Canada, China tighten trade ties, sign beef deal

Wed Feb 8, 2012 5:39am EST

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* Canada wants to boost relatively modest trade with China

* Beef deal should allow resumption of beef, tallow exports

* Canada keen to sell oil to China

By David Ljunggren

BEIJING, Feb 8 (Reuters) - China and Canada on Wednesday signed a series of agreements to boost modest levels of bilateral trade, including a deal that Ottawa said should allow the immediate resumption of Canadian beef and tallow exports after a nine-year pause.

The deals were inked in Beijing's Great Hall of the People by Premier Wen Jiabao and Prime Minister Stephen Harper, who arrived on Tuesday with a large trade delegation in a bid to ramp up exports and reduce Canada's reliance on the huge U.S. market.

"The agreements being signed today, in such a wide range of areas, are further testimony that we are taking relations to the next level and further strengthening our strategic partnership," Harper said in a statement.

Harper is particularly keen to increase exports of oil, citing the need to diversify away from the United States, which is the largest importer of Canadian energy.

Canadian officials said the deal on beef should allow the immediate resumption of beef and tallow exports, which Beijing halted in 2003 after Canada discovered a case of mad cow disease.

China committed itself in 2010 to resuming trade in Canadian beef and tallow. However, commercial trade has not resumed because of Beijing's standing restrictions on beef containing the growth enhancer ractopamine.

The two sides also wrapped up 18 years of negotiations on a foreign investment promotion and protection agreement, but gave few details. Both nations will need to conduct a legal review of the deal and then sign and ratify it before it can take effect.

The relatively small amount of bilateral trade - which amounted to less than C$60 billion ($59.4 billion) in 2010 - shows how much potential there is for growth.

Harper said Canadian investment in China rose by 39 percent in 2010 from 2009 to hit nearly C$5 billion. Chinese investment in Canada the same year totalled $14 billion, an increase of 9 percent from 2009.

Canada says it is determined to open up new markets and reduce reliance on the United States, which takes about 75 percent of all Canadian exports.

Ottawa intensified its calls to diversify exports last month after Washington vetoed a pipeline that would have carried crude from the western province of Alberta to Texas.

China does not import any Canadian oil, but says it is interested in doing so. The two nations also signed an extension of a memorandum of understanding on energy issues covering oil, gas and nuclear energy as well as trade and investment.

"This agreement will increase opportunities to attract capital investment, and improve access to markets for Canada's energy resources, technology and related services," a Canadian statement said. ($1=$0.99 Canadian) (Reporting by David Ljunggren; Editing by Ken Wills and Ron Popeski)

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