The Trans-Pacific Partnership (TPP) may soon be an acronym as recognizable as NAFTA — but this free trade venture could have much more economic strength and impact than its North American predecessor.
As Canada sets its sights on joining the club, many are asking what exactly our country would be getting, and giving up, to secure a potentially game-changing multilateral agreement.
What is the Trans-Pacific Partnership?
The Trans-Pacific Partnership is a free trade deal aimed at further expanding the flow of goods, services and capital across borders.
Its four founding members — New Zealand, Chile, Singapore and Brunei – may not be the usual suspects when it comes to high-powered global economic deals, but the trade-hungry countries turned heads when they signed off on the TPP’s precursor, the Trans-Pacific Strategic Economic Partnership Agreement in 2005.
They pledged, among other things, to “enlarge the framework of relations among the Parties through liberalizing trade and investment and encouraging further and deeper cooperation to create a strategic partnership within the Asia-Pacific region.”
‘This is a further example of our determination to diversify our exports and to create jobs, growth and long-term prosperity for Canadian families.’ —Prime Minister Stephen Harper
The quartet faced relatively few obstacles in their quest to set up the transnational deal, and the efforts soon caught the attention of five other nations: the United States, Australia, Peru, Vietnam and Malaysia, who joined in 2008.
The nine partners currently have a combined GDP of more than $17 trillion.
Canada and Mexico are now being considered for membership, subject to the approval of the nine countries already involved — including their long-time trading partner, the U.S.
Although negotiations involving Canada haven’t begun in earnest, the federal government has already signaled its eagerness to get on with the process.
“This is a further example of our determination to diversify our exports and to create jobs, growth and long-term prosperity for Canadian families,” said Prime Minister Stephen Harper from the G20 Summit in Mexico on June 19.
Where did it come from?
The TPP has its roots in the notoriously incremental dealings of the Asia-Pacific Economic Co-operation forum (APEC), a 21-member collective that seeks to promote free trade within and beyond the Asia-Pacific region.
Canada was among APEC’s founding members, capitalizing on its Pacific Ocean coastline and its interest in freer trade. In 1989, it joined the forum, which included Japan, Indonesia, Australia, Brunei, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and the U.S.
Throughout the 1990s, nine other members — including Chile and Vietnam — also joined APEC. It is from this forum that TPP’s founding members would eventually springboard to expedite many of APEC’s goals.
Early on, one of the TPP’s stated objectives was to “support the wider liberalization process in APEC consistent with its goals of free and open trade and investment” by establishing a free trade area.
What’s in it for Canada?
The federal government has been vocal about its plans to diversify trade. It is pursuing trade deals with India and has a foothold in China and Japan. So far, however, Canada does not have a bona fide free trade deal in increasingly attractive Asia.
Admission to the TPP would mean access to a bundle of growing economies.
So far, the CBC community has mixed feelings about the Trans-Pacific Partnership.
- “We’d be crazy not to at least explore this option.” – Linda’s View
- “Canada is better off holding out for a far better deal (on our terms) as the world’s insatiable thirst for our resources exceeds our ability to supply.” – William Hebert
- “I think we are going to get shafted once again.” – alainmci
What do you think? Take our poll and join the discussion.
Add to this the possibility that Japan could join the TPP, despite mounting protests in that country, and the economic and political traction of the group increases.
In fact, the TPP could become the world’s largest free-trade zone – one that is well formed, but also flexible enough to accommodate a growing membership.
With Canada and Mexico entering the talks, the countries involved represent 658 million people and a gross domestic product of $20.5 trillion, according to a release from the Prime Minister’s Office.
The TPP already includes some of Canada’s major trading partners, notably the U.S., and could soon include Mexico — which increases the pressure to protect Canada’s economic position in North America.
Ottawa argues that TPP membership would be a boon to the integrated supply chain on the continent, and that a missed opportunity to join would have dire consequences.
CBC News national affairs editor Chris Hall notes that, if Canada is shut out of the group, national products could become relatively more expensive, and therefore less appealing. Canada would also have to deal with the group’s tariffs.
On the flip side, a best-case scenario for ordinary Canadians would include new jobs and lower prices on everything from cheese to manufactured goods if TPP membership bolsters both import and export trade.
Indeed, the possibilities presented by membership are enormous, but so too are the potential risks.
What are the risks?
The major concerns surround what Canada will have to give up to join the TPP, and whether or not the costs will outweigh the benefits. The government has not released a cost-benefit study as it did during past negotiations with Europe and India.
Many are uncomfortable with the bargaining chips already on the table, especially control over Canada’s marketing boards and the national supply of eggs, chickens and milk.
It’s an important point for some members — especially the U.S. and New Zealand — and some have speculated that Canada’s supply management system, which controls domestic poultry and dairy prices, trade restrictions and high tariffs on imports, will have to ease up before the country can enter the TPP.
John Weekes, Canada’s former chief negotiator for the North American Free Trade Agreement (NAFTA), told CBC News in 2011 that the U.S. will likely use the TPP to try to resolve a range of bilateral trade issues with Canada.
For instance, he said, NAFTA never dealt with Canadian foreign ownership rules that have kept American companies out of this country’s lucrative telecommunications market — a fact, many argue, that has also been to the detriment of consumers here.
How the U.S. will leverage its spot in the TPP remains to be seen, but the results could have implications across all sectors of the economy — including the banking sector.
Gerald Keddy, the parliamentary secretary to the trade minister, insisted that Canada’s marketing boards will be protected.
“Let’s be clear, we’ve signed free trade agreements with nine countries around the world and we’ve been able to look after supply side management in every single one of those,” he said.
From the outside looking in, however, the details of a potential deal remain imprecise. It isn’t even clear what the cost of admission was for other members.
“What did they give up, if they gave up anything?” asked Liberal trade critic Wayne Easter, who is not convinced of the merits of the TPP. “We need a net benefit for the country.”
Another concern is that, as a late comer, Canada will have to accept several agreements made by the current TPP partners before it is allowed to come to the table — which will happen no sooner than the fall.
By then 12 rounds of negotiations will have taken place without Canadian input, according to the Canadian Press.
This reality hasn’t fazed the prime minister, who says the negotiations are still at “fairly preliminary phases” and that Canada won’t try to undo what has been done.
“There is an accession process, so we don’t disrupt the negotiations,” he said.
Harper was vague about the specific terms of Canada’s entry into the TPP talks.
“As in any negotiation, nothing is agreed to until everything is agreed to by all parties.”
What are critics saying?
The TPP has no shortage of critics around the world.
At home, many are questioning the assertion that Canada will steer clear of major and unprecedented compromises, arguing that the federal government has already worked hard to be considered a candidate.
‘It’s really a trade agreement for the one per cent and their corporate interests.’ —Maude Barlow, the Council of Canadians
“It’s very, very clear that Canada had to make some significant concessions … in order to get into these negotiations,” said Don Davies, the NDP trade critic.
“We’ve been given a seat at the table, but we’ve had our ability to negotiate significantly impaired,” he added.
Citizens’ organizations and public advocacy groups who oppose the deal are gearing up for a fight that could be as intense and bitter as the one that lead up to NAFTA’s implementation in 1994.
“It’s really a trade agreement for the one per cent and their corporate interests,” said Maude Barlow, the National Chairperson of the Council of Canadians, which opposed and continues to criticize NAFTA.
“This is not going to be a good deal for Canadians.”