Op/Ed – Why the TPP is in Canada’s Best Interest
Minister of International Trade, Chrystia Freeland has spent her first two weeks of 2016 travelling across Canada talking up proposed free trade agreements with India and China. The new Liberal Government evidently has no problems talking the talk on international trade, except it appears, when it comes to the Trans-Pacific Partnership (TPP).
It would be terribly short-sighted to not sign and ratify the TPP. This group of twelve countries represents 40 per cent of the world’s GDP and includes Japan, the world’s third largest economy. This is a tremendous amount of preferred market access to pass up on simply to assuage domestic political concerns. Further, as the United States is also a TPP partner, by not signing on Canada runs the risk of losing the advantage we enjoy with our largest trading partner. Writing in the Globe and Mail, Kevin Lynch (a vice-chair at the Bank of Montreal), Tiff Macklem (dean at the Rotman School of Management) and Daniel Trefler (also from the Rotman School of Management) state that “the potential costs of not being in a multilateral trade agreement anchored by the United States are significant and real for a NAFTA partner.”
Besides risking our competitive advantage in the American economy, not signing the TPP would handicap Canada in other Asian markets. The TPP is already being hailed as a gold-standard for modern trade relationships in a globalized world and contains some provisions that would be particularly useful as we look to broaden our trading relationship with China. Laura Dawson and Kent Hughes from the Wilson Centre write that the “TPP requires [state-owned enterprises] to follow recognized rules of transparency and competition” and that the “disciplines worked out in the TPP could help constrain other countries’ SOEs, including China’s, if these countries undertake agreements with TPP members.” The only trade agreements that will be in Canada’s best interests will be those that are truly reciprocal in nature. The TPP will grant us access to valuable precedent that can assist us in achieving just that.
All of this being said, the strongest case for signing and ratifying the TPP is that it is, in fact, what Canadian businesses want. One in five jobs in Canada and 60 per cent of our nation’s GDP is directly linked to exports, while small and medium-sized enterprises (SMEs) account for over 90 per cent of Canadian exporters. Since the TPP focuses on SMEs in a significant way, according Eva Busza and Justin Elavathil at the Asia Pacific Foundation this focus “could prove extremely beneficial” to Canadian companies.
Further, the tremendous cross-sector excitement that ensued last fall when it was announced that a deal on TPP was reached was indicative of what this agreement means to our business community. Groups such as the Canadian Chamber of Commerce, the Canadian Council of Chief Executives and Canadian Manufacturers and Exporters all hailed TPP as a win for Canadian exporters. Industry groups from sectors across Canada welcomed the huge increase in market access their members would enjoy and the jobs that would follow.
In the face of the hard facts about what Canada would cede by not signing the TPP and the overwhelming support for the deal from Canadian business, the Liberal government is going to have to decide whose side it’s on. The answer should actually be quite easy.
Randy Hoback, Member of Parliament for Prince Albert
Hoback is the Former Chair of the House of Commons Standing Committee on International Trade