Minister of Small Business, Export Promotion and International Trade appearance before the Special Committee on the COVID-19 Pandemic

2020-05-27

Taiwan's interest in joining the CPTPP

Issue

Taiwan has publicly expressed interest in acceding to the CPTPP.

Responsive Lines

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• The Government of Canada is committed to diversifying trade and investment and strengthening Canada's ties with its Asia-Pacific partners.
• The CPTPP is designed for expansion and provides Canada an opportunity to secure new access in the Asia-Pacific region.
• The Government of Canada welcomes the interest in accessions of economies that are able to meet the high standard rules and ambitious market access commitments of the CPTPP.
• No economy has formally applied to accede to the CPTPP.
• The Government of Canada will make decisions on accessions that are in the best interest of Canadians.

Releasable Background

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trading block that represents 500 million people with a combined gross domestic product of CAD $13.5 trillion - a full 13.5% of global GDP. Through the CPTPP, Canada has preferential access to half a billion consumers in some of the world's most dynamic and fast-growing markets, which will strengthen Canadian businesses, grow the economy, and create more well-paying jobs for middle class Canadians.

The CPTPP entered into force for the first six countries to ratify the Agreement - Australia, Canada, Japan, Mexico, New Zealand, and Singapore - on December 30, 2018, and for Vietnam on January 14, 2019. For the remaining signatories (Brunei, Chile, Malaysia, and Peru), the CPTPP will enter into force 60 days after that country ratifies the Agreement.

The CPTPP is designed to expand to include new economies. As of May 25, 2020, Thailand, the United Kingdom, South Korea and Taiwan have all expressed informal interest in accession, but none have formally applied.

Canada's trade relations with Hong Kong

Issue

New security legislation being promulgated by China could threaten Hong Kong's status as a trade and investment hub.

Responsive Lines

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• Owing to its rule of law and favourable business environment, Hong Kong acts as an international financial centre and a platform for Canadian companies to access China and other Asian markets.
• Hong Kong is an important conduit for both Canadian investment into China and for Chinese outbound investment to Canada.
• Total bilateral trade with Hong Kong amounted to $4.4 billion in 2019, making Hong Kong Canada's 22nd largest trading partner, and 6th largest in Asia (after Taiwan).
• The imposition by China of national security legislation without the engagement of Hong Kong's own institutions would undermine confidence in the integrity of the One Country, Two Systems framework, and in Hong Kong's role as a global hub.

Releasable Background

Owing to its rule of law and favourable business environment, Hong Kong acts as an international financial centre and a platform for Canadian companies to access China and other Asian markets. The bulk of foreign direct investment in China continues to be channelled through Hong Kong.

Investment - Hong Kong is a major investment partner for Canada, acting as both a source of investment and as a hub mediating investment flows from third party countries (most notably China).  In 2018, total FDI investment that flowed immediately into Canada from Hong Kong was $21.8 billion. The total stock of Canadian direct and portfolio investment in Hong Kong was $9.1 billion in 2018.

Trade Flows - Total bilateral trade with Hong Kong in 2019 amounted to $4.4 billion, a 3.6% increase over $4.2 billion in 2018. Major Canadian exports to Hong Kong are precious stones and metals (mainly gold in unwrought form), meat, ginseng roots, live fish and plant products with specialty uses (pharmacy, perfumery, insecticides, fungicides etc.).

Services - In 2018 Hong Kong ranked seventh as a global destination for Canadian exports of services, totalling $2.2 billion, a 13.5% increase from 2016. Canadian service providers excel in a diverse range of sectors such as finance, engineering, information technology and professional services.

New Security Legislation - China has announced that the National People's Congress (NPC) will deliberate on a draft bill that would impose national security legislation on Hong Kong in a process that circumvents the legislative channels of the Hong Kong Special Administrative Region. The legislation would likely criminalize a wider range of politically-related activities and greatly shrink the range of freedoms Hong Kong citizens have traditionally enjoyed, notably those related to freedom of association and expression. Inasfar as the new legislation is seen to undermine Hong Kong's autonomy, it may weaken its attractiveness as a regional business and investment hub.