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This page serves as a toolkit for Canadians interested in learning more about China and the ongoing exploratory discussions.
Frequently asked questions (FAQs)
Select the question below to learn more about:
What is a Free Trade Agreement (FTA)?
A Free Trade Agreement (FTA) is an agreement between two or more countries with the aim of liberalizing trade in goods and services, and investment. An FTA does this by removing barriers to trade, which can include eliminating or reducing tariffs and quotas on goods; addressing non-tariff barriers such as technical barriers to trade; eliminating restrictions affecting service providers and investors; and creating rules in areas such as intellectual property protection and government procurement.
Canada’s FTAs also typically include labour and environmental provisions. These seek to ensure that the Parties protect the rights of workers and pursue high levels of environmental protection, and that trade liberalization is not at the expense of good labour standards and environmental protection.
Canada’s FTAs have always preserved the ability of Canadian authorities at all levels to regulate in the public interest in areas such as health, public education and social services.
Each FTA covers different industry sectors and contains different provisions, depending on the FTA partner.
Why does Canada negotiate FTAs?
FTAs provide Canadian businesses with a clear and stable framework to conduct business; secures access to markets for Canadian exporters allowing them to compete on a more even playing field with local firms in the FTA partner country; and protects Canadian investors abroad from discriminatory or arbitrary treatment. FTAs also provide consumers with greater choices and more competitive prices, and increase the productivity and efficiency for the Canadian economy.
The Government of Canada is committed to creating the most favourable conditions for Canadian businesses to compete internationally. Free trade agreements (FTAs) between Canada and our trading partners create new opportunities for Canadian businesses.
Benefits of FTAs include:
- Greater access to the international economy and boost Canada’s global competitiveness
- Allowing Canadian businesses to compete on a more level playing field with local firms
- More opportunities for two-way investment
- Reduced import costs for Canadian business and consumers
What are “exploratory discussions”?
Exploratory discussions are normally the first step that Canada takes when considering whether to initiate negotiations for a potential free trade agreement (FTA), with a prospective partner. These discussions are useful in determining what issues or areas could be included in a potential agreement, and whether there is sufficient interest or economic benefits to pursue such an FTA.
Exploratory discussions are not FTA negotiations, and do not guarantee that the parties will decide to launch FTA negotiations.
Who is involved in the exploratory discussions?
Government officials from Canada and China will be conducting exploratory discussions.
Global Affairs Canada is Canada’s lead department for negotiating international trade agreements. The department collaborates with other relevant federal departments on Canada’s FTA initiatives.
What happens after exploratory discussions?
After exploratory discussions, Canada and China will each separately decide whether to move forward with launching FTA negotiations.
For Canada, this decision will be based on numerous factors, including the potential economic benefits of an FTA with China, the likelihood of success, the potential risks and challenges, and the views of Canadians and stakeholders.
The Government will decide whether launching an FTA negotiation is in the best interest of Canada.
Why is Canada exploring a potential FTA with China?
China is Canada’s second largest single-country trading partner. With millions entering China’s middle class every year, and with a population exceeding 1.4 billion, China’s size and growth offers significant opportunities for the Canadian economy.
FTAs provide Canadian companies with predictability in entering an international market. An agreement could provide rules for fair treatment and a level playing field for Canadian companies operating in China.
An FTA could potentially benefit exporters by eliminating tariffs and other trade barriers while benefitting consumers and businesses that have improved access to goods and services from China.
What say will Canadians have on whether or not Canada launches FTA negotiations with China?
The Government is asking for Canadians for their views on a possible Canada-China FTA.
It is important for the Government to receive a wide range of perspectives and experiences during this consultations process.
Public input will be an important factor in the Government’s decision on whether or not to ultimately launch FTA negotiations with China, and if so, how Canada would approach those negotiations.
How will Canadians be updated on the progress of consultations?
The Government plans to provide periodic updates and summaries of the consultations, including stakeholders consulted, where consultations took place, and what topics were discussed during the consultations.
Is an FTA going to increase the risk of unsafe Chinese products entering Canada?
Canada has robust regulatory requirements and strong enforcement action can be taken on unsafe products entering the country.
Regardless of country of origin, if the Canadian government identifies products that do not meet regulatory requirements, enforcement action will be taken. Enforcement action can take a number of forms, including recall.
All food sold in Canada, whether domestic or imported, must comply with the Food and Drugs Act and Regulations, and the Consumer Packaging and Labelling act and Regulations.
How are Canadian investments in China currently protected?
Canada’s Foreign Investment Promotion and Protection Agreement (FIPA) with China works to protect Canadian investments in China, and is among the most ambitious investment agreements China has ever ratified.
The agreement is designed to protect Canadian investments in China through stable, predictable rules and protection against discriminatory and arbitrary practices.
For businesses looking to set up in China, China cannot treat a Canadian company less favourably than they would any other foreign company looking to do the same. Once an investment is made, a Canadian business cannot be treated less favourably than any other business, including Chinese businesses.
Will Canada address human rights concerns in China through an FTA?
The Government is committed to a progressive and inclusive approach to international trade that takes into account the impact of trade on areas such as labour and human rights.
Through high-level exchanges and ongoing initiatives, Canada continues to encourage China to live up to its international obligations on human rights.
The promotion and protection of human rights is an integral part of Canada’s foreign policy and a priority in our long-standing relationship with China.
Will an FTA help protect Canadian intellectual property in China?
Intellectual property (IP) protection will be among the many focal points of discussion throughout exploratory FTA talks.
A possible FTA could include provisions that would help to mitigate the risk of IP infringements. We would like to hear from you on your experience with IP rights in the context of the Canada-China commercial relationship.
Additionally, Canadian firms are encouraged to raise any IP problems they have in China or other overseas market with the Canadian Trade Commissioner Service.
Factsheet: Canada and China
Read the factsheet to learn more about Canada and China.
Fast facts – Canada-China relations
Canada has a long-standing and comprehensive relationship with China
- Canada was one of the first Western countries to establish diplomatic relations with China. In 2020, Canada and China will celebrate 50 years of diplomatic relations.
- The Bank of Montreal undertook its first foreign-exchange transaction in support of trade with China as early as 1818.
- Almost 1.5 million Canadian residents are of Chinese descent. Chinese (including Cantonese, Mandarin and other dialects) is Canada’s third-most spoken language after English and French.
China is one of the world’s largest, fastest growing economies
- In 2016, China had the largest population in the world with a total of 1.38 billion people. Due to average GDP growth rates of 6 to 7 percent, China’s growth effectively adds a G-20 sized economy every year.
- Millions of Chinese continue to enter the middle class. It is predicted that by 2022, more than 50 percent of urban households in China will be in the middle class.
- China serves as an increasingly important part of the global economy and regional value chains in Asia. According to an Associated Press study, China became the largest merchandise trading partner for much of the world in 2011, surpassing the United States.
- Shanghai, the commercial and financial centre of China, is the largest metropolitan area in the world with a population of approximately 24 million people. By 2030, it is predicted that China will add 219 million additional people to its cities.
China is a significant global customer of goods and services
- In 2015, 21.1 million passenger cars were sold in China, making it the world’s largest market for automobiles.
- In 2009, China became the world’s largest consumer of energy. In 2015, China’s consumption of energy was 3,014.0 and US was at 2,280.6, (in million tonnes oil equivalent).
- China is the world’s largest growth market for clean energy. In 2016, China installed more solar power than the electrical capacity of Switzerland, likely topping 30 gigawatts.
Trading with China supports Canadian prosperity
- China is Canada’s second-largest single-country trading partner, with two-way merchandise trade totalling $85.4 billion in 2016 and accounting for 8.1 percent of Canada’s total merchandise trade.
- There are over 500 Canadian firms active in China operating in cities such as Beijing, Shanghai, Guangzhou and Shenzhen.
- Canadian firms in China are operating in diverse sectors, including health sciences, automotive, aerospace, transportation, financial services, information and communication technologies, and clean technologies.
People-to-people ties between Canada and China are expanding
- Approximately 120,000 Chinese students were studying in Canada at the end of 2015, making China the largest source of international students in Canada.
- From 2010 to 2016, the number of Chinese visitors to Canada has grown from 193,000 to over 610,000, an increase of 23.6% compared to the same period in 2015 (480,238).
- Chinese citizens inject almost $1 billion annually into the Canadian economy. In 2015, Chinese tourists spent over $2,000 per trip on average.
- In the peak summer months of 2016, Canadian and Chinese airlines operated up to 88 flights per week between four cities in Canada (Calgary, Montreal, Toronto and Vancouver) and seven cities in China (Beijing, Chengdu, Guangzhou, Kunming, Shanghai, Shenyang, Xiamen).
- There are over 100 jurisdictions in Canada and China twinned with each other at both the provincial and municipal levels.