With the United States pulling out, there will be even greater benefits for Canada in the 11-country accord
Progress is being made on a revised Trans-Pacific Partnership agreement.
Japan and other countries have stated the goal is to have an announcement of an agreement in principal in November at the Asia-Pacific Economic Co-operation (APEC) summit in Vietnam.
The agreement would be between the 11 remaining members of the TPP, after the United States withdrew from the pact.
Carlo Dade, director of the Trade and Investment Centre of the Canada West Foundation, said the new deal will be more advantageous for Canada than the original agreement.
“We do better without having to share the Japanese market with the Americans,” he said.
A report prepared for the foundation shows Canada’s net benefit under TPP11 would be C$3.4 billion versus $2.8 billion under TPP12.
The beef sector would be the biggest beneficiary due to reduced competition in Japan from U.S. beef. But there would also be potential gains for pork, poultry, fruits and vegetables, processed foods and canola oil.
Both agreements would harm the dairy sector due to concessions made by Canada but the threat is smaller under TPP11 because there will be less pressure on fluid milk prices with the U.S. out of the agreement.
“The benefits for Western Canada and for Commodity producers are substantial,” said Dade.
“The Americans are getting up from the table and just shoving their chips across the table to us.”
The Canadian Agri-Food Trade Alliance recently sent a letter to Francois-Philippe Champagne, minister of international trade with Global Affairs Canada, urging him to support and implement TPP11 without delay.
“Canada’s exporters are becoming increasingly alarmed that they will soon no longer be competitive in the Japanese market as they watch their competitors complete and implement free trade agreements with Japan,” CAFTA president Brian Innes stated in the letter.
Australia, Chile and the European Union already have free trade deals in place with Japan and the United States has indicated it wants one as well.
CAFTA says it is reminiscent of the South Korea situation when Canada was late getting a free trade deal in place and lost market share to competitors.
“The implications of Canada losing out on Japan are even more serious than they were for South Korea,” stated CAFTA.
“Japan imports approximately $4 billion of agri-food products annually from Canada.”
Japan was originally lukewarm about resurrecting the TPP until Prime Minister Shinzo Abe had a meeting with U.S. president Donald Trump in Washington, D.C., and got first-hand exposure to Trump’s anti-trade viewpoint.
“Suddenly, two days later you see a reversal of the Japanese position,” said Dade.
Japan, Australia and New Zealand are all committed to coming to terms on a new pact. It is taking some convincing to get some of the other Asian countries on board because the real prize of the original agreement for them was gaining freer access to the U.S. market.
But the thought is that if a TPP11 agreement emerges and the U.S. loses market share in important, high-value markets like Japan, the U.S. business sector will pressure Trump into reentering the deal.
A similar thing happened when Trump was poised to terminate the U.S.-Korea Free Trade Agreement. He holstered his pen after an intense backlash from industry and the two countries are now renegotiating the deal rather than scrapping it altogether.
Dade said Canada is one of the main beneficiaries of Asian nations trying to send a political message to Trump that trade liberalization isn’t dead just because he doesn’t like it.
“The Asians basically are willing to let us make a little bit of coin in the short-term in exchange for the strategic objective of getting the U.S. back to the table,” he said.
“We haven’t seen money like this on the table for us since forever.”
Critics of TPP11 say the deal could complicate NAFTA negotiations and would be akin to Canada thumbing its nose at the U.S., which is by far and away its largest trading partner.
Dade said that sentiment exists inside the hallways of Global Affairs Canada. He thinks it would be foolish for Canada to sacrifice what’s on the table in TPP11 based on fears of reprisals from the U.S. that may or may not happen.