Social Policy in Ontario

Just what is the TPP (and why should you care)?

Posted on June 21, 2015 in Policy Context

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TheStar.com – Business
Jun 18 2015. By: David Olive, Business

The most ambitious trade deal ever attempted hit a road-bump late last week that many political pundits have described as a deathblow. On June 12, the progressive wing of Barack Obama’s Democratic Party denied their own leader the ability to secure U.S. membership in the proposed Trans-Pacific Partnership (TPP).

But the TPP or something very like it is going to happen. The partnership promises to greatly improve economic conditions, and thus living conditions, among close to 800 million people. The 12 countries negotiating the TPP, including Canada, account for about $28 trillion (U.S.) in GDP, or close to 40 per cent of the global economy.

More important, like the European Union (EU), whose lifespan has marked the longest period of uninterrupted peace in European history, a TPP will strength bonds of mutual benefit and goodwill.

One telling aspect of the TPP negotiations is the participation of the U.S. and Vietnam. That is obviously a triumph of two former sworn enemies forging a relationship of mutual reliance and goodwill. And it also sees a relative micro-economy wielding significant bargaining power at the negotiating table with the world’s biggest economy.

The TPP is a proposed mutual-benefit arrangement among the greatest multitude of varied cultures ever attempted, and between some of the world’s biggest economies and least developed ones. It would be a stretch to call it a New World Order (certainly the negotiators make no such claim), but it comes pretty close. And that’s a good thing. Which is why, setbacks aside, the TPP will happen.

What the TPP negotiators want

– As with the EU and NAFTA, there will be an enormous economic benefit to all parties from a Trans-Pacific Partnership, measured in the tens of billions of dollars annually in increased GDP.

– The TPP is a template for future economic agreements among the world’s most and least-developed countries. In resolving the significant economic and cultural differences between the two, negotiators are setting the stage for future and still more mutually beneficial agreements between the world’s fast-growing but least developed economies and its biggest but slowest-growing ones.

– Negotiators representing the likes of Canada, the U.S. and Australia are tackling widespread state ownership in less-developed economies, and local preference in government procurement. Again, success at resolving these differences sets the stage for future agreements with non-TPP members such as China and India, which also have widespread state ownership and local preference in government purchasing.

– To compensate for a loss of manufacturing jobs, mature-economy negotiators are seeking greater access for Canadian service-sector providers — from computer software writers and financial services to telecommunications and legal services — to the vast Pacific Rim and South American markets.

– Japan regards the TPP as its best hope to breathe new life into an economy in stagnation for three decades. The Japanese PM, Shinzo Abe, also sees TPP reforms as the means to modernize a tradition-bound, sclerotic business culture.

– Canada could follow suit, using the TPP’s guiding anti-protectionism principles to finally end the unfairly high prices imposed on Canadian consumers for dairy, egg and poultry prices due to marketing boards and state subsidies. Eradicating those protections would also provide Canadian farmers their first chance to export dairy products and Alberta’s superb beef to Japan.

– The term “trade deal” is misleading. Negotiators seek to impose on their countries higher standards of working conditions, environmental protection, intellectual property rights enforcement, and purity of food and drug imports. If China was a member of a TPP, it would not be exporting food and drugs contaminated with plastic to Calgary, Halifax and Houston, because that would be cravenly illegal under the TPP.

What about jobs?

The most compelling case against the TPP is job loss.

Yet most economists argue that many of the low-income jobs Canada has lost have been replaced by higher-skill and better-compensated ones. And most of the jobs we’ve lost have been to the Pacific Rim, South Asia and Central America, with which Canada has no sweeping free-trade agreements.

Frankly, by continuing to underinvest in new-product development and hyper-efficient manufacturing methods, Canadian companies are heavily complicit in their misfortune.

South Korea is becoming a high-cost jurisdiction, the fate of all economies as they become prosperous. But that hasn’t kept Samsung Electronics Co. and Hyundai Motor Co., now the world’s fourth-largest automaker, from achieving global prowess. BlackBerry Ltd. has not been a victim of low-cost producers, but of its own failure to continue innovating in the very market it created.

A TPP-like arrangement, if not the TPP itself, will come to fruition. And it will dictate a more progressive world order. Its promise of higher living standards for hundreds of millions of everyday people, along with greater innovation strength of entire regions, argues that the emergence of a TPP is not a question of if, but when.

TPP cheat sheet

What is it? The most biggest, most ambitious free-trade deal ever attempted, the Trans-Pacific Partnership accounts for close to 40 per cent of the global economy, and embraces almost 800 million people.

Who’s in it? The 12 TPP negotiating countries are Canada, the U.S., Japan, Mexico, Australia, New Zealand, Chile, Peru, Singapore, Malaysia, Vietnam and Brunei. Economic heavyweights South Korea and Taiwan have signalled a strong interest to join, along with the Philippines. China has shown some interest in the TPP, as well, and could be part of a subsequent “wave” of new members such as India, Indonesia, Thailand, Bangladesh and Colombia, much as the European Union grew in stages to its current 28 members.

What are it’s goals? TPP negotiators are striving to reduce or eliminate tariff and non-tariff barriers to trade, thereby boosting the economies of the TPP member nations. Negotiators also seek to impose strict new rules on environmental protection; safe working conditions; intellectual property rights enforcement; and purity of food, drug and other exports, among other advances.

When will it happen? Informal talks began in 2002. The enormity of the TPP was achieved when the U.S. joined the TPP member-negotiators in 2008-09. It was hoped an agreement ready to be ratified by members would emerge by 2012. Stumbling blocks in the negotiations and, to a lesser extent, opposition by organized labour, environmental groups, health advocates and Internet freedom activists have delayed but hardly derailed the process.

< http://www.thestar.com/business/2015/06/18/just-what-is-the-tpp-and-why-should-you-care.html >

Tags: economy, featured, globalization, ideology, participation, privatization, rights, standard of living

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