Canada making progress with U.S. in effort to join new TPP trade bloc: Fast

OTTAWA – Canada is making progress in convincing the United States that it should be allowed to join an ambitious new trans-Pacific trade bloc, federal Trade Minister Ed Fast said Thursday.

Washington is believed to be one of the key impediments to Ottawa’s efforts to join the nine-member Trans-Pacific Partnership, largely because it also wants to protect dairy, egg and poultry farmers in Quebec and Ontario from outside competition.

But the minister, who was attending the inaugural trade ministers meeting of the G20 in Puerto Vallarta, Mexico, on Thursday, said he has been working on his U.S. counterpart to sort out their differences.

“In my meetings with Ambassador Ron Kirk, each meeting has been productive,” he said in a telephone interview.

“We believe we are making significant progress in impressing upon the United States that Canada will be an ambitious negotiating partner, that we will be a very valuable asset at the negotiating table,” he said.

“We’ve also impressed upon the Americans that Canada and the U.S. should be walking together as partners as we open up new opportunities within the Asian economies. We have highly-integrated economies, supply chains and we should be doing this in partnership.”

Fast said Canada’s protectionist supply management system should not be an impediment because Canada has agreed to put it on the table in talks, as it has done in other negotiations.

That does not mean Canada would necessarily negotiate the system out of existence, however.

“Since the late 1980s, we’ve negotiated agreements with 14 countries, (and) in each case we have been successful in addressing the issue of supply management and that has not prevented us from actually completing free trade negotiations,” he pointed out.

The goal is to get a deal that benefits the country overall, he said, which suggests Canada may be willing to remove some of the barriers to imports in dairy, eggs and poultry if the price is right.

Fast will also be talking to New Zealand’s trade minister, another critic of supply management, at the G20 meetings which end Friday.

No major announcements are expected from the talks, the first time trade ministers from the Group of 20 countries have formally met. But Fast said he hopes the summit will result in a consensus that protectionism is “toxic” in the modern global economy.

“Most of the world economies injected significant stimulus to emerge from the economic crisis,” he said. “The new stimulus now is deeper, freer and more open trade.”

Fast said Canada has walked the walk on trade by actually lowering and removing tariffs worth about $435 million annually even as the country was struggling through recession and the aftermath.

“That’s one of the reasons Canada leads the G7 in terms of economic fundamentals,” he said.

The minister said Canada will continue to pursue an aggressive trade agenda as the a key pillar for future economic growth.

A new forecast from the federal trade agency Thursday pointed to trade as a driver of near-term economic growth in Canada now that record household debt is restraining the domestic economy.

Export Development Canada predicts exports will rise 7.1 per cent this year and 7.3 per cent in 2013, contributing about one half of economic growth.

That’s somewhat at odds with Bank of Canada governor Mark Carney, who has lamented exporters’ near-sighted dependence on safe markets like the U.S. and believes net trade will be a minimal contributor to growth.

But EDC chief economist Peter Hall defends his projections.

“Our outlook on exports is stronger, but our outlook on imports is definitely dimmer than the Bank of Canada’s,” he said.

“There are a number of reasons we’re bullish on exports. U.S. growth is very strong at the moment and we believe Canadians will be capitalizing on that,” Hall said.

“And in emerging markets, we’ve been growing like gangbusters. Their thirst for commodities is driving that, but we’re also doing substantial high value-added trade.”

Hall believes the bank governor is also too pessimistic on Canada’s record in cracking fast-growing emerging markets such as China and Brazil.

“Back in 2000, emerging market trade as a share of total merchandise exports was only four per cent. Now it’s 11. And if (the trend continues), by the time we get to 2020, it’s going to be just under a quarter and by 2025, it’s going to be close to a third,” he said.

Fast said his government is focusing on emerging markets in its trade agenda.

Besides its interest in the Trans-Pacific Partnership, Ottawa recently launched free trade talks with India and Japan and exploratory talks with China as well as South America’s Mercosur trade bloc, which includes Brazil.