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The Trans-Pacific Partnership (TPP) Negotiations: No Need to Rush

Michael Teeter, Principal

(This article first appeared in Liberal Voice – a newsletter for Liberal Members and Supporters)

The Harper government’s seven bilateral trade agreements since 2005 were cast as a centrepiece of the Conservative economic agenda.  However, all of them are very small compared to the much larger Canada-EU Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP), negotiated in secret so the economic impacts are largely unknown to Canadians.  CETA and TPP together eclipse the economic impacts of NAFTA many times over.  TPP, if and when brought into force by all parties, will cover 40 per cent of global trade.  This is an enormous multi-nation undertaking driven by the United States and Japan. 
In early October, TPP Ministerial meetings wrapped up in Atlanta with an agreement in principle wholeheartedly supported by the Harper government but without details.  Significant hurdles lie ahead, including ratification by all signatory governments.  Leading Democratic Presidential candidate Hillary Clinton has publicly stated her opposition to TPP.  Additionally, several bilateral side agreements that must be part of TPP have yet to be negotiated.

TPP currently includes significant changes to the rules of origin and content rules for autos and auto parts.  These changes could have an enormous negative impact on jobs in Ontario and elsewhere in Canada.  Some Intellectual Property protections have been strengthened, possibly to favour U.S. companies over Canadian companies and the section on biologics protection is incomplete.  There are some positives for agriculture and food exporters and negatives for supply management.  There will be more investor-state protections and some restrictions on state-owned enterprises.  Parts of our government procurement market will be opened up considerably by both TPP and CETA, which could have a material effect on Canadian companies that rely on government purchasing for stable, long-term business.  Some trade sensitive industries, such as textiles and apparel, may require considerable time to factor in the new rules of origin and the specific product impacts.  

A critical but largely unrecognized feature in TPP is the elimination of U.S. trade preferences that Canada currently enjoys by virtue of NAFTA and its predecessor FTA.  Although Canada and Mexico currently have the best market access to the U.S., TPP will provide the same or lower market access as 11 other countries.  Competition in our most important market will significantly intensify.  Moreover, TPP will provide the template for a U.S.-EU negotiation in the near future and may very well remove any incentive for the EU to ratify CETA. 

What should Canada’s new government do?  The simple solution is to go slow and let others (particularly the U.S.) set the timetable and agenda.  This process will take years to complete and there are few political or economic incentives for the new government to be in front.  There should be a complete public airing of TPP and broad-based discussion and consultation to follow.  There is no need to rush this file.

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