Canadian pursuit of TPP a wise trade strategy

Canada’s decision to pursue a Trans-Pacific Partnership agreement with 10 Asian countries, including Japan, should be a given, but it’s worth noting just why this matters, especially with the fate of the North American Free Trade Agreement in doubt.

Canada stands to benefit in most sectors of the economy with a TPP11 deal, even more so than in the original TTP12 because the United States will not be a competitor in those economies, according to the Canada West Foundation, which has studied the issue.

In particular, Canada’s agriculture sector stands to gain in TPP11. Significant trade opportunities exist in beef, pork, poultry, fruits and vegetables, processed foods and canola oil.

Alas, as in the original TPP12, the supply managed sector — dairy, poultry and eggs — might have to relinquish some of its market share (up to 3.25 percent in TPP12) in exchange for some compensation ($4.3 billion in TPP12), but there will be less pressure this time because it was the U.S. that was pushing hard for this, as is New Zealand, but the U.S. isn’t at the table in TPP11.

Or put more colourfully by Carlo Dade, director of the Trade and Investment Centre of the Canada West Foundation, by withdrawing from the TPP, “the Americans are getting up from the table and just shoving their chips across the table to us. … We do better without having to share the Japanese market with the Americans.”

Canada exports about $4 billion worth of agri-food products annually to Japan.

The foundation concludes that under TPP11, Canada would incur a “net benefit” of $3.4 billion in trade, while that stood at $2.8 billion in TPP12, which included the U.S.

So, economically, TPP11 makes sense for Canada, and in particular, much of the agriculture sector.

Also of note is that while tariffs are an important issue in trade, trade analysts say logistics, transportation, supply chains and infrastructure are becoming a chief concern. So, if Canada is looking to make a long-term investment in exports to other countries to relieve its dependence on trade with the U.S., the destination for more than three quarters of our exports, it would be best to start now, and get going on the needed infrastructure (begin your own pipeline debate here, readers).

And consider Chinese President Xi Jinping’s recent lengthy speech to his country’s congress in which he vowed to empower China’s economy with the destiny of becoming a global powerhouse. Much of Asia will be swept into China’s economic orbit through trade. It would be folly for Canada (and the U.S.) to miss out on the trade opportunities this offers.

President Donald Trump favours bi-lateral agreements, but in a world where regional blocks are increasingly forming trade partnerships, there is no guarantee that Japan, or even the South American Mercosur group — Argentina, Brazil, Paraguay, and Uruguay — which Canada is pursuing an agreement with, will be enthusiastic about the route, especially since they’re watching Trump’s dictatorial approach in NAFTA talks.

The intangible, as the Canada West Foundation notes, is how much Canada’s pursuit of TPP11 would annoy U.S. negotiators, which could affect trade talks, either under NAFTA or in a bilateral process, should NAFTA talks fail. There is a certain reality to this, but under Trump trade talks are no longer ambitious and gentle; they’re more analogous to hard-nosed playoff hockey.

With the U.S. pulling out of the TPP, Canada has a breakaway. Make it count.

Bruce Dyck, Barb Glen, Brian MacLeod, D’Arce McMillan and Michael Raine collaborate in the writing of Western Producer editorials.

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