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It appears Saskatchewan’s trade relationship with China is getting stronger.
Warren Kaeding, Saskatchewan’s trade and export minister, spent the last week in China leading a trade mission. He joined The Evan Bray Show on Tuesday to explain how his meetings went, share some highlights from the trip, and take a look at what the future trade relationship with China could look like.
Read more:
- Businesses ‘desperately in search of certainty’ on trade deal — but at what price?
- China deal good news, but tariffs are the ‘new reality,’ agriculture expert says
- Sask. Premier Scott Moe calls tariff deal with China a ‘tremendous, landmark agreement’
Kaeding said the next milestone for that relationship will come on Dec. 31, which is when an agreement for the reduction and removal of tariffs between Canada and China is set to expire. He said he spoke with industry and government leaders in China who all said they want to see that agreement extended.
Listen to the full interview with Kaeding, or read the transcript below:
The following questions and answers have been edited for length and clarity.
EVAN BRAY: Welcome back. You spent basically the last week meeting with business leaders and government officials in China. What was your biggest takeaway from the trip?
WARREN KAEDING: China is an immense country, 1.4 billion people. I don’t think we met them all on this trip, but we certainly found that China is a very populated country, and it is certainly an emerging economy. They talked about how 20 years ago, maybe three per cent of the residents were qualifying as the middle class, and now, probably 35 per cent of the residents are middle class. And that really provides so many opportunities for us to continue to support their economy.
Why is the measure of the middle class important for us, as an exporter of goods?
KAEDING: Disposable income. More people have more money to spend on items that are maybe even beyond a necessity. What we’re seeing is that they’re looking for higher-quality food. Well, we’re good suppliers of high-quality food. They’re looking at more finished products. That’s good. We’ve got an industry that can certainly support agricultural value-added food products. They’re looking for Canadian beef. I heard that loud and clear throughout the country. They are looking for copious amounts of energy, crude oil in particular. We happen to have ample supplies of that, so that’s what we saw while we were there.
Were there any things that you would classify as a win on this mission?
KAEDING: I would say the win that I saw immediately is everyone recognizing what Premier (Scott) Moe and Prime Minister (Mark) Carney were able to accomplish in very short order. Our premier has been there, I think, three times now in the last couple of years. The prime minister was there in the early part of the year, and how they were able to get the tariffs either reduced or eliminated in that one meeting was recognized and still talked about in the areas where we were. Certainly that was a message that we provided as well – that we recognize that December 31 is coming up quickly, and that’s ultimately that next milestone that that the tariffs were going to be eliminated or reduced until, and everyone we talked to – business, government on their side – said that needs to be extended, and we agreed wholeheartedly. And that was definitely the message we provided every opportunity that we had.
Will there be an extension of the break on the tariffs? The people you met with, were they mostly industry people? Were there some government officials there?
KAEDING: We met lots of industry. We met a lot of government in both Beijing and then in Jilin, our sister province, and then in Guangzhou. We also met lots of lots of government, as well as advanced education or university people.
What did you hear in China that they find frustrating? Are there problems that they asked you to work on or eradicate in terms of the trade relationship we have?
KAEDING: When we talk to businesses there, the tariffs that were implemented by their government also hurt their bottom line. We talked to a couple of crush plants and some food processors, and the cost of them sticking with Canada did hurt their bottom line. We heard a lot about that when we talked to industry. When we talked to the government, it was the ability to reach out and have conversations with, say, our prime minister, with the premier, or with trade ministers as they were coming through the country.
Some people in our province are still skeptical of trading with China altogether, because of the unpredictability, but others say we cannot cut China out altogether. How do you balance that when you’re talking with people in the province?
KAEDING: China has 1.4 billion people. India has 1.4 billion people. Between those two countries alone, you’re looking at probably 35 to 40 per cent of the world’s population. You can’t dismiss that market potential and, as I talked about early in the show, that growing middle income is really providing incredible opportunities. If it’s not us, it’s going to be Australia, it’s going to be the United States, it’s going to be South America. So I look at that as an incredible amount of volume. They pay well. It’s a high-value market, and we cannot replace that. It is going to take an awful lot of work in so many more countries to make up that same volume of opportunity.
Did you talk about the importance of Saskatchewan canola in the renewable fuel market while you were in China?
KAEDING: Yes, I did, and a couple of the crushing plants there were trying to build up volume to get into that market there as well. China is no different than the rest of the world. This conflict in the Middle East has certainly showed some vulnerabilities when it comes to a reliable, dependable supply of crude oil. They’re looking, as everyone else in the world is now, at alternatives to a single source of crude oil, and that would mean biofuel. We’ve certainly had that conversation there as well.
Is the infrastructure in place to get our goods to the market in China, and in an affordable way?
KAEDING: As I’ve traveled internationally, I have heard from buyers around the world that this is the one concern that they’ve got, that we have had bottlenecks, we’ve had labor issues, we’ve had supply issues in getting product that’s been bought and paid for delivered on time and in place when they need it, and it’s the same in China. But they certainly appreciated the fact that our federal government is now committed to improving a national transportation industry, from improving ports to rail efficiency. They did appreciate, and very sincerely appreciated, the fact that there is a renewed focus on building and maintaining that infrastructure.
If you’re talking to Saskatchewan farmers today, what is the message you give them after this trip about the relationship, specific to agricultural products and China?
KAEDING: They need our products. They appreciate the quality of our products. The one thing that I heard throughout the trip was that they recognize that the quality of our peas and the quality of our canola is second to none. There is no one else who competes with that quality. They also need that on a regular basis. In fact, they would like to start increasing the volumes of those over time. They want to have price certainty, and they want to have a tariff-free environment as well, so I have high hopes that we continue to have this engagement. They are very much looking forward to Prime Minister (Mark) Carney coming back to China. I believe there are other federal ministers who have plans to come to China, and those are so important in maintaining relationships, because that’s how China trades, which is by building strong relationships.
