Sunday, September 9, 2012

China and Canada sign trade deal on last day of APEC meeting

At the last day of the APEC meeting in Vladivostok Russia China and Canada have signed a new trade deal that will give protection to Canadian investments in China
After spending time lecturing Putin on Syria and breaking off relations with Iran, Prime Minister Stephen Harper met with Chinese President Hu Jintao on the last day of the APEC meeting and officials signed a broad investment pact. Harper beamed:
"Our government is committed to creating the right conditions for Canadian businesses to compete globally...This agreement with China — the world's second largest economy — will provide stronger protection for Canadians investing in China, and create jobs and economic growth in Canada."
Harper has been anxious to expand trade with Asia and especially China and to diversity capital sources to develop Canadian resources. Much of our trade now goes south to the United States. The Chinese premier said:
"Mr. prime minister, we attach great importance to the China-Canada relationship."
The meeting comes just as Canada is reviewing CNOOC's $15.1 billion deal for Nexen Inc. based in Calgary. Some worry that the state-owned company will not play by the rules as would private companies. Other countries also have state-owned oil companies including the Saudis and even Norway.
China made an offer that was far above the market price of shares. North American headquarters will be kept in Calgary and staff retained. Even the Alberta government supports the deal and so it will be difficult for Harper to claim that it is not a net benefit to Canada.
Some Americans have expressed reservations about the deal. Canada is regarded as a reliable source of raw materials by the U.S. Under NAFTA the U.S. has favorable terms to purchase of our resources. They may not appreciate China having more access and more control over our oil resources. Nexen is a global company and also has leases in the Gulf off the U.S. coast. There could be some pressure from the U.S. to reject the deal. However with so many Canadian players on side with the Chinese Harper may ignore any U.S. pressure.

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