Canada's Trudeau set for tough China talks on trade deal, plane sales

OTTAWA/MONTREAL (Reuters) - Just days ahead of a Beijing visit, Canadian Prime Minister Justin Trudeau has yet to decide on whether to launch talks on a free trade deal that China has long pressed for and could face a cool reception over his government’s decision to snub Chinese interest in Bombardier.

FILE PHOTO - Canadian Prime Minister Justin Trudeau gestures during the news conference in Manila, Philippines November 14, 2017. REUTERS/Czar Dancel

China wants a free trade pact similar to the ones it has with Australia and New Zealand but Trudeau, aware of domestic unease at the idea, is moving slowly.

“No decisions have been taken at this end as a government,” a Canadian source familiar with the matter said about the possibility of talks being announced during Trudeau’s Dec 3-7 visit. Trudeau’s office declined to comment.

Trudeau is caught in a tough position. Although polls consistently show Canadians are split over the merits of a trade deal, Canada needs to diversify exports to offset the possible damage done if the United States pulls out of NAFTA. Any China trade deal would take a decade to complete, insiders say.

The prime minister also faces pressure stemming from distinct signs of impatience from China. Beijing laments what it sees as Canada’s “vague thinking” about a deal, said one person briefed on the Chinese position who asked to remain anonymous given the sensitivity of the situation.

The Canadian source said the government was aware of Chinese impatience but, while diversification is important, Ottawa was setting “a high bar in terms of what trade means for Canadians.”

“While they may be impatient to move forward, I think they understand that,” the source said.

Foreign executives operating in China complain about difficult working conditions, arbitrary decisions by local courts and lack of protection for intellectual property rights.

The visit comes as plane maker Bombardier Inc is eager to win a breakthrough order from Chinese carriers for its CSeries jet, whose fuselage is made in China.

But the chance of nabbing such deals has become more cloudy after Canada encouraged Bombardier to sell a controlling stake in the CSeries program to Airbus SE rather than a Chinese firm.

Some Chinese commentators called Bombardier “mad” for spurning a China tie-up, while others expressed dismay saying that it was a missed opportunity to gain access to the firm’s valuable technology.

Trudeau, who will meet President Xi Jinping and Premier Li Keqiang, agreed last year to hold annual talks with senior Chinese figures. An official Chinese statement on Trudeau’s visit did not mention trade once.

With additional reporting by Brenda Goh in ShanghaiEditing by Chizu Nomiyama