BEIJING – Justin Trudeau has officially submitted Canada’s application to join a controversial new international infrastructure bank led by China – an initiative the Asian country hopes will help build its economic credibility around the world.
China founded the US$100-billion Asian Infrastructure Investment Bank late last year to provide other countries in the region access to capital for investments in projects in areas such as transportation, power and telecommunications.
The Canadian government made the announcement after the prime minister met with Chinese Premier Li Keqiang on Wednesday in Beijing, but did not immediately specify how much money it would put into the new bank.
The government said joining the bank will help Canada further engage in multilateral infrastructure efforts, and help pave the way for Canadian companies looking for new business opportunities.
Finance Minister Bill Morneau, who is travelling with Trudeau in Beijing, said Ottawa believes the bank will make an important impact on the global economy, and therefore the Canadian economy, through infrastructure investments.
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Canadian firms can benefit, too, he added.
“That is important, obviously, for those Canadian companies that will be part of the work that the AIIB does,” said Morneau, who met with the bank president Jin Liqun on Wednesday.
Morneau said the bank has shown Canada that it will be a highly effective institution.
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“They’ve put forward approaches to governance, approaches to management at the institution that shows us the impact that’s possible,” he said.
The bank has already invested more than US$500 million in Bangladesh, Indonesia, Pakistan and Tajikistan, and Chinese officials have said it plans to loan out US$10-15 billion over the next five years. The AIIB has about US$100-billion in capital.
Canada is aiming to become the first North American member of the bank.
By joining, Canada would add its name to the list of 57 other member countries, including Australia, the United Kingdom, France, Germany and South Korea, which signed on last year in the face of opposition from the United States.
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In order to join, countries agree to contribute funds in the form of shares. Australia agreed to contribute $930 million over five years, making that country the sixth-largest shareholder.
The bank’s governors could decide on new members early in 2017, according to Canadian government documents, which also indicated that the size of Canada’s share would be decided at that time.
American officials have warned that the new bank would provide loans to developing countries without requiring any caveats about the environment, labour rights or anti-corruption reforms, as are typically included in loans from the World Bank and International Monetary Fund.
On Tuesday, Trudeau hinted that Canada’s application had been in the works.
“My government believes very, very much in the importance of investing in infrastructure,” Trudeau said during a roundtable discussion with business leaders.
“That’s one of the reasons why we’re looking very favourably at the possibility of joining the AIIB.”
Former Canadian diplomat Charles Burton said joining the bank would signal that Canada is prepared to see China take a seat at the table in terms of having input on the global economic landscape.
“Certainly we’re trying to show that we are prepared to see China take an important role in the global economy,” said Burton, a political scientist at Brock University.
“And by supporting this institution that’s primarily initiated by China indicates that we’re trying to build trust that China will use this institution for the greater good in a liberal, internationalist way and not simply as a device to expand its geopolitical reach.”
There is still some wariness in official Ottawa about supporting China’s global influence, particularly with its recent actions the South China Sea, said Paul Evans of the University of British Columbia’s Institute for Asian Research.
But he said most officials feel Canada made a mistake by not joining the bank last year.
The four projects approved earlier this year addressed many of the concerns western countries had about the new bank, he said, including that China would use it to advance its own strategic and commercial interests.
Evans said the Liberal government’s decision to sign on would be symbolically important in terms of Canada-China relations.
While the cost – which he estimated will be as much as $1 billion – could be high, he said Canadian companies would indirectly benefit from the billions of dollars in projects the bank will finance.
– With files from Lee Berthiaume in Ottawa
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