Negotiating NAFTA and TPP at the same time is complicated

The 11 remaining countries in the Trans-Pacific Partnership have agreed to move ahead with work on a trade pact minus the United States after a dramatic 24 hours at the recent Asia Pacific Economic Summit in Vietnam.

Getting to this point was dicey.

Canadian Prime Minister Justin Trudeau missed a leaders’ meeting, infuriating several world leaders who accused Canada of sabotaging the deal.

The fact that the TPP has survived another day was welcomed by Canada’s agriculture industry, which sees the deal as a key avenue into the lucrative Japanese market, which the industry has sought after for a very long time.

Still, the agreement in Vietnam means Ottawa’s trade file just got even more complicated.

For one thing, many of the contentious files in the TPP are also sensitive issues in the ongoing North American Free Trade Agreement. Those files include Canada’s supply management system, rule of origin for automobiles and cultural exemptions, to name a few.

The fifth round of NAFTA talks is scheduled for Nov.15-21 in Mexico City. The round was delayed to give negotiators from all three countries a chance to regroup while trying to narrow significant gaps in positions after a tense fourth round.

Whether those gaps can be overcome remains to be seen. U.S. negotiators have tabled several “poison pill” requests, including a five-year sunset clause, which Canadian and Mexican officials have refused outright. An American walk-out remains a real possibility.

Ottawa has said from the beginning of the NAFTA renegotiation that Canada needs to diversify its trade portfolio.

However, doing so while at the same time trying to salvage NAFTA is easier said than done, trade experts say. The TPP and NAFTA may be different deals, but the decisions, concessions and proposals tabled at either table can easily influence the other negotiation.

Consider supply management, for instance.

Canada has said repeatedly it will defend the country’s quota-based production system for eggs, dairy and poultry at the NAFTA table. Negotiators have already rejected an American demand that calls for the elimination of all tariffs on supply managed goods within 10 years and changes to this country’s do-mestic milk classification system.

Supply management was one of the last contentious issues to be addressed during the original TPP negotiations when the United States was still part of the deal. New Zealand and Australia also had Canada’s supply management system in their crosshairs.

Canada has said it wants to take another look at the concessions made in the TPP now that the United States is no longer part of the deal. Push-back from New Zealand and Australia should be expected.

However, any Canadian concessions on the supply management file at the TPP table would go against negotiators’ positions at the NAFTA table. It sets a precedent that Canadian dairy farmers do not want set.

Then there’s the Liberals’ ongoing interest in negotiating a free trade agreement with China.

At least one retired cabinet member, former Industry Minister James Moore, has warned that entering a free trade agreement with China could lead to problems with the U.S., given the President Donald Trump administration’s testy relationship with Beijing.

Global Affairs Canada recently released results of its public consultation with stakeholders and Canadians about a potential China trade deal. More than 600 businesses and stakeholders took part.

The department found that doubts continue around whether a China-Canada free trade agreement would resolve ongoing trade issues. Those challenges include Beijing’s inconsistent rule of law and the nature of China’s state-run economy — concerns in Canadians view “that are more difficult to resolve using a traditional approach to free trade agreements,” the department said.

Sounds complicated.

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Comments

  • appaulled

    Complicated only because we are too tied to the USA. If we diversify, then things would not be so difficult as we would not rely on trade with the USA. We could maintain our supply management with the USA while trading it away for something of value in TTP. The USAhas significant subsidies to its dairy industry so unless they stop subsidies why would we stop supply management.

  • Harold

    Trade is about expanding your commerce. You cannot expect to expand yours into their country and not expect the other party to expand theirs into your country at the same time. Both parties have to at the same time protect their own industry’s and jobs. Both country’s have geographical and constitutional differences and these elements further complicate the process. Some things that you urgently want to trade are not needed and you need to redirect. Everything is doable, but who ever said that this is an easy task? Oh ya, the fake news. We are trying to tie our self to the USA and being “too tied” is the meaning of our success. “Too tied” means that they have accepted the majority of our trade. How do you go about selling milk to a party who already has milk and how do you sell cheese to party who can already make cheese. One party would have to fire all of the workers making cheese and the other party would have to fire all of the workers making milk to enable trade. What do we give to the unemployment line? How do you create a floating contract that is demand based? Canada has produce in the summer and not the winter per say and the USA year around per say. How do you float that contract in trade and what do counter it with?
    Can our government come up with the ingenuity that it takes or will they continue to cry that Trump got them off their ass and put them to work. We know that Canadians didn’t get them off of their asses and put them to work at the opportunity and prospect of gaining a better new contract. I wonder why we are paying them because anyone who has mastered grade two can keep resigning an old contract and add nothing new. I’ve heard lots of stories of “doom and gloom” every time I’ve put my children to work for the family good when they didn’t want to. It seems that our government never wanted to; children capable of growing a beard no less.

  • Monkeeworks

    — because Canada’s dairy supply management creates higher costs for all dairy to all Canadians. People buying dairy products, such as milk for children, are the ones forced to subsidize the dairy industry. It is a user pay subsidy to the dairy industry in Canada. When you consider 48% of Canadian children in homes that receive below poverty government assisstance do not get enough dairy because it is to expensive is one good reason to eliminate the dairy supply management. As for cheeses etc. Why do we have such a limited selection of cheese and what is available is very expensive? Same reason. We the user of dairy are paying the subsidy for dairy management, not the whole taxpayer base. The imported cheeses are also charged a high tariff to force us to look at Canadian cheese as a cheaper alternative. When it comes to dairy, if I could, I would Buy American.

    • Harold

      I think I know what you are saying in short. How many agencies does it take to sell a glass of milk? How many agencies does a cow have to jump through to land onto a plate. Those agencies produce nothing and only vacuum up money; but whose money? Producer and consumers money. If the tax payer is paying a milk subsidy and the same taxpayer is paying for the milk what is the real cost? If I give twenty dollars to joe and joe gives my $20.00 to the milk producer and I give another $20.00 to the milk producer what has the milk really cost me and what favor did joe do? A $20.00 cost is a good illusion to the fiction of a well being.. Ah, the magic of Government and the magic of Supply Management.
      I buy cheese direct from a local producer and by- pass the insanity. It costs more because it is the true price and not the supply managements “magic” low price. I would rather have the producer receive full benefits for their labor rather that it be shared by supply management and government turn around fantasy and bureaucracy. This is not available everywhere and to whose fault? One could say that they “magically” disappeared from the consumer.

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