Carney, the first Canadian leader to visit China in nearly a decade, characterized the deal as a breakthrough following a period of tit-for-tat levies between the two nations. Xi Jinping hailed the agreement as a "turnaround" in the relationship.
The move comes as Canada seeks to diversify its trade relationships, particularly away from the United States, its largest trading partner. This diversification effort gained momentum following the trade uncertainties created by former U.S. President Donald Trump's fluctuating tariff policies. The agreement could also pave the way for increased Chinese investments in Canada.
The relationship between China and Canada has been fraught with tension in recent years. Disputes over trade, human rights, and the detention of Huawei executive Meng Wanzhou in Canada at the request of the U.S., followed by China's subsequent detention of two Canadian citizens, Michael Kovrig and Michael Spavor, have contributed to the strained ties. The resolution of the Meng Wanzhou case and the release of the two Canadians paved the way for a potential thaw in relations.
The reduction in tariffs on Canadian canola oil is particularly significant for Canada's agricultural sector. China is a major importer of canola oil, and the high tariffs had significantly impacted Canadian exports. The agreement to tax Chinese electric vehicles at the most-favoured-nation rate could also benefit Chinese manufacturers seeking to expand their presence in the Canadian market.
The agreement is viewed by some analysts as a sign that both countries are seeking to stabilize their relationship and explore new avenues for economic cooperation. However, challenges remain, particularly regarding human rights issues and concerns about Chinese influence in Canada. The long-term impact of the agreement on the overall relationship between China and Canada remains to be seen.
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