*Whispering in the Wind (WITW 101) December 16, 2015
One of the more controversial topics discussed (debated) during
the 78 day federal election campaign was trade and specifically, the Trans
Pacific Partnership (TPP) agreement. As
it stands, the TPP is an “economic” agreement between 12 Pacific Rim nations that
still requires legal review and ratification from individual member-country governments. From a Canadian perspective, the proposed agreement
has a complicating twist – the TPP was negotiated over a seven year period under
the supervision of Stephen Harper and his Conservative government. The TPP is now being reviewed by Justin
Trudeau’s Liberal government for ratification.
The details of the “more than just trade” agreement was agreed to on
October 5, 2015 and made public on November 5, 2015. Mr. Trudeau’s position on the TPP during the
election campaign was that he wouldn’t comment on an agreement that he hadn’t
seen. When the agreement was made public
(after the election) Prime Minister Trudeau said it would be appropriately
analysed and considered by his new government.
It is still under review and rightly so, the consequences for Canada are
huge.
The
TPP is a Big Deal!
The Trans Pacific Partnership (TPP) agreement is just one
of the latest efforts to offer greater discipline and control over the economic
affairs of member states. The 12
participating states (Brunei, Chile, New Zealand, Singapore, Australia, Canada,
Japan, Malaysia, Mexico, Peru, United States, and Vietnam) have tentatively agreed
to an economic agreement that encompasses about 40 percent of the world’s
output. Three other Pacific Rim nations
(Indonesia, the Philippines and Thailand) have expressed interest in joining
the partnership and should that occur, over 50 percent of the world’s output
will be guided by TPP principles and rules.
Important to point out, United States’ President Barack Obama is the
lead advocate of the TPP while China and India are on the side lines watching
how the TPP agreement unfolds – the Chinese and Indians have their own plan for
how trade and commerce should be conducted in the 21st century.
What
the TPP Offers
The TPP is a massive 30 chapter agreement encompassing a wide
range of elements and conditions. The
aim of the TPP is to offer freer, more disciplined trade in goods and services within
the 12 member trading bloc. At the same
time the agreement incorporates measures that will restrict some government
policy initiatives and limit national (sub-national) governments from operating
in the public’s interest. In summary,
the TPP advances the interests of global corporations and at the same time, restricts
governments from acting in the national, public interest when it comes to the
environment, technology and investment – and that’s not good news for Canada
and Nation Building.
TPP’s
Impact on Canada
In the early days, Canadians were viewed as a nation of
“hewers of wood and drawers of water” with the nation operating at the behest
of the great empires of Europe. Today,
things are different and an independent Canada is exporting much more than just
lumber, fish and beaver pelts. The Trans
Pacific Partnership (TPP) is just one example of how nations like Canada are
reacting to a drastically changing, globalized framework. Following are a few points Prime Minister
Justin Trudeau might consider prior to offering the TPP agreement to Canada’s
parliament for ratification:
1. Canada has trade treaties with four of the
larger members of the TPP (Peru, Chili, United States and Mexico) where tariffs
are already low and a dispute settlement procedure in place that is functioning. For the other seven TPP members, Canada is
running a trade deficit of $5-8 billion annually – Canada is buying more than
we are selling. 80 percent of Canada’s
exports to these seven countries are raw or semi-processed goods (beef, coal,
lumber), while 80 percent of Canada’s imports are high value-added goods
(autos, machinery, computer, electronic components). Analysts have suggested that the impact of
the TPP on Canada’s overall economy will be minimal in terms of GNP growth, but
most likely will further erode Canada’s manufacturing sector.
2. A good
number of the rules embedded in the TPP agreement appear to be modeled after existing
United States trade law and that could mean trouble for Canada. One element embedded in the technology
chapter of the TPP is healthcare and drugs which could prove to be a disaster
for Canada and its efforts to control healthcare and pharmaceutical drug costs.
3. Possibly
the most controversial issue facing Prime Minister Trudeau and Canada’s
participation in the TPP will be the environmental component of the TPP and how
it might be “re-drafted” – a result of the Climate Change Conference and the goals
set last week in Paris. How the 12
member states re-state their environmental goals and specific targets on
greenhouse gas emissions is without doubt going to be intense and lengthy
process. For Canada, Prime Minister Trudeau
has promised to meet with Canadian Premiers within 90 days to start the
discussion on setting emission targets and how to achieve them – it will take
time. Does it mean that ratification of
the TPP will be held up – probably? Does
it mean opening up further negotiations on other aspects of the TPP – an open
question?
Overall, the Trans Pacific Partnership agreement is
likely to be held in limbo for some time, possibly years – and that’s good news
for Canada. As the country awaits Mr.
Trudeau’s assessment of the TPP, the haunting, historical statement remains;
will Canada return to be simply “hewers of wood and drawers of water”?