Friday, Jan. 14

HEATHER SCOFFIELD
Parliamentary Bureau
Wednesday, January 12, 2000

Ottawa -- The federal government has chosen China over Europe as the next destination for Prime Minister Jean Chrétien's annual Team Canada trade mission, The Globe and Mail has learned.

Ottawa tentatively decided before Christmas that China would hold more promise as a destination than northern Europe -- the other top choice on the list, government officials said.

"Frankly, we don't see the same potential in Europe as China," one government source said.

China was suggested by many of the premiers at the end of the last trade mission to Japan last fall, and government officials feel that the Prime Minister and premiers will officially approve the choice of China soon.

"I would say 90 per cent of them [the people on the last Team Canada trip to Japan] wanted China," one trade official said. "There are big opportunities there, for every province, every market."

An announcement will likely come in a few weeks, said François Lasalle, spokesman for the Department of Foreign Affairs and International Trade. The China trip will likely take place in November, and either just before or just after the summit for the Asia-Pacific Economic Co-operation forum in Brunei.

Mr. Chrétien has organized a trade mission every year since 1994. The trips include the provincial premiers, the Prime Minister and dozens of Canadian companies.

The main aim is to seal trade and investment deals for Canadian business and use the influence of the Prime Minister and premiers to make business inroads in countries with high -- but largely unexploited -- trade potential.

Four of the five past missions have been to Asia, including one to China in 1994. Only one trip was made to Latin America. Europe, the United States and Africa have never been destinations.

Trade officials had considered northern Europe as one possible destination for this year's trip, and the focus would have been as much on investment as on exports and imports, officials said.

But when European Union President Romano Prodi visited Ottawa a month ago and dashed Ottawa's hopes for a Canada-EU free-trade agreement, the federal government crossed Europe off its list and opted for China instead, sources say.

The EU has just signed a free-trade agreement with Mexico, despite cries from Canada that the EU should deal with Mexico, Canada and the United States all at once in an EU-North American free-trade agreement deal.

The EU cut Canada out of the loop by forging a pact with Mexico and entering into talks with the United States while telling Ottawa there's no chance of a deal with Canada.

Canada's position with China, on the other hand, is privileged, Ottawa feels. Mr. Chrétien's diplomatic links with China go back decades, and China holds Canada in good esteem, government officials said.

In November, Canada signed a historic agreement with China that gives Canada's support to China's membership in the World Trade Organization. The Canadian agreement was signed just days after the United States signed a similar deal.

But the U.S. deal, which would remove the main barrier to Chinese WTO membership, still has to go through the U.S. Congress. Canadian government analysts believe it has little chance of making it through.

With U.S.-China trade relations tied up in congressional politics, Canada has an advantage in China, at least for now, one official said.

"Our sense is, no matter what happens in the United States, we're there [in support of China] and we want to cement that relationship," said the official. "There is an advantage for us, and we'll play it."

Canada's trade deficit with China is large since imports from China have exploded in recent years while exports have largely stayed flat. Canadian imports from China were worth $7.7-billion in 1998, while Canadian exports to China were valued at $2.5-billion during the same year.

China's shaky human rights record will likely cause the federal government some public relations problems in promoting the mission, trade officials acknowledged yesterday. China has resisted any attempt by foreign countries to interfere in Tibet or with the Falun Gong, the sect outlawed in China.

Past Team Canada trips may also haunt the proposed China trip.

The mission to Latin America was not considered a success, even within the Liberal government. Business people on the trip were grumpy, Mr. Chrétien joined the trip late because of the Eastern Ontario and Quebec ice storm, and some politicians were embarrassed by newspaper photos of themselves lying by a pool.

opposition politicians and trade analysts have questioned the value of sending so many politicians and aides around the world for the benefit of just a few companies.