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The Canadian prime minister was, in fact, already on record as being favorably disposed toward a free trade agreement. Back in February when he visited China, Harper noted in a CBC radio interview that his government wants to diversify Canadian trade. Commenting on the Foreign Investment Promotion and Protection Agreement and plans for a study on the compatibility of the two economies, he said these developments would set the stage for "discussions to examine the feasibility and some of the potentials of a free trade agreement."
"There will be enormous opportunity in China if we could ever get to that stage," he said, "but at the same time [we're] not under any illusions that there would be…a significant number of economic and other questions that would have to be answered."
The study on economic compatibility, which was released in mid-August, concluded there is "untapped potential for further growth" in bilateral trade and investment.
It focused on seven sectors: agriculture and food; clean technology and environmental goods and services; machinery and equipment; natural resources; services; textiles; and transportation infrastructure and aerospace.
The study described natural resources and agricultural production as "two particularly notable areas" for Canadian export growth because China's domestic resources "cannot meet the needs of its 1.34 billion people and rapidly expanding economy."
Besides these traditional areas, the study also highlighted emerging sectors such as clean energy and transportation and aerospace. According to the report, "In each of these areas, Canadian businesses can provide advanced technology and leading product and services solutions. For its part, China can provide input for advanced materials and equipment that will help Canadian producers remain competitive."
In order to turn these opportunities into reality, however, the report said the two governments would have to address existing "impediments to trade," such as "the clarity and predictability of the Chinese and Canadian regulatory environments; differences in national standards, and in technical and certification requirements; the application of tariffs; and the protection of intellectual property rights."
On that last point, the report deviated from the usual criticism of China to say, "It is important to acknowledge that China's intellectual property protection framework has advanced greatly since the country's World Trade Organization accession in 2001. Further improvements in this and the above-mentioned areas would enhance business opportunities in both economies."
The report's reference to "impediments to trade" would seem to lead naturally to the current buzz about a free trade agreement.
There is a certain irony in the fact that a government led by Harper is contemplating free trade with China. Economic ties between the two countries were a priority under the Liberal governments of Jean Chrétien and Paul Martin (1993-2006), and Liberals had long favored trade diversification away from over-reliance on the American market.
Harper's Conservatives, however, were suspicious of the China connection and changed Canada's trade priorities after coming to power early in 2006. Relations with China were allowed to stagnate, and Harper and his ministers rarely missed an opportunity to criticize Beijing on a wide range of issues. On trade, the focus swung to the Western Hemisphere, including free trade agreements with Chile and Colombia. These moves were controversial; even Harper's supporters in the business community wondered how relatively small Latin American economies could replace the potential of China. By 2008, criticism of the government's ideological aversion to nurturing relations with China became so loud that Harper and his cabinet could no longer ignore it. The financial crisis that erupted later that year, which crippled Canada's traditional trading partners in the United States and Europe, accelerated the rapprochement with China.
Canada's "energy superpower" strategy has now swung away from the United States, where there is widespread criticism of the environmental impact of the development of the western Canadian oil sands, and is focused on China and other Asian markets. Harper's government favors the construction of the "Northern Gateway" pipeline that would carry bitumen from the oil sands to Canada's west coast for export to China.
During his February interview with the CBC, the prime minister noted that Canada currently sells 99 percent of its energy to the United States, and "hasn't penetrated the Asian markets very far and obviously that's a priority for the government."
Oil exports would be the ultimate answer to Canada's nagging trade deficit with China, while being an important step toward the long-term Canadian goal of trade diversification. As for Beijing, it would gain a stable and reliable energy supplier. The first indication that the two countries are on a new economic course will come when Ottawa makes its decision on the Nexen deal. Should it be approved, that match made in economic heaven could well be on its way toward consummation.
The author is an editor at the Toronto Star and a former editorial consultant at Beijing Review | 
