Implementing legislation for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP was in Parliament last week but it wasn’t passed before the summer recess.
This trade agreement between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam promises to unlock valuable trade opportunities for all members, while enhancing prospects for the growth and diversification of Canadian agriculture.
The latest federal budget set an ambitious target to increase Canadian agri-food exports to $75 billion annually by 2025, up from $64 billion today. The CPTPP offers a path toward this goal.
The case for trade diversification is stronger in today’s political climate, with protectionism on the rise in traditional markets and uncertainty over the North American Free Trade Agreement.
Implementing the CPTPP is a concrete opportunity for Canada to improve access and competitiveness in new markets.
Looking more closely at the CPTPP, we see that its benefits for Canadian agriculture revolve around three key areas.
First, lower tariffs achieved through this agreement have a direct impact on Canadian competitiveness.
This is particularly important for value-added agri-food products, many of which have traditionally faced high tariffs in export markets. But it is also critical for commodities like wheat and canola, where Canada will have preferential access to key markets such as Japan and Vietnam, thereby matching the gains achieved by Australia.
Somewhat ironically, the CPTPP will also give Canada a leg up against the United States in high-value Asian markets, even as the U.S. pulled out of the previous version of the agreement, saying it was a bad deal.
But to lock in these benefits, Canada must be among the first countries to ratify the agreement.
Second, through the CPTPP Canada and its partners are upgrading the rules of trade. Predictable, risk- and science-based trade rules play a key role in facilitating access to markets.
The CPTPP sets higher standards for participating countries while creating a more predictable and transparent trade environment. Stronger science-based and risk-based rules for agricultural trade will help limit the potential for protectionist barriers and encourage greater investment in innovation. Adoption of new technologies leads to productivity enhancements and new commercial opportunities.
The improvements to the trading rules through the CPTPP are critical for Canadian farmers and exporters who are increasingly facing unjustified market barriers around the world. A strong and ambitious agreement between Canada and CPTPP partners sets common standards that reduce the likelihood of trade friction, while offering stronger dispute resolution mechanisms when issues arise.
The third benefit, and perhaps the most important, is that the CPTPP is viewed as an opportunity to provide leadership in promoting multilateral trade policy co-operation. In the wake of withdrawal and rising protectionism by traditional trading partners, the importance of achieving these outcomes is clearer than ever. What’s more, as the global economic and political center of gravity shifts towards Asia, Canada will be well-positioned to deepen its trading relationships and shape global business standards.
The CPTPP will build jobs in both rural and urban Canada and it will help grow the Canadian economy.
With the implementing legislation for the CPTPP in Parliament last week, Canada had a chance to play a leading role by joining the first six countries to ratify the agreement.
Daniel Ramage is director of market development for Cereals Canada.