Just when you thought the trade waters could not get any muddier between Canada and China, they do.
Trade works best when supply and demand is the driving force.
Trade does not work very well when outside forces are applied to the process, in particular when governments use the process of trade as a club in non-trade disputes.
The current situation between Canada and China might be a textbook example, with the two countries embroiled in a dispute after the chief financial officer of Huawei Technologies Co was detained in Vancouver on a U.S. arrest warrant.
What that arrest warrant has to do with trade of course is nothing at all, but China is using trade to try and force Canada to do what it wishes. The situation is silly on one hand, two nations in dispute over an arrest warrant for a guy with the resources to hire a legion of lawyers to his defence.
On the other hand the disruption to trade is hugely serious, especially in terms of agriculture trade as it is a key area of dealings between the two countries.
Now China has made a decision to block imports of Canadian meat.
But this decision is just a bit outside the Huawei debate, although that ongoing issue likely made China’s choice regarding meat imports easier to make in terms of blocking deals because it continues to put pressure on Canada.
China has said it wants the Canadian government to temporarily stop allowing meat shipments to China after bogus pork export certificates were discovered.
The issue is of particular concern to the pork sector as its impact on Canada could be significant as this country is the world’s third-biggest shipper.
However, the decision has the potential to hit China hard too, as they turn to meat imports after African swine fever killed millions of its pigs. Canada, in spite of any questionable certificates on likely limited shipments, still makes sense as a source to meet China’s need for out-sourced pork.
While there are of course other pork exporting countries for China to deal with, this announcement does throw a wrench into trade workings.
For example, the United States, the second-biggest global pork exporter, isn’t an obvious backfill-source since it is subject to a 62 per cent Chinese tariff, with China and US president Donald Trump in a dispute of their own.
The meat dispute will certainly do nothing except add to the tension in trade between Canada and China and cold push a resolution of things farther down the road, and that is unfortunate because the two countries have far more to gain by an amiable flow of trade.
Calvin Daniels is Editor at Yorkton This Week.