What U.S. interest in TPP means for Canada
Donald Trump is reportedly musing that he might join the 11-nation TransPacific Partnership free trade deal. If he is serious, the angst-ridden negotiations over the North American Free Trade Agreement, as well as NAFTA itself, could become largely irrelevant.
The TPP, which is known officially as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, is a trade and investment deal between Canada, Mexico, Japan, Australia, New Zealand, Chile, Peru, Malaysia, Singapore, Vietnam and Brunei.
The TPP originally included the U.S. But during the 2016 presidential race, both Trump and his Democratic rival, Hillary Clinton, campaigned against it.
One of the first actions Trump took on becoming president was to withdraw from the pact. He said he didn’t like multilateral trade agreements in general and he particularly didn’t like this one.
At one point, he said the deal would lead to “the rape of our country.”
Apparently, he has changed his mind. In a meeting Thursday with lawmakers, he reportedly ordered two of his top officials to investigate how the U.S. might rejoin the TPP.
Trump made it clear ... that if the U.S. is to rejoin the TPP, the agreement must be altered substantially
The ostensible reason for Trump’s change of heart is China. China and the U.S. are rivals in Asia. China is trying to set up trade blocs that favour it. The TPP was supposed to be an Americanled response.
Now that Trump is setting himself up for a trade war with China, he has become more amenable to anything — including the TPP — that might further his grand political and economic aims.
For Canada, the prospect of America’s return to the TPP raises more immediate and practical questions. In particular, what would it mean for NAFTA?
Canada and Mexico are already members of both pacts. If the U.S. were to follow suit, the newly expanded TPP would almost certainly supersede NAFTA.
In the current NAFTA talks, for instance, Canada is working hard to protect supply management in dairy products. But in the TPP, Ottawa has already made concessions on this front.
Ditto for rules of origin in auto parts, where the TPP is already much looser than NAFTA in terms of allowing manufacturers to outsource to low-wage nations.
Ditto also for intellectual property rules, where the TPP favours the drug giants more than NAFTA does.
If the 11 members of the TPP were to sit down and negotiate America’s return to the pact, the talks would begin from a position that is considerably less favourable to Canada than the NAFTA status quo. When Trump pulled out of the TPP last year, the remaining 11 — led by Japan — decided to make it as easy as possible for the U.S. to return. To that end, they attempted to keep the text of the agreement largely as is, in the hope that if, and when, America applied to rejoin, negotiations could be kept to a minimum.
But with Trump in the White House, this minimalist strategy almost certainly won’t work. The president made it clear Thursday that if the U.S. is to rejoin the TPP, the agreement must be altered substantially in America’s favour.
For Canada, none of this is particularly welcome news. If Trump decides to rejoin the TPP, NAFTA becomes irrelevant and the past year’s worth of negotiations a waste of time.
What’s more, having already made concessions in order to get the original TPP deal, Canada will be put in a position where it has to give more.
There is another possibility. It may be that Trump wasn’t serious when he told his officials to figure out how to rejoin the TPP. It may be that he was just talking.