Canada’s commitment to freer trade about to be tested
The Globe and Mail
April 28, 2015
Just how committed Canada’s political parties are to freer trade is about to be tested as the Trans-Pacific Partnership (TPP) negotiations enter their end game. To enjoy TPP benefits, we need to reform the supply management system that controls our dairy, egg and poultry production.
Japanese Prime Minister Shinzo Abe visits the United States this week to talk trade and security with President Barack Obama. They will discuss access for Japanese autos and U.S. agricultural products, major sticking points in concluding TPP negotiations.
Meanwhile, the U.S. legislation giving Mr. Obama trade promotion authority to “fast track” the TPP through Congress moves closer to reality with its passage last week through the relevant House and Senate committees.
When Mr. Obama was elected, there was little expectation that trade liberalization would be part of the Obama legacy. Climate, immigration and health-care reforms were to be his signature achievements but not freer trade because it roiled labour unions and environmentalists – key elements of the Democrat base.
But in 2009, during his first trip to Asia, Mr. Obama embraced the freer trade pact, originally initiated in 2002 by New Zealand, Chile, Brunei and Singapore. With the United States aboard, Australia and then Peru, Vietnam and Malaysia signed on.
At the Asia Pacific Economic Cooperation (APEC) summit in Honolulu in November, 2011, Stephen Harper secured Mr. Obama’s consent for Canadian participation on the basis that supply management was negotiable. Mexico also joined the TPP talks and, later, Japan. South Korea and Taiwan have signalled their interest in TPP.
When negotiated, TPP will cover 40 per cent of world trade and promises to be “the most progressive trade agreement in history.” It will reduce tariffs, cover services, procurement and intellectual property and include enforceable standards on labour and the environment.
Strategically, TPP is the economic complement to the U.S. military rebalance to Asia. U.S. Defence Secretary Ashton Carter describes TPP as important as “another aircraft carrier.”
The pressure is on Canada to deal with our supply management practices because, as Mr. Harper recently acknowledged “we as Canadians cannot, alone, stop a deal from happening if we don’t like it.”
For Canada, the significance of the TPP goes beyond setting the standards for future trade deals. It gives trade negotiations a boost. After 14 years, the World Trade Organization’s Doha Round is approaching zombification. The TPP also effectively updates the competitive framework for North America without reopening NAFTA. With TPP membership, we also avoid becoming just a spoke in a U.S. hub.
The U.S. threatens to exclude Canada if we don’t deal on supply management but when it comes to agricultural protectionism, the U.S. also has much to reform. We need to call the U.S. on their export subsidies for dairy products and other technical barriers.
Canada should be a world leader in dairy exports. We make our superb artisanal cheese, with Quebec alone producing more than 300 varieties. We have land, climate and an increasingly competitive industry, if only we would look at it from the right end of the telescope.
Look to New Zealand and Australia. They reformed their supply management practices two decades ago. New Zealand’s co-operatives now export 95 per cent of their milk product.
Studies by our research institutes – C. D. Howe, Macdonald-Laurier, George Morris, Conference Board, School of Public Policy – argue that supply management costs Canadian consumers and stunts industry growth. They provide road-maps for transition from our current costly protectionism to profitable export growth.
Canada was once the “bread-basket” of the world. We should aim to own the global food podium and add dairy and poultry to our export leadership in pork and beef, grains and pulse. But to do so, we need to open new markets in the Pacific and elsewhere.
The Conservatives, Liberals and NDP declare they are committed to freer trade. Each party is equally committed to supply management. Defending supply management is part of our political DNA, laments John Manley, a former industry minister and now CEO of the Canadian Council of Chief Executives. He compares it to “a dog that it is better not to poke or it will jump up and bite you.”
Rather than fear competition, we should take the muzzle off supply marketing and follow former prime minister Brian Mulroney’s advice to open our industry’s “enormous export potential.”
Will our national leaders work with our premiers to reform supply management? Leaving supply management reform to Stephen Harper’s granddaughter is not an option.
The opportunities of membership in the TPP will create benefits that our grandchildren will enjoy. It’s time for us to reform supply management.