Canada’s China Policy:
How to explain the inexplicable?
Alastair Gordon, President
Canadian Coalition for Democracies
Canada’s policy toward China
and Taiwan
has long been a puzzle for me, yet apparently quite clear for many Canadians.
Am I missing something, or have Canadians been sold a bill of goods?
By way of confession, I have
been a life-long technology entrepreneur and rabid capitalist, so any criticism
you may hear of Canada’s business sector is not based on a distrust of the free
enterprise system, but on a belief that we must have a strict separation of
industry and state, just as a devout theologian would insist that we have a
strict separation of church and state.
Another confession is that I
had the great privilege to be part of the international observer team for the
Taiwanese presidential election held this past March. There is no question
about Taiwan’s
democratic credentials, with voter turnouts typically in the 80% range, and
citizen participation that would be the envy of any Canadian democracy junkie.
Despite a few growing pains experienced by this young democracy, if every
nation on earth were as democratic as Taiwan, we would have universal
respect for human rights and peace. Could Canada have a more natural ally?
And yet, one long-standing
example of Canada’s puzzling
foreign policy was seen again this year when our then Foreign Minister, Maxime Bernier, reaffirmed Canada’s commitment to the One
China Policy. Bernier was following in the footsteps of former Prime
Minister Paul Martin who likewise endorsed the One China Policy and went
so far as to issue a joint statement with Chinese Premier Wen
Jiabao on January 20, 2005 stating that,
"...there is only one China in the world, that the government of the
People's Republic of China is the sole legal government to represent all of
China, and that Taiwan is an inseparable part of Chinese territory…” What a
declaration, especially considering that Taiwan
has never – not for a year, a month or even a day – been part of the People’s
Republic of China!
What if the tables were
turned on Canada
in the same sort of way? Canada’s
puzzling submission to the One China Policy would be like Taiwan’s President Ma choosing to endorse a One
America Policy with President George Bush declaring Canada to be an inseparable part of the United States.
Ridiculous yes, but no more so that Canada’s endorsing a One China
Policy.
Just as Canada’s independence is not the business of any
foreign leader, the independence of Taiwan is not the business of any
Canadian leader or cabinet minister. It is curious that Canada would chose to
do anything more than the obvious – namely, to declare that Taiwan’s
independence is to be decided by the democratic will of 23 million Taiwanese,
and by no one else.
But Canada’s
commitment to the One China Policy is not the only curiosity. During Taiwan’s latest presidential election on March
22 of this year, our same former Foreign Minister Bernier declared that a
democratic referendum held in Taiwan
on applying for membership in the United Nations "needlessly escalates
tensions across the [Taiwan]
Strait". Yet our foreign minister had no similar reprimand for China with its 1,300 missiles aimed -- and
occasionally fired – in the direction of Taiwan. So, Canada’s
foreign policy holds that an internal referendum is an unnecessary escalation
of international tensions, but aiming and firing missiles in the direction of a
neighboring democracy is unworthy of comment. How to explain that one?
How also to explain that our
government forbids peaceful and democratic Taiwan from having an embassy or
consulate in Canada, while China, Zimbabwe, Libya and even Iran – implicated in
the murder of Canadian citizens -- all enjoy diplomatic representation? How to
explain the fact that Canada
has even denied democratically elected representatives of Taiwan the right to land in Canada on family matters, while China’s
unelected party officials are given VIP treatment and access to the highest
offices in the land?
I have often asked my fellow
Canadians why Canada’s
foreign policy so predictably submits to the will of Beijing
when it comes to nations and peoples whose right to self-determination is
threatened by the People’s Republic of China. The answer is generally
delivered with an air of mild discomfort – an acknowledgment that something is
not quite right about Canada’s
abandonment of its democratic principles when it comes to China and Taiwan. But invariably, the
explanation is that billions of dollars in trade are at stake, and we can’t
risk the economic damage – the unemployment, the factory closures! -- that would result from upsetting China.
But does the argument of
trade have any validity? I would suggest it is a red herring, a vaguely
plausible, yet essentially fabricated, justification that causes Canadians to
reluctantly accept what they know is wrong. It is a “justification” that falls
apart upon closer inspection and a convenient misconception in the public mind
that no Canadian government has been anxious to correct.
As I will show, Canada holds all the cards when it comes to
trade with China, and China can do nothing to undermine the broad
trading interests of Canada.
So why do we allow Beijing
to set our foreign policy? What is at stake that causes us to abandon all
principles of democracy, self-determination, and human decency?
The vast majority of
Canadians – including consumers, small businesses and multinational
corporations -- has nothing to fear from trade threats – real or imagined --
from the People’s Republic of China.
However, a very small number of influential Canadian-connected corporations,
whose profitability depends on Beijing’s
goodwill, could feel vulnerable to Chinese pressure. Indeed, some of these
corporations seem, at least as far back as the Trudeau years, to have exerted
profound influence over Canadian governments on China and related policy. If this
should be true, it could be argued that the profitability of a handful of
politically-connected Canadian companies is driving Canada’s
Asia policy in its sustained concessions to Beijing. And so, we are left with the
possible corollary: Canada’s
government trades our integrity, and the interests of 23 million free
Taiwanese, for the aims of corporate king-makers.
That was the rhetorical part
of my talk. Now it is time for me to back up the rhetoric with some hard trade
statistics. Since 1997, imports from China
to Canada
have grown from around $5 billion to nearly $40 billion per year. Over that
same period, exports from Canada
to China
have grown from around $1.4 billion to nearly $8 billion per year. Our trade
deficit with China
has therefore grown from about $3.5 billion to over $30 billion. That trade
imbalance alone assures that any restriction of trade will hurt China a lot more than Canada.
But trade imbalance is only a
small part of the picture. Much more significant is the nature of the
goods being traded. China’s
purchases from Canada
are overwhelmingly raw materials, including oil, metals and forest products.
The entire basis of the Chinese economy is using its cheap labor to add value to
raw materials and exporting the finished products. So, a dollar’s worth of oil
can be turned into $100 dollars’ worth of Barbie dolls. A hundred dollars worth
of lumber becomes $10,000 worth of furniture. Perhaps most dramatic is China’s
ability to turn a few cents worth of oil, silicon and copper into a
microprocessor that sells for $100, or to put that microprocessor into a laptop
computer that sells for $1,500. Without raw materials, China’s ability
to add value collapses, and its economy, social stability, and the goodwill of
its elites -- upon which the government depends -- decline dangerously. China’s
economic and political rise proves that the Chinese government is very smart
and understands risk and benefit. China will not readily undertake an
initiative that represents catastrophic economic risk with no demonstrable
benefit. Instead of degrading our foreign policy in response to virtually
non-existent threats, Canadians need to understand that we hold all the trump
cards when it comes to trade with China.
Canada will always have a market that will buy our raw
materials. Our Wal Marts will always stock cheap
Chinese goods. Our purchase dollars will always flow into Chinese coffers. And
we know that China
will do nothing to change that.
So if the threat is not
trade, then what is the hammer that China holds over our heads to cause
our governments to act in such an apparently un-Canadian way?
To answer this question, we
must understand the role of the Canada China Business Council (CCBC), which is,
in its own words, “a private, membership-based association that seeks to
facilitate and to promote trade and investment between Canada and China. Founded in 1978 by a
forward-looking group of Canadian and Chinese businessmen, the CCBC has served
Canadian and Chinese businesses for over 28 years.”
On the home page of CCBC,
Montreal-based Power Corporation is shown as its sponsor. The honorary chairman
of CCBC is Mr. André Desmarais,
president of Power Corporation. The chairman of CCBC is Mr. Peter Kruyt, vice-president of Power Corporation. The founding
chairman of CCBC is the Hon. Paul Desmarais, Chairman
of the Executive Committee of Power Corporation.
Alongside senior Power
Corporation officials, former political appointees are at the top of CCBC. Sergio
Marchi, former Minister of International Trade under
Liberal Prime Minister Jean Chrétien, is President of CCBC. The Vice-Chairman
of CCBC is Howard Balloch, former Canadian Ambassador
to China
from 1996 to 2001, and founder of The Balloch Group,
which claims to be “among the top five China-based boutique investment banks”.
Until his recent election as an MP, Bob Rae, former premier of Ontario, was a director
of the CCBC. His brother, John Rae, is an Executive Vice-President of Power
Corporation. Also sitting on the board of CCBC is Ken Sunquist,
Assistant Deputy Minister of the World Markets Branch within the Department of
Foreign Affairs and International Trade, and Canada’s leading bureaucrat in
charge of international trade.
The Honorary Director of CCBC
is Maurice Strong, former President of Power Corporation, self-described
radical environmentalist, and an architect of the Kyoto Protocol. Since
dropping off the radar screen while under investigation for his alleged role in
the notorious United Nations Oil-for-Food scandal, Maurice Strong now serves in
China
in various environmental roles. It is this arrangement that may best illustrate
the effectiveness of Power Corporation and the CCBC. Let’s take stock of one
example of Power Corporation’s China
interests, and how they might tie in with CCBC and other organizations and
personalities:
· The CCBC persistently takes its case to Ottawa to help assure that that Canada’s
foreign policy is friendly to China
and, hence, to a select handful of Canadian businesses in China.
· André Desmarais,
Power Corporation CEO, is a major shareholder of CITIC Pacific, one of China’s largest
corporations.
· CITIC Pacific builds coal-fired power stations in China at the pleasure
of the Chinese government.
· Because of restrictions on carbon emissions under the
Kyoto Protocol, such coal-fired power plants would likely be impossible to
build in Canada.
· But China, among the world’s worst polluters, is
conveniently exempt from such restrictions under the Kyoto protocol, for which Maurice Strong can
claim much credit.
Taken together, all of this
might suggest some very capable long-term strategic thinking on the part of those
concerned in serving their corporate goals, while seriously damaging Canadian
and Taiwanese interests.
Needless to say, in a
totalitarian Chinese environment, the arrangements and interconnections to
which I’ve alluded would rely on – indeed, be at the mercy of – the ongoing
goodwill of the Chinese government. Thus, implicated Canadian corporate
interests would presumably need to ensure Canadian foreign-policy “compliance”
with the wishes and diktats of Communist Chinese policy. With this in
mind, one pauses to reflect on certain corporate connections with Canadian
prime ministers and prime ministerial hangers-on, connections that go back at
least to the era of Pierre Elliott Trudeau.
Reflect, for example, on a 2003 LifeSite
article: “Prime Minister Jean Chrétien sat on the board of Power Corporation
subsidiary Consolidated Bathurst Inc. before becoming leader of the Liberal
Party. Chrétien’s daughter France is married to Paul Desmarais’
son, André. André was
involved in Canadian power station projects in China. Chrétien personally withdrew
Canadian support of a UN condemnation of China’s human rights abuses after
Chinese officials threatened to take power station projects away from Canadian
firms.” One could be forgiven for interpreting this about-face on human rights
by a Canadian prime minister as a damaging distortion of Canadian foreign
policy for the profitability of one or more politically-connected Canadian
corporations.
In her April 17, 2003 National Post column, Diane Francis notes
that Chrétien heir apparent, Paul Martin, was hired in the 1960s to work for
Paul Desmarais senior by Maurice Strong. In 1974,
Francis writes, “Desmarais made Martin president of
Canada Steamship Lines and then, in 1981, made him spectacularly rich by
selling the company to him and a partner…” Former Prime Minister Brian Mulroney
and Desmarais go back at least as far as 1972.
Mulroney friend Ian MacDonald described Desmarais as
“Mulroney’s mentor in the business world.”
Former Prime Minister Pierre Trudeau had an
especially close and long-term relationship with Communist China’s leaders, Mao
Zedong and Chou En Lai. In 1973 when Canada
officially recognized China
and granted it Most Favoured Nation trading
status, the stage was set for trade deals to come. And Trudeau also had a
special relationship with Paul Desmerais who had
supported Trudeau’s leadership bid in 1968. According to Mel Hurtig’s The Betrayal of Canada, “Paul Desmarais provided much of the money for Pierre Trudeau's
campaign, Brian Mulroney's campaign, and Jean Chrétien’s campaign." Prior
to becoming Prime Minister, Mulroney was Desmerais’
principal labour negotiator for his thirty or so
companies. During the 1976 Conservative Party leadership convention, Desmerais was Mulroney’s “biggest contributor” and
benefactor. When out of politics, both Trudeau and Mulroney became members of
Power Corporation’s international advisory board. Paul Martin continues to hold
millions of dollars in shares in Power Corp. and was also the recipient of
political campaign funds from Power Corp.
This litany scratches the surface of mutually beneficial
relationships between Power Corporation and former prime ministers, and
demonstrates the corporation’s rare ability to align its interests with
Conservative, Liberal and even NDP political leaders. Perhaps it is no
coincidence that Canada’s
submissive foreign policy toward China has long served the interests
of Power Corporation.
A primary mandate of our
Department of Foreign Affairs and International Trade (DFAIT) is, in its own
words, “Greater international support for freedom and security, democracy, rule
of law, human rights and environmental stewardship”. As Canadians, we have the
right to ask how the actions and policies of DFAIT with respect to China --
including the denial of democratic self-determination to the people of Taiwan,
withdrawal of a UN resolution in support of human rights in China, and
facilitating the building of environmentally-destructive coal-fired power
plants in China that would be illegal in Canada -- are consistent with this
mandate.
To conclude, Canada’s inhospitable attitude to democratic Taiwan, an
attitude that has spanned the lives of several Canadian governments, cannot be
explained by the conventional wisdom of Canada-China trade. A more likely
explanation is that Canada’s
foreign policy has been bent to serve the interests of a handful of corporate
players, whose relationship with Ottawa’s
highest office-holders has been too cozy for too long.
Thank you.
Alastair Gordon,
President
Canadian
Coalition for Democracies
admin@canadiancoalition.com