Canada signs on to revived TPP amid spectre of NAFTA collapse
Many sectors give it thumbs up, but some fear it will harm trade
OTTAWA — Canada has agreed to a trade deal with the remaining members of the old Trans-Pacific Partnership that excludes the United States and will open distant new markets at a time of uncertainty over NAFTA.
The agreement was struck Tuesday after two days of high-level talks in Tokyo — exactly one year after U.S. President Donald Trump withdrew his country from the Pacific Rim treaty. The fresh commitment left Japan as the largest player in a new 11-nation pact that spans two hemispheres and includes both U.S. neighbours.
Prime Minister Justin Trudeau hailed the revised agreement as the “right deal” and called it a new step on the path to ensuring the benefits of trade are shared by everyone, not just the rich.
The breakthrough came on the same day that negotiators began the sixth round of talks on the North American Free Trade Agreement, which Trump has repeatedly threatened to abandon.
The new pact involves Canada, Japan, Australia, Singapore, Mexico and six other nations that border the Pacific Ocean. China is not part of the deal, which was originally conceived as a way to counter China’s growing economic power.
But with only a few publicly available details following the announcement, many questions remained unanswered Tuesday.
Some criticized the process for largely taking place in secrecy.
Among the open queries was how — or if — the federal government will compensate dairy farmers, who learned their protected sector is to be opened up by 3.25 per cent to foreign competition.
That concession on Canada’s supply managed dairy sector was the same as the one outlined in the original TPP deal, which was negotiated by the previous Conservative government. But it remained unclear Tuesday if Ottawa would offer dairy farmers the same $4.3-billion compensation package put forward by the Tories.
“It’s a pretty sombre day for the 220,000 Canadians that depend on dairy for their livelihood,” said Jacques Lefebvre, CEO of the Dairy Farmers of Canada.
Many sectors in Canada, including much of the country’s agricultural industry, applauded the deal.
But even those who thought the deal would likely be a positive for Canada approached the announcement with some doubts — at least until the fine print comes out.
“Signing another free-trade agreement is not a panacea,” said Canadian Manufacturers & Exporters president Dennis Darby, who was optimistic about the agreement.
“It’s not so much the tariffs, but what are the other elements of this deal? Because it’s the non-tariff barriers that have sometimes proven to be difficult for Canada.”
The autos component risks being more controversial. In a sector considered key to the deal, Canada managed to get a bilateral arrangement with Japan to resolve non-tariff barriers, including a binding dispute settlement mechanism, according to an official.
But several auto-industry associations, as well as a union that represents Canadian auto workers, criticized the deal. The Canadian Vehicle Manufacturers’ Association feared the agreement would give foreign competitors an edge over domestic companies.
Unifor head Jerry Dias said that the new TPP deal would allow the greater use of cheaper parts from Asian nations, causing havoc in the domestic industry. “The simple reality is what happened with the TPP completely undermined what’s happening in Montreal over NAFTA,” said Dias.
Trudeau described the deal as a win for the Asia-Pacific partners and workers. “Our government stood up for Canadian interests and this agreement meets our objectives,” he told the World Economic Forum in Davos, Switzerland.
Canada, the second-largest economy among the partners, was widely considered the main holdout in the negotiations to revive the pact, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, without the U.S.
The partners are now expected to work toward signing the agreement by early March.