In agreeing to TPP deal, Liberals hope to have secured a much-needed win on trade

by Marie-Danielle Smith (feat. Brian Kingston)

Ottawa Citizen
January 24, 2018

OTTAWA — It was snowing heavily in Tokyo on Monday and through into Tuesday, as Canadian negotiators sat down with their counterparts from 10 other countries to try to solve the issues in the way of a deal on the Trans-Pacific Partnership. By the time hands had been shaken on the last of several side-letter agreements — agreements which the Canadian government sustained significant international embarrassment to secure — the Japanese capital’s biggest snowstorm in four years had subsided. Everything was melting.

Chris White, president of the Canadian Meat Council, was one of few industry representatives who made the trip to Japan this week. Safe from the flurries outside, he and another agriculture stakeholder camped out in the lobby of a Hilton hotel waiting for updates from Canada’s delegation. Monday morning: still issues to resolve. Tuesday morning: still issues to resolve. Tuesday afternoon: a deal, to the relief of forestry, agriculture and mining sectors but to the ire of the auto industry and labour.

“I think there was a sense that the deal would go forward regardless of Canada,” White said. He reported being “pleasantly surprised” that it all came together. “I think certainly the industry was worried. Or at least, I think, the sense was that ultimately Canada would get there but that they might not get there this soon.”

Brian Kingston, who heads up international trade policy for the Business Council of Canada, also said he was surprised at how quickly an agreement came together. “I think the really big win here, on this, is the fact that it shows that Canada can get a deal done right now,” he said.

Others were less certain it was a win. NDP trade critic Tracey Ramsey — whose party fears the CPTPP will lead to Canadian job-losses, called the rush to a deal “a manifestation of the anxiety that the government is having around their inability to have movement on NAFTA. So there’s a feeling of desperation to signing the TPP.”

Observers have had cause to question the Liberal government’s approach to trade. The North American Free Trade Agreement is being renegotiated and despite the United States reportedly taking a hard-line on its demands, American negotiators have begun accusing Canada of being uncooperative. In December, Prime Minister Justin Trudeau came back empty-handed on a recent trip to China aimed at securing the launch of free trade negotiations. And while Canada worked towards deals on those fronts, it had managed to anger the 10 other nations for whom the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — a deal renamed at Canada’s request — was a first priority.

Officials from two other countries told the National Post that Canada broached new requests to secure protections for its cultural industries only in the late stages of negotiations. This was ill-understood by some around the table, and seen as a stalling tactic — though Canada’s concerns were supported by New Zealand, whose new prime minister’s progressive priorities closely match Trudeau’s. “We are one of the countries, perhaps the only country, who had supported Canada throughout” on the cultural-protection issue, Prime Minister Jacinda Ardern told journalists Tuesday.

With no meaningful progress in China and NAFTA’s future ever more uncertain, over the past two weeks Canada recommitted to sealing a deal on the CPTPP. As plans were finalized for the Tokyo meetings, Trudeau appointed Ian McKay, CEO of the Vancouver Economic Commission, as a special envoy to Japan to work on the deal. A Canadian government official said trade minister François-Philippe Champagne talked to his counterparts from other countries “virtually non-stop over the weekend” and throughout the Tokyo meetings, which he did not personally attend.

So there seemed an impetus on the Canadian side to make a deal in Tokyo and, as Australian trade minister Steven Ciabo suggested in an interview with Australia’s public broadcaster Wednesday, their attitude had changed. “They were more reasonable this time around,” he said. “We were able to find a consensus.”

Even after Canada’s marked change in tone, some expressed worries that there might be another no-show at a signing ceremony, planned for March 8 in Chile. A Japanese official told the Nikkei Asian Review Tuesday that the ceremony will absolutely not be rescheduled, and “even if Canada were to withdraw” the other 10 countries would still go ahead with the deal.

“It would have been a pity if we ended up with TPP 10,” former Japanese ambassador to Canada Sadaaki Numata said in an email to the Post Wednesday. “I am happy and relieved that Canada is back on board with us.”

Side-letters on culture and the auto industry appear to be the main gains Canada made this week in Tokyo. Vietnam, Malaysia and Brunei also resolved outstanding issues with the CPTPP.

The Canadian official, who was not authorized to speak on the record, said letters between Canada and each other country outline an exemption on culture, on top of existing exemptions that were written into specific chapters of the original TPP. There are new agreements with Malaysia and Australia on auto rules-of-origin. And with Japan, Canada has secured most-favoured-nation status on auto rules; established a dispute settlement mechanism to resolve complaints about non-tariff barriers to trade; and reinstated auto standards that Japan, Canada and the U.S. had negotiated in the original TPP but that Canada lost access to when the U.S. left the deal.

To match the deal’s name, its preamble has also been updated to include language reflecting Canada’s “progressive” trade agenda, making mention of labour rights, environmental protections, cultural identity and diversity, corporate social responsibility, gender equality and Indigenous rights.

On Tuesday, the Canadian official held up as “real progress” other elements of the deal that had been sorted out before the Tokyo talks.

Those measures already agreed to included a variety of suspensions of clauses that had been negotiated with the U.S. in mind, including a chapter on intellectual property. While the suspension of the IP chapter is lauded as a victory for Canada, for other countries, notably Japan, the suspension is seen as a temporary, juicy incentive to lure the U.S. back to the TPP table.

The Liberals rubber-stamped that chapter, and all other provisions now being suspended, when then-trade minister Chrystia Freeland signed the original TPP back in February 2016 after the agreement had been negotiated under Conservative Prime Minister Stephen Harper. If a future American president decides to re-enter the TPP, these chapters could be the subject of further discussion.

Also notable is the fact that current Canadian officials are lauding legally-binding environment and labour chapters, which fit in with the Liberal “progressive trade agenda,” when these were negotiated before Liberals came into power.

The Canada West Foundation’s Carlo Dade congratulated Champagne but raised questions around who deserves credit for “progressive” aspects of the CPTPP, beyond the name and preamble. “If all the government did was get the cultural exemptions strengthened and tweak a thing or two, then does that mean that the Harper government really negotiated a progressive agreement? If all the (Trudeau) government did was change the name?”

Conservative trade critic Dean Allison had no qualms about saying that his government had negotiated the “progressive” chapters. “I think most of our deals have been progressive,” he said.

Toronto lawyer Lawrence Herman pointed out that Liberals and Conservatives share similar trade goals, and should keep showing a united front as Canadian negotiators keep working on NAFTA in Montreal this week. If anything, the CPTPP shows that “Canada has options apart from its dependency on the U.S. market,” he said, and can strengthen their position.