TPP 2.0 Would Help Insulate Canada From U.S. Protectionist Measures
May 8, 2017
Two weeks ago, both Canada and Mexico suffered a huge shock when it was revealed that officials in the White House had drafted an executive order withdrawing the United States from NAFTA. While Mexico has found itself playing defence on NAFTA for more than half a year, it was an unwelcome surprise to us here in Canada to find us having to do the same. Thankfully, the United States backed down from its threat to immediately withdraw from the agreement, but this episode once again revealed a reality about Canada’s trading relations in the world: we are heavily dependent on our trade with the United States.
Our former Conservative government recognized this reality early on and understood that the free flow of goods and services across borders creates jobs and economic growth for all Canadians; and so we made it our business to work to diversify our international trade portfolio around the world. When we came into government, Canada only had free trade agreements with 14 countries; when we left, we had agreements with 44.
We were the government that negotiated and reached an agreement in principle with the European Union on the Comprehensive Economic and Trade Agreement (CETA), which is now giving Canadian businesses preferential market access to the EU’s lucrative 29-country market. It is estimated that this agreement will boost Canada’s economy by $12 billion annually, which is the equivalent of about 80,000 new Canadian jobs.
We were also the government that negotiated and signed the Canada-Korea Free Trade Agreement, which was Canada’s first in the Asia-Pacific region. Canadian businesses now have unprecedented access to the emerging Korean market and preferential access to over 50 million new customers, which will boost our economy by $1.7 billion annually.
These agreements, amongst the many others we signed, supported the one in five Canadian jobs linked to trade and spurred further job creation and growth in Canada. That is why I am concerned to see Justin Trudeau’s Liberal government continuing to dither on the Trans-Pacific Partnership (TPP).
While it is true that the TPP as negotiated cannot move ahead, as the United States formally withdrew from it, other TPP partners such as Japan, Australia and New Zealand have expressed a willingness to move forward with a TPP 2.0. By all rights, Canada should be a leader in this group, but we have been conspicuously missing in action.
The TPP, even without the United States, would provide huge benefits to our exporters, particularly those in the agriculture sector, because of the tariff-free access it would give our farmers. According to the Canadian Agri-Food Trade Alliance (CAFTA), Japan is the third priority export market for our farmers as it takes approximately 10 per cent of our total agri-food exports per year. Further, CAFTA also asserts that Japan is the “largest predictable market for Canadian canola seed, the second largest market for Canadian malt and Canadian pork, the fourth largest market for Canadian beef and an important high-value market for Canadian wheat, pulses and sugar.” Signing a free trade agreement that includes Japan as a partner would likely double or triple Canada’s beef exports to Japan.
Joining with our TPP partners in forging ahead with a TPP 2.0 also has the added benefit of bringing rules-based trade to the Asia-Pacific region ahead of further trade engagement with China. The Australians found out the hard way what happens when you negotiate one-on-one with China; the end result was a one-sided deal that had Australia making many concessions while not receiving reciprocal tariff reductions for commodities such as rice and sugar. Canada should be wary of negotiating a deal like Australia eventually signed.
With over $2 billion in trade crossing the Canada-U.S. border each and every day, America will always be Canada’s largest trading partner. And it is for that reason that it is imperative that Canada continue to look elsewhere for customers. Being part of something like the TPP 2.0 would help to insulate us from protectionist measures in the U.S.
So why is Justin Trudeau shying away from being a leader on this agreement? Canadian farmers who are increasingly at risk of losing out in the upcoming NAFTA renegotiation deserve to know why the Liberals are leaving a good deal on the table.