadian business capabilities and promote sourcing, sales, procurement and investment opportunities with Chinese business and government leaders. It is important to remind China's leadership of Canada's key role as a leading global supplier of agri-food, energy, forestry, mining, fertilizer, and advanced manufactured products, as well as of value-added services like engineering, architecture, education, insurance, design, and software. For several key sectors of the Canadian economy, future growth depends on our ability to attract foreign direct investment - we therefore need to seize the opportunity to promote Canada as an investment destination.

While Chinese investors - including state-owned enterprises - can freely invest in companies and assets in Canada, and in most sectors assume complete ownership of assets, Canadian companies are restricted from owning a majority stake in most Chinese enterprises. A mutually beneficial commercial relationship requires improved treatment of Canadian investment, including expanded access to investment opportunities in China so that Canadian and Chinese investors enjoy reciprocal rights in both countries.

Reciprocal market access: Canada's commercial and trading relationship with China can be significantly enhanced only if both parties meet their WTO obligations, ensure open and fair market access on a reciprocal basis, and reduce non-tariff barriers to trade, for instance by working together to develop and adopt global standards. Addressing these issues would help achieve more balanced trade as China's exports to Canada are three times greater than Canada's exports to China.

Monetary Policy: China's practice of limiting the appreciation of its currency is an issue of ongoing concern for Canadian manufacturers and exporters, and for the Canadian economy as a whole. The global economic imbalances that it causes, the unfair advantage it confers to Chinese exporters, and the threat of retaliatory measures being adopted by other trading partners are all reasons why Canadian industry believes this issue needs to be raised again with China's leaders. CME supports a solution such as that proposed by the US Treasury Secretary whereby all members of the G20 commit to refrain from weakening or preventing an appreciation of an undervalued currency, G20 emerging market countries with significantly undervalued currencies and adequate precautionary reserves allow their exchange rates to adjust fully over time to levels consistent with economic fundamentals,

Intellectual property protection and counterfeiting: Trade in counterfeit goods is a threat to the health and safety of Canadians, as well as to the innovation and competitive capabilities of Canada's manufacturing sector. A majority of counterfeit goods entering North America originate in China. While Canada has previously raised concerns over China's enforcement of intellectual property (IP) rights on a wide range of goods, both bilaterally and through the WTO, the issue still remains a problem for Canadian manufacturers who see counterfeit goods entering North American supply chains, as well as for domestic and foreign firms operating in China. China's promotion of indigenous innovation procurement policies also undermines IP protection for foreign-based firms. For these reasons, it is critical to engage China's leadership on this issue and seek improvements in China's protection of IP rights.

Enforcement of trade rules: China's leadership has been seeking official recognition as a market economy in anti-dumping cases. Canada's Special Import Measures Act does not provide such a blanket provision, but rather uses a case-by-case approach based on the specific conditions of the sector being examined. Given the pervasive role that state-owned enterprises play in China's economy, the broad web of support that exists for Chinese producers, and the number of successful trade remedy cases brought forward against Chinese producers in recent years, recognizing China as a market economy would prevent Canada from maintaining strong trade rule enforcement and addressing violations of trade rules such as dumping and illegal subsidies.

Nuclear cooperation: Enhancing Canada's nuclear cooperation with China could help grow exports of Canadian uranium and nuclear energy technologies. Canada has an excellent track record as a supplier of nuclear energy technologies to China, and with China now growing its nuclear energy capacity, the country should be a prime market for uranium exports from Canada. Updating the Canada-China Nuclear Cooperation Agreement (NCA) to include safeguards for uranium exports, and reviewing Natural Resources Canada's Memorandum of Understanding (MOU) with its Chinese counterpart to cover research and development activity on recycled uranium and thorium would help Canadian businesses take advantage of these growing opportunities.

Canada-Hong Kong Double Taxation Agreement: Hong Kong holds tremendous potential for Canadian businesses looking to establish a strong presence in China and indeed across all of Asia. The successful conclusion of a Canada-Hong Kong Double Taxation Agreement (DTA) would significantly reduce barriers to growing two-way trade and investment between Canada and Hong Kong by preventing the double taxation of income, assets and transactions, streamlining taxation procedures, and improving investment conditions between Canada and Hong Kong. CME welcomes the progress made in negotiations and supports the swift conclusion of such an agreement.

"The Prime Minister's visit will only help establish deeper dialogue between Canadian and Chinese business and government leaders, which will be vitally important in building opportunities for enhanced cooperation, addressing barriers to trade and investment, and defining a common vision for growing our commercial relationship," concludes Myers.

For information: Jean Michel Laurin, Vice President, Global Business Policy, (613) 238-8888 ext. 4238.


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