OTTAWA - Canada is closing in on a key trade agreement designed to boost economic ties with China as the importance of the U.S. wanes, says Trade Minister Ed Fast.
Fast told reporters in a conference call from Jakarta on Monday he will be travelling to China next week and that negotiations are nearing a close.
"We're hoping to complete those negotiations soon and if that happens I think it will increase investment for both of our countries in a very significant way," he said.
Canada has been seeking a Foreign Investment Promotion and Protection Agreement since 1994, but the process picked up steam recently following Prime Minister Stephen Harper's first visit to China at the end of 2009. The prime minister is rumoured to be planning a second visit later this fall.
China is the world's second-largest economy and a major buyer of Canadian resources — from coal and fertilizer to grain and lumber — while Canadian businesses have been seeking a firmer foothold in the world's emerging economic superpower.
Fast said a new agreement would set the ground rules for firms that want to invest in China and would contain a dispute resolution process.
"I've been asked to make Asia a key focus of our work and most of all China," he said.
"In the long term, Canada is going to have to diversify its trading relationships and that will benefit our long-term prosperity."
Next week, Fast said he will visit Beijing, Shanghai and four regional centres where Canadian firms have interests. The trade visit will focus on sectors such as the nuclear industry, natural resources and aerospace, he said.
China has been stockpiling minerals, metals, cement, coal and other resources for years to help feed the Asian country's rapidly growing infrastructure needs.
In the last two years, companies from China have bought a 20 per cent stake in Vancouver-based Teck Resources (TSX:TCK.B), Canada's largest publicly traded miner, as well as expanded in the oilsands sector of Northern Alberta.
Chinese companies have also helped finance iron ore exploration in northern Quebec and other metals projects in the rest of Canada.
A report from CIBC World Markets, released Monday, noted that Canadian exporters are already adapting to the global economy's shifting centre gravity away from the U.S. and Europe.
The CIBC notes that Canadian exports are currently 30 per cent more diversified than they were a decade ago, with the share of exports to the U.S. — while still at about 75 per cent — back to the level they were before NAFTA. At the present rate, the U.S. share of Canadian exports could fall to 60 per cent by the end of the decade, the report states, with countries like China picking up most of the slack.
"The post-Great Recession era, and the new mix of economic growth that will define it, could provide corporate Canada with a golden opportunity to restructure itself in a way that simultaneously reduces its dependence on the U.S. economy, and improves its bottom line," the report argues.
While Canadian exports have sharply increased in recent years, China continues to enjoy an advantage in the relationship, exporting more than twice what it takes in from Canada.
As well, China's trading policies, particularly it's low currency, have become a lightning rod of criticism in the U.S. This week, the U.S. Senate is debating whether to impose sanctions in response.
Fast would not comment on possible U.S. action, but said in general he is concerned about the "rise" in protectionist sentiment, adding that "expanding trade with the Asian countries" was in Canada's interest.
Canada will not back off on its efforts to increase trade liberalization, including talks with the troubled European Community, in the face of the global economic difficulties, he insisted.
The minister's comments came at the conclusion of a trip to Japan and Indonesia where he concluded four trade agreements, including an Anti-Counterfeiting Trade Agreement and an expanded air transport deal with Japan.