What’s next for Canada on the world trade front?
Where will Canada focus its efforts now that a new North American trade deal has finally been agreed upon? With a ministerial portfolio devoted to “trade diversification” and a government that touts the “rules-based international order” that the United States has thrown into scrutiny, don’t expect Canada to hang up its hat just because it concluded a deal with President Donald Trump. “People know that we have made significant investments and significant efforts toward diversifying our trade relationships around the world, even as we were negotiating the new (deal),” Prime Minister Justin Trudeau said at a press conference in British Columbia Tuesday. “Canada is a trading nation. We understand how important it is to engage, to exchange, to grow our economies to the benefit both of ourselves and the countries we partner with.” Marie-Danielle Smith writes about what the Canadian government is up to outside this continent, and how things could change because of the United States-Mexico-Canada Agreement (USMCA).
WHAT’S GOING ON WITH CHINA?
Before Trump took office, Canada was already making moves toward China. During his first trip in 2016, Trudeau launched exploratory trade talks. Since another trip last December, when an anticipated announcement of formal negotiations did not materialize, not much has moved on that front.
Experts told the National Post that Canada is now even less likely to enter formal talks with China because of a clause in the USMCA that places restrictions on free trade agreements with “non-market” countries, including letting
WHAT ABOUT THE REST OF THE ASIAPACIFIC?
The House of Commons is debating legislation to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an Asia-Pacific trade pact that includes access to Japan and Australia, and also includes USMCA partner Mexico. It’s “moving swiftly,” said Joseph Pickerill, a spokesman for Carr.
Another party to that deal is Vietnam, which the U.S. considers to be a “non-market economy,” but Canada is likely to ratify it before USMCA takes effect, and Mexico already has. Once six of the 11 parties ratify, the trade zone enters into force among them.
Before Trump came into power and withdrew from it, the U.S. was a signatory to a previous version of the TPP negotiated by President Barack Obama. The text of that agreement formed a skeleton for many of the provisions in USMCA. While Japan’s leaders have expressed hope that the U.S. will re-join the agreement, for now it gives Canadian and Mexican companies advantages over American ones. other USMCA partners review agreements with such countries before they are signed. As former Conservative trade minister Stockwell Day told the Post, given Trump’s aggressive attitude toward China, “It’s clearly intended as a ‘beware’ note to us.”
Reporters asked Trudeau Tuesday how he planned to report his progress with China to the U.S., per the new agreement. “Obviously China is a significant growing player on global trade and we, as always, will look for ways to engage, deepen and improve our trading
HOW ARE THINGS GOING IN EUROPE?
It has now been more than a year since the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union came into force. Last week, a joint committee of officials met in Montreal to discuss how things are going. Jason Langrish, executive director of the Canada Europe Roundtable for Business, was there. “It’s a very easy relationship. It’s the complete opposite of what we have with the United States right now, so in that regard it’s a good thing,” he said. So far, European companies have been more aggressive in taking advantage of the deal, he said, but it’s still early days.
Although USMCA doesn’t necessarily have much impact on CETA, the “non-market” clause could change the calculus when Canadian companies look to the east or west. “I think it reinforces Europe’s position as the fallback, because China’s been kind of taken out of the equation with this new deal,” Langrish said. relationship with them in ways that are beneficial both to Canadians and to everyone,” he said.
Hong Kong, which governs its own trade affairs, is separately seeking a free-trade agreement with Canada, its commerce secretary, Edward Yau, told the Post in an interview last week. He met with Trade Minister Jim Carr and Small Business Minister Mary Ng to discuss it.
However, a Canadian senior official suggested that the government is more interested in a “comprehensive” approach to China.
HOW ABOUT ELSEWHERE?
Trudeau mentioned negotiations with two South American trade blocs on Tuesday as evidence that Canada is actively pursuing trade diversification: one with the Pacific Alliance, which includes Chile, Colombia, Mexico and Peru, and another with Mercosur, which includes Argentina, Brazil, Paraguay and Uruguay.
“Negotiators on Mercosur just met and that market of roughly 275 million, including Brazil, is moving swiftly towards a comprehensive outcome,” Pickerill said. “The Pacific Alliance negotiators are meeting right now. There is a lot of momentum and the winds are clearly blowing in Canada’s global favour.”
Still, experts such as Carlo Dade, at the Canada West Foundation, caution that negotiations by others with those blocs haven’t always concluded swiftly. “It took the European Union decades (with Mercosur) and they still haven’t finished,” he noted.