The United States is backing away from multilateral deals, while Canada continues to sign those kinds of agreements
We’re neighbours, but Canada and the United States are racing into different worlds when it comes to world trade.
That became obvious from comments by leading American and Canadian trade policy experts at the Grain World conference Nov. 13.
“I think there’s probably a greater chance that I will grow a full head of hair than we will get back into (the Trans-Pacific Partnership),” said Bill Lapp, president of Advanced Economic Solutions in Omaha, Nebraska, a man of much scalp.
“Our agreements will be bilateral.”
As well, he expects to see his nation’s president continue to play hardball with trading partners, continue his confrontation with China and be antagonistic toward the World Trade Organization.
Frederic Seppey, Canada’s assistant deputy minister of agriculture for trade, described an almost opposite trade policy: more multilateral trade agreements, growing relations with China and strong support for the WTO.
“As a medium-sized economy, it’s important that we rely on rules,” said Seppey, who has been Canada’s chief agricultural negotiator.
“We cannot simply assume that we can rely on the low-hanging fruit of the easiest-to-access market.”
The divergent courses being charted by the U.S. and Canada were clear from the two experts.
Lapp, who is a critic of many of the White House’s trade actions, painted a future for U.S. trade policy of one-on-one trade deals made or attempted with countries such as Japan and the United Kingdom, as well as organizations such as the European Union.
The battle with China will be unlikely to end soon.
“I don’t believe there’s a good chance we will reach an agreement with China until we reach agreements with those other countries,” he said.
“I don’t think there will be a long-term solution (for) … all of 2019.”
As long as the U.S. administration is dominated by President Donald Trump’s trade hardliners, any return to multilateralism is unlikely.
However, for all the hostility and undermining of the WTO, for which the U.S. has prevented the appointment of new adjudicators, Lapp does not expect to see the U.S. pull out of the organization.
“I think it will survive this,” said Lapp, noting that U.S. Trade Representative Robert Lighthizer has celebrated U.S. success at the WTO.
Seppey portrayed Canada as a committed supporter of the WTO and other multilateral trade bodies and agreements.
“The WTO has had better days,” noted Seppey.
However, Canada seeks to strengthen the organization, plus move aggressively on building new trade relationships.
“It’s important that we remain (free trade agreement) competitive,” he said, highlighting Australia’s current advantage on trade with China, “even if we question the quality of (that agreement’s) rules.”
That means having Canada attempt to establish trade agreements with giant nations such as China and India and join with regional trade blocs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the ASEAN group of Southeast Asia and Mercosur in Latin America.
“We need to work and ensure that we have the tools in place to keep our open new markets around the world,” said Seppey.
Canada’s senior ministers and the prime minister have been open, active and vocal with these efforts, he said.
Canada also actively engages with multilateral organizations that govern international standards with plant, animal and food safety and quality, hoping to minimize the ability for trading partners to erect non-tariff barriers as a means of blocking markets.
Canada’s trade policy is relatively easy to understand because of its majority government in a parliamentary system. The U.S. situation is more complicated with the tripartite structure of presidential administration, House of Representatives and Senate all playing varying roles and having the ability to lead or restrain the actions of the other parts of the system.
Lapp said he expects the White House to keep leading on trade but to be restrained by the Democrat-controlled House. That means continued drama and a resistance to multilateralism.
That will probably apply until 2020, when the next presidential elections come along.