Canada must balance human-rights concerns with business interests when dealing with China, says Foreign Affairs Minister Peter MacKay.

"I would describe the prime minister's approach, the government's approach, as one of direct engagement for a frank discussion on the concerns that involve human rights," said MacKay, following a recent speech to the Vancouver Board of Trade. "But I don't think that one has to trump the other."

MacKay said Canada should be - and already has been - able to have discussions with the Chinese government surrounding human rights as Canadian industries seek to increase their ties with the world's largest country.

"That (concern about human rights) should not detract or deter our business interests in any way (or) exclude our ability to forward your interests - Canadian interests - as far as expanding our business footprint in the country," MacKay told the audience, which included business leaders, B.C. government ministers and diplomats from Japan and other Asian countries.

Peter MacKay

"I believe that, increasingly, China appreciates that approach, as long as it isn't done in a surreptitious way, as long as we are not doing it in a disrespectful or hectoring way," said MacKay. "I would suggest that the two interests do not have to diverge. They can foster better relations in the future if we're honest and upfront about where we stand and don't say things outside the room that we're not prepared to say to them face to face."

MacKay's comments come as China's economy rapidly expands and becomes more westernized. Some industries, notably tourism and energy, have cited political and legal roadblocks to expanded trade with the Asian nation.

While human-rights groups have chastised Beijing for its handling of Tibet and Taiwan, as well as alleged human-rights atrocities, MacKay noted that Canada "puts a great deal of emphasis (on) and values human rights."

"We're a country that is very open and a country that has been inviting to people from all corners of the Earth," he said. "We respect human rights. We value good governance practices - transparency - and we will continue to be advocates - both at home and abroad - for those important principles and human values."

The Chinese government accepts that approach, he said.

"I think they have - and I think they have to," said MacKay. "There is a modernization that's taking place everywhere. Having said that, we are diplomatic, respectful and direct, and I think that most countries - China included - find that refreshing coming from the Canadian government."

Speaking in the same downtown Vancouver hotel banquet room as MacKay five months ago, Trade Minister David Emerson gave Canada a scathing review of its business-building efforts with Asia. If not for energy, he claimed, Canada would have had a trade deficit with Asia in recent years.

Emerson, the former Liberal cabinet minister who defected to the Tories after the last federal election, also said Canada has faced delays in obtaining approved destination status from China, which would allow more ordinary Chinese citizens to visit here, because Ottawa has declined to extradite Chinese fugitive Lai Changxing.

Lai, the accused mastermind of a multibillion-dollar smuggling operation who lives in Vancouver, has fought for seven years to stay in Canada. While allowing him to stay, a judge rejected claims from Chinese authorities and diplomats that Lai would not be tortured.

Business leaders, academics and other observers also contend Ottawa's fears about increased Chinese ownership of Canadian firms - particularly in the energy sector - and criticisms about human-rights violations carried out by the Communist Chinese government have hampered trade between the two countries. Yuen Pau Woo, president and co-chair of the Asia-Pacific Foundation, has called on the Tories to state a clear position on Chinese investment in Canadian companies.

One audience member questioned why MacKay's ministry has spent so much time lately trying to develop closer ties with South American countries while it is trying to increase trade with Asia through such programs as the Pacific Gateway.

MacKay noted Ottawa's increased attention on South America is part of the government's plan to extend Canada's reach and presence around the globe and will not in any way diminish what it's doing in Asia.

"Quite frankly, our presence in the Americas has been waning somewhat, and we've heard this from various sources and governments," said MacKay. "Let's be honest. We have to roll with the times that are evolving."

He added Ottawa does not want to take its positive and fruitful relations with the Americas for granted.

MacKay also pledged that Ottawa will make more Canadian consular officials available to assist companies seeking to do business in the key markets of China and India - and make things happen quickly - while also helping small and medium-sized firms.

"A competitive tax structure" will also be a big part of increased Canadian-Asian trade, he said, but did not elaborate.

Canada will also pursue more bilateral free-trade agreements with Asian countries in wake of the stalled Doha Development Round free-trade talks, initiated by the World Trade Organization, which aims to lower barriers globally. The delay has been blamed on divisions between the European Union, U.S. and Japan, and G20 countries led by China, India, Brazil, and South Africa.

Another audience member questioned why Canada closed two consulates in Japan, including one at Kyoto, where the international protocol of the same name to reduce greenhouse gas emissions was signed. Other consulates have been shuttered in St. Petersburg, Russia, and Milan, Italy.

The consulates in Japan and Milan were disproportionate to the government's desire to expand consulates into countries such as Liberia and Yemen, said MacKay.

Meanwhile, MacKay said Canadian-U.S. relations remain strong despite concerns over issues such as the softwood lumber dispute.

He noted Canadian government officials have been well received in the U.S. before and after the Democrats gained control of Congress.

The Canadian and U.S. governments are also working together on possible new identity cards and technologies that MacKay said he hopes will be in effect before the American government's Western Hemisphere Travel Initiative (WHTI) fully kicks in next year. The WHTI will require all people - Americans included - to have a passport when arriving in the U.S. by land, sea or air.

The WHTI took effect for air travel Jan. 23, 2007. The requirement that people arriving in the U.S. by land have a passport is not slated to begin until Jan. 1, 2008. Congress has also granted the Department of Homeland Security an extension on the passport requirement for land travellers until 2009.

Tourism operators and other business leaders have claimed the rule is hampering Canada-U.S. trade.

But MacKay said preserving the integrity of the Canadian passport and protecting transportation routes such as the Detroit-Windsor tunnel from terrorists will be essential to trade between the two countries.

(Monte Stewart can be reached at monte@businessedge.ca)