industries

Canada joins TPP free trade talks

At first, Canada wasn’t interested. But joining the Trans-Pacific Partnership puts us in a stronger position to deal with China.

Whatever the price of admission to the Trans-Pacific Partnership, Canada seems willing to pay it. Such is the federal government’s determination to take its place in the nascent trading bloc. While membership has its conditions, none of them are known. Some are secret, the rest yet to be determined.

Coming late to the talks, Canada must commit in advance to closed chapters of the agreement, of which little has been disclosed. New signatories may also have to forfeit veto rights on agreements reached while awaiting accession. And members must be willing to visit all aspects of trade, thus threatening Canada’s supply-management system for dairy and poultry farmers.

To critics, Canada is negotiating while blindfolded and gagged, all to gain access to such economic powerhouses as New Zealand and Brunei. Canada’s existing trade agreements with the U.S., Mexico, Colombia and others, after all, already cover almost 90% of the TPP’s combined $20-trillion market.

At first, Canada resisted overtures to join the group, which was conceived in 2005 as an offshoot of the Asia-Pacific Economic Cooperation meetings. Two events sparked Canada’s change of heart: the failure of the World Trade Organization’s Doha Round and the admission of the United States to the TPP.

The TPP quickly became the best hope for a modern, multinational free-trade agreement, one that could eventually include the powers of the Asia-Pacific, says John Manley, president of the Canadian Council of Chief Executives. “With Doha being stalled, this is the only supraregional trade negotiation that shows promise on the planet.”

The potential of the TPP comes into focus when considering the possible future participation of South Korea, Japan and China. China’s suspicions of the organization as a U.S.-led strategy to contain Chinese growth will subside, Manley says. “I believe ultimately China will be part of the TPP. In that case, I’d much rather be able to negotiate with the clout of the United States than trying to do it bilaterally.”

In the meantime, membership in the free-trade group at least gets Canada in China’s neighbourhood, says Laura Dawson, a former adviser at the U.S. State Department and president of Dawson Strategic, an Ottawa trade consultancy. “It will get us participating in Asian supply chains and Asian investment flows. We’ll be with the TPP partners selling into China, rather than competing against those partners for market share.” To opt out could also put our trade with the U.S. at risk.

Dawson says the potential benefits of Canada’s participation outweigh the costs, which, in any event, have been overstated. It’s believed that only one chapter of the trade agreement dealing with small and medium-sized enterprises has been closed. That’s after 12 rounds of talks—a pace that leaves little chance of the most contentious negotiations finishing before Canada takes its seat at the table. And while Canada has far from committed to ending supply management, a defence of protectionism should not be allowed to undermine Canadian influence in what could become the world’s most important trade agreement.