Re­worked TPP could be trade deal of the fu­ture

Toronto Star - - OPINION - Thomas Walkom

In Canada, all eyes are on Don­ald Trump and the North Amer­i­can Free Trade Agree­ment.

Will the mer­cu­rial U.S. pres­i­dent sand­bag the deal? Or is his hard line just a ne­go­ti­at­ing ploy?

What will Canada do if NAFTA is shelved? Would the end of free trade with the U.S. be a dis­as­ter? A tem­po­rary in­con­ve­nience? A plus? These ques­tions are de­bated ad nau­seam. Mean­while, in Vietnam, an­other set of talks is go­ing on that is po­ten­tially far more im­por­tant.

These are the talks over the trun­cated Trans-Pa­cific Part­ner­ship (TPP). Orig­i­nally en­vi­sioned as a 12-na­tion pact cen­tred on the United States, the TPP fell off the radar in Jan­uary after a newly elected Trump pulled Amer­ica out of the just-fi­nal­ized deal.

With­out U.S. par­tic­i­pa­tion, it seemed, there was no rea­son for the other 11 coun­tries — Canada, Ja­pan, Mex­ico, Aus­tralia, New Zealand, Malaysia, Vietnam, Sin­ga­pore, Brunei, Chile and Peru — to carry on.

Canada, for in­stance, had en­tered the orig­i­nal talks re­luc­tantly and only be­cause it feared that a TPP, which in­cluded both the U.S. and Mex­ico, might out­flank NAFTA. With the U.S. out of the game, that fear evap­o­rated.

But thanks largely to Ja­pan, the TPP — now known as the TPP-11 — sol­diered on. The gov­ern­ment of Prime Min­is­ter Shinzo Abe sees mul­ti­lat­eral trade deals as the coun­try’s sal­va­tion, the only way to pull Ja­pan from the eco­nomic dol­drums.

In par­tic­u­lar, it wants so-called rules-based deals that give ad­vanced economies, such as Ja­pan’s, an edge over those such as China’s, which fo­cus on cheap labour.

To that end, Ja­pan has tried the keep the orig­i­nal TPP text in­tact — in the hope that Amer­ica can be per­suaded to join once its in­fat­u­a­tion with Trump­ism has ended.

Some other mem­bers of the 11, in­clud­ing Canada, are more in­ter­ested in us­ing Amer­ica’s ab­sence to rene­go­ti­ate el­e­ments of the deal that they don’t like.

The orig­i­nal TPP, for in­stance, would have al­lowed mem­ber coun­tries to ob­tain up to 65 per cent of their auto parts from cheap-labour coun­tries out­side the pact.

It also would have raised the price of some drugs and lim­ited the abil­ity of gov­ern­ments to en­act cul­tural and in­tel­lec­tual-prop­erty poli­cies that are deemed to in­ter­fere with trade.

The orig­i­nal TPP text con­tained lan­guage on labour and en­vi­ron­men­tal rights. But CBC re­ports that Canada wants more, as well as a chap­ter on gen­der rights.

Where all of this will go is un­clear. Of­fi­cials from the TPP-11 are meet­ing in the Viet­namese city of Da Nang prior to the ar­rival of lead­ers this week­end for the 21-mem­ber Asia Pa­cific Eco­nomic Co-op­er­a­tion sum­mit.

Ja­pan wants an agree­ment on the TPP-11 by then. Prime Min­is­ter Justin Trudeau says he’s in no rush. In­deed, Canada’s pre­oc­cu­pa­tion with NAFTA has left the gov­ern­ment lit­tle time to fo­cus on other trade deals.

But this one is im­por­tant. Like all such deals, it is about more than trade. It is about form­ing eco­nomic blocs.

NAFTA was de­signed to form an eco­nomic bloc cen­tred on the U.S. Sim­i­larly, China’s Asian In­fras­truc­ture In­vest­ment Bank (to which Canada be­longs) is de­signed to form an eco­nomic bloc cen­tred on Bei­jing. The Eurasian Eco­nomic Union is a bloc cen­tred on Rus­sia.

The TPP-11, at least in its cur­rent con­fig­u­ra­tion, is not cen­tred on any big power. Ja­pan has the largest econ­omy in the group. But for rea­sons of his­tory, it is re­luc­tant to act like an im­pe­rial na­tion.

If the ob­vi­ous short­com­ings of the orig­i­nal TPP — in­clud­ing the prob­lems posed by cheap labour in some coun­tries — can be fixed, this would be an in­ter­est­ing bloc to be­long to. It is made up of mid­dling pow­ers. It fo­cuses on one of the growth ar­eas of the world. For the fore­see­able fu­ture at least, it by­passes Wash­ing­ton.

In that sense, and un­like NAFTA, it has the po­ten­tial to be the trade deal of the fu­ture. Thomas Walkom ap­pears Mon­day, Wed­nes­day and Fri­day.

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