Away from glare of NAFTA talks, Canada eyes Pacific trade deal
Backroom negotiations, ministerial meetings, shuttle diplomacy, all in hopes of getting agreement on a sweeping trade pact by year’s end. No, it’s not NAFTA. While the spotlight has focused on trade talks between Canada, Mexico and the U.S., efforts are quietly underway on another sweeping trade pact — the TransPacific Partnership — that would give Canada preferred access to Asian markets.
The agreement, left for dead after Washington’s exit in January, has come back to life.
And the 11 remaining nations in the partnership are hoping that by moving forward on the agreement — possibly in the coming months — they can entice the U.S. to rejoin the initiative abandoned by President Donald Trump immediately after he took office.
“Entry into force of TPP 11 is the highest immediate priority for us,” said Sadaaki Numata, a former Japanese ambassador to Canada who now chairs the honorary board of advisers for the Canadian Chamber of Commerce in Japan.
“We do see it as a means of inducing the United States to come back to TPP. You could call it a lever.”
“We do see it as a means of inducing the United States to come back to TPP. You could call it a lever.” SADAAKI NUMATA FORMER JAPANESE AMBASSADOR TO CANADA
There’s optimism that negotiators could have a rejigged agreement ready by November when political leaders from the TPP nations — including Prime Minister Justin Trudeau — gather in Da Nang, Vietnam for an Asia-Pacific Economic Conference (APEC) summit.
“There is a degree of momentum behind that now and I think there is a recognition, especially in today’s trade policy environment, that having a successful negotiation would have broader implications,” Ian Burney, Canada’s ambassador to Japan, told the Star in an interview.
Trump’s withdrawal from the partnership had put its future in limbo. “At that time, it seems we lost a path, a way as to what we should do,” Nobutka Sawada, of the Economic Affairs Bureau in Japan’s Ministry of Foreign Affairs, said in an interview.
“But after a lot of consultations and discussions, we found that the significance of the TPP remains. So TPP is still important.”
Japan, joined by Australia and New Zealand, is leading the effort to see the agreement become a reality. Canada is supportive of the pact that also includes Mexico, Brunei, Chile, Malaysia, Peru, Singapore and Vietnam.
The push for liberalized trade is part of Japanese Prime Minister Shinzo Abe’s efforts at economic reforms and a focus on liberalized trade that includes the TPP as well as an agreement with the European Union and ongoing negotiations with Regional Comprehensive Economic Partnership, which would cover 16 Asian countries including China and India.
Officials on both sides of the Pacific say the TPP would unlock trade between Canada and Japan — two G7 nations — which now stands at about $27 billion annually, an amount that has been largely stagnant in recent years.
Five years ago, the Conservative government under prime minister Stephen Harper attempted free trade negotiations with Japan, backed by estimates it could boost Canada’s GDP by more than $4 billion.
But Japan abandoned those discussions two years later in favour of pursuing liberalized trade through the TPP.
While Canada holds out some hope of achieving a bilateral deal, too, that doesn’t look likely.
“We have been trying to revive the bilateral process but have not succeeded. There is a strong preference on the Japanese side to focus on the TPP process,” Burney said.
“Japan has always been relatively clear with us that TPP probably reflects the high water mark in terms of what they are prepared to offer in terms of concessions,” he said.
“I think from the standpoint of what’s in the agreement, that probably is the best that can be achievable.”
That view is shared in Japan, too, especially because the TPP goes beyond trade to also include topics such as labour, intellectual property, digital trade and government procurement.
“We do see great potential to be developed,” said Ichiro Hara, director international affairs bureau at Keidanren, the Japanese business federation.
“I think that either TPP 11 or 12 will be very beneficial framework to reinforce the trade relationship between Japan and Canada,” he said, via an interpreter.
Negotiators from the remaining TPP countries recently met in Tokyo and will meet again in Japan in October.
But potential roadblocks remain. With the U.S. out of the equation — and with it the opportunities of favoured access to the American market — there’s concern that the agreement has become less attractive for some nations.
“I believe the biggest hurdle might be to overcome the resistance or hesitation on the part of developing countries (that) made great compromises in order to accommodate the U.S. requests and demands on the assumption that the U.S. market would be open,” Hara said.
There’s also the concern that some nations may seek to renegotiate parts of the agreement. “Every country has agreed that modifications should be minimal but what is minimal for each country differs significantly.”
And so a question mark hangs over the Trump administration as the U.S. risks being isolated on the trade front. Trump has pulled out of the Trans-Pacific Partnership. He has threatened to withdraw from NAFTA, even as U.S. officials try to bargain a modernized pact with Canada and Mexico. He has mused about ending America’s trade deal with South Korea.
“That the largest and most influential country in the world is turning to that kind of attitude is very dangerous,” said Shujiro Urata, dean of the Graduate School of Asia-Pacific Studies at Tokyo’s Waseda University.
“That would make the U.S. the isolated country. I hope that they realize that kind of situation will be very harmful to the U.S. economy.”
“But again I guess Mr. Trump and his advisers have to change their views towards multilateralism versus U.S.-first policy.”
Experts like Urata and Hara say the best way to counter to protectionist sentiments is to move ahead on trade deals and hope that the U.S. — seeing American corporate interests increasingly disadvantaged on the world stage — returns to the pact.
“Trade and investments are globalized and connected these days. I hope the U.S. can see that it would be to their disadvantage not to be part of this global movement,” Hara said.
“We hope domestic business leaders in the U.S. will raise their voices saying that the U.S. should be back in TPP.”