How Canada can lead a bold new trade agenda
by Randolph Mank
Feb 10, 2017
Say what you will, U.S. President Donald Trump is clearly committed to keeping his campaign promises. There’s no escaping the resulting disruptions and consequences. His quick re-opening of NAFTA and withdrawal from the Trans-Pacific Partnership leave Canada with an uncertain and mostly defensive trade policy agenda.
At the same time, the new president appears keen about deal-making and eager to declare early victories. In that lies a potential opportunity and a way forward for Canada.
We have already signalled our willingness to take the first step of updating NAFTA. We have little choice. But to do nothing more could expose us to collateral damage from the likely more adversarial U.S.-Mexico negotiations. To offset this, we should take the second step of proposing new trilateral trans-Atlantic trade talks.
During her recent visit to Washington, British Prime Minister Theresa May obtained agreement to pursue a bilateral trade deal. Ms. May needs to fill the gap left by Brexit; Mr. Trump is amenable.
Prime Minister Trudeau meets Trump Monday. Proposing Canada’s participation in such talks would make sense for us on every level, economically, geographically and historically. We need NAFTA but this initiative would provide fresh focus and, if successful, a complementary arrangement. Having recently concluded our own trade agreement with the EU, it would also address the gap for us that will result from Brexit.
As a third step, given that our prosperity depends so much on open global trade, we should pursue a replacement for the TPP, though from a different direction.
The next opportunity to do so may be within the otherwise ineffectual Commonwealth group, which is at long last holding its inaugural trade ministers’ meeting in London in early March. Among its members, along with the U.K. and Canada, are such notable TPP signatories as Australia, New Zealand, Singapore and Malaysia.
Canada should propose to these like-minded partners the pursuit of a new trade agreement that mirrors as much as possible an eventually updated NAFTA in order to attract the U.S., and welcomes any future partners who wish to accede. This is precisely how the TPP emerged from the APEC group: a small coterie of like-minded countries combining efforts to formulate binding trade rules.
In short, we should ultimately be seeking a new and broad-based Trans Atlantic-Pacific Partnership deal. There would be no need to start from scratch, as there is much worth saving in the TPP. Of course, to bring along the Trump administration, repackaging would be imperative.
Filling the gaping hole on the Asia flank is perhaps the greatest challenge. With the demise of the TPP, China will have even more favourable access to Asian markets when negotiations on the Regional Comprehensive Economic Partnership (RCEP) are soon completed. This is not good for many reasons, not least because Canada is shut out.
Japan may be the bridge. While it is also a party to the RCEP process, it signed the TPP because it wants new trade arrangements with the West as well. Its first impulse now will be to seek new bilateral deals. But there is no reason why we cannot propose a broader negotiating umbrella with Japan included.
While past failures in advancing the WTO agenda certainly offer a cautionary tale, harmonizing North American, European and Asian China trade rules should be our future ambition, no matter how difficult it may seem at the moment.
Trump may turn out to be a bilateralist to the core, immovable on any such global trade initiatives. And new initiatives won’t make his “America first” policies any easier to deal with at the negotiating table. Then again, he might just see victory in pursuing international agreements that are even grander and more ambitious than those of his predecessor. For Canada, it would be better to take bold initiatives to advance the principles of free trade than simply to play defence.
Randolph Mank is a three-time Canadian ambassador, who currently serves on the board of the Canadian Chamber of Commerce in Singapore. He is also a Fellow of the Canadian Global Affairs Institute and the Balsillie School of International Affairs.