TPP deal a clear win for Canada

Posted on October 6, 2015 in Debates – Globe Debate
Oct. 05, 2015.   Derek Burney And Fen Osler Hampson

Derek Burney was Canada’s ambassador to the U.S. from 1989 to 1993. He was directly involved in negotiating the free-trade agreement with the U.S.; Fen Osler Hampson is a distinguished fellow and director of global security at the Centre for International Governance Innovation and Chancellor’s Professor at Carleton University.

With campaign posturing in full crescendo, it may be difficult for Canadians to divine the full import of the just-concluded TPP negotiations but, in scope alone, the agreement is an historic achievement. It covers 40 per cent of the global economy ($28-trillion) with a combined population of 800 million people, and notably will give Canada increased and preferential access for goods, services and investments in the dynamic Asia-Pacific region.

However, ratification, especially by the unpredictable U.S. Congress, is anything but assured. The TPP has little support among President Barack Obama’s Democrats, including those running to succeed him and, after the sudden resignation of House Speaker John Boehner, the Republicans are literally at war with themselves girding for another major battle with the Mr. Obama in December on the budget and the debt ceiling. The window for ratifying the TPP in Washington is as narrow as its support. And no matter who is elected Oct. 19, Canada’s Parliament will also need to approve what has just been negotiated.

The facts should speak for themselves and, on that basis, the TPP represents a clear win for Canada, one that serves the national interest and is especially beneficial for consumers. While preserving and quite possibly strengthening our preferential access in North America – a prime motive for us joining the negotiations – Canada will be anchored strategically to global supply chains, will remain competitive with the U.S. and will gain new access in markets like Japan, Malaysia and Vietnam, which currently have high barriers to entry. Independent estimates suggesting increases of $10– to $12-billion to our GDP will now need to be tested against the actual provisions of the agreement.

As with any trade agreement there are tradeoffs but, in this case, almost all sectors of our economy stand to benefit, including aerospace, agriculture (pork, beef, fruits, grains and canola oil), energy, seafood, chemicals, plastics, industrial goods, machinery, metals and minerals, forest products, IT, and financial and professional services. It will now be up to our exporters to aggressively seize new market opportunities open to them.

When combined with the Canada-Korea free-trade agreement and the Comprehensive Economic and Trade Agreement (CETA) with the European Union, Canada will have gained preferential access covering 90 per cent of our exports. Besides, once consummated, the TPP will serve as a template for a dozen or more additional partners like India, Indonesia, South Korea, Taiwan, and possibly China as well.

Access gained must be compensated to some extent by access provided. We will have to relax some protectionist measures propping up our least competitive entities, as will other TPP partners. The government has signalled its intent to compensate those, such as dairy and poultry farmers, who may be adversely affected, and the impact will be phased in gradually. Worth noting is that, once released from the constraints of supply management, New Zealand and Australian dairy farmers became highly efficient exporters.

There has been much talk about auto content thanks to the ham-fisted, private deal struck earlier by the U.S. with Japan without any consultation with its NAFTA partners. The percentage provisions of that side deal have been modified slightly in the final accord but, in today’s more globalized economy, the certainty or clarity of definitions pertaining to “domestic content” are even more significant for auto makers and parts manufacturers. Judging by the initial responses from those most affected, it would seem that an acceptable balance was struck. But there are those who are unequivocally and consistently opposed to any trade liberalization.

For those opposed to the deal, the real question to ask is how Canada could expect to compete with any of the TPP partners if we chose to opt out. The consequences for an economy already buffeted by the slump in energy and commodity markets would be lethal.

On trade liberalization, we are actually moving at a much faster clip globally than domestically. Rather than being nagging spectators on the global trade agenda, some recalcitrant provinces should act to break down the shackles inhibiting competition in our own country. That would help our producers seize full advantage from the preferential access afforded by agreements like the TPP.

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