Agricultural sector worries that Ottawa has yet to ratify the agreement as auto industry fears cast shadow
In January, Canada’s agriculture industry celebrated when the federal government committed to the Trans-Pacific Partnership trade deal.
A month later, Canadian agricultural leaders are still pressing the government on the deal, which has recently been revived as the Comprehensive Progressive Trans-Pacific Partnership (CPTPP).
They want Ottawa to formally ratify the deal as soon as possible, otherwise Canadian beef, pork and canola exporters could face a disadvantage when competing against countries like Australia.
“We’re concerned that Canada (will) not move quick enough to implement the CPTPP,” said Brian Innes, vice-president of public affairs with the Canola Council of Canada and president of the Canadian Agri-Food Trade Alliance, which represents national commodity groups on trade issues.
Canada announced Jan. 23 that it will be part of CPTPP. Representatives from Japan, Australia, Canada and other countries in the 11-nation trade pact are scheduled to sign the deal March 8 in Chile.
Following the formal signing, national governments still need to pass legislation approving the agreement. However, if one or two nations are slow, other members of the pact can still move forward.
“The text, as released, specifies that CPTPP will come into effect when six countries ratify and implement the agreement,” Innes said Feb. 20.
“We understand that countries like New Zealand, Australia, Japan, Singapore and others are set to move quickly to implement the CPTPP…. We’ve heard our trade minister talk about tabling legislation in the fall.”
If Canada isn’t part of the initial group of countries that ratify the deal, exporters of pork, beef, canola, wheat and other commodities could lose out, in the short term, in the key market of Japan.
For example, Japan imposes a tariff on Canadian beef of 38.5 percent, or in some cases 50 percent. In the first year of the CPTPP that tariff would drop to 27.5 percent and eventually sink to nine percent.
Estimates suggest that the tariff reduction could boost Canadian beef sales to Japan by $200 million annually, in the short term.
But if the federal government is slow to ratify CPTPP, other nations in the deal could benefit from lower tariffs not available to Canadian exporters.
It’s a similar story for other key commodities like canola oil and pork; if Canada delays on implementing CPTTP, other nations could establish a stronger trade foothold in Japan, a country that imports more than $80 billion in agri-food and seafood products annually.
“The longer we wait, the further we are behind,” Innes said.
The federal government could move slowly on CPTPP because representatives of Canada’s auto industry are campaigning against the deal. Unifor, the union that represents autoworkers, has said that CPTPP will severely cut Japanese investment in Canada’s auto industry because the deal states that 45 percent of the content of a vehicle must be made in a CPTPP member country to enter Canada tariff-free.
Under those terms, Japanese firms will likely build cars in Japan, using parts from China, a non-member country, instead of assembling cars in Canada, Unifor has said.
“A major question you have to ask yourself is why would the Japanese automakers ever invest one more nickel in Canada with this deal? The fact is they won’t,” Unifor president Jerry Dias said last fall.
Ontario Premier Kathleen Wynne told the Toronto Board of Trade Feb. 22 that the trade deal will reduce investment in Canada’s auto sector, according to the Financial Post.
That means Ottawa would need to support Ontario’s auto sector over the next decade with financial commitments of more than $1.2 billion to compensate for the impact.
“I have been clear that new opportunities for trade should not come at the expense of these workers. That would not be fair,” Wynne said. “It would hurt Canada’s competitiveness. And frankly, as a country, we haven’t always got it right when it comes to properly dealing with the challenges of trade deals while benefiting from the opportunities.”