The Globe and Mail
July 21, 2015
Are we on the cusp of a Trans Pacific Partnership deal? Ministers and negotiators from the 12 partner nations who meet at the end of the week in Maui certainly hope so.
Divisions remain. For Canada, the negotiations on reforming supply management are difficult and divisive. Governments also need to address domestic complaints around transparency and that trade outsources jobs and trumps national sovereignty.
Trade agreements were once conducted in privacy and quietly ratified with passing public attention. For Canada that era concluded during negotiation of the Canada-U.S. Free Trade Agreement (1988). After rancorous but healthy public debate, an election determined its passage.
Multilateral trade negotiations came of age with the salmagundi of trade unionists and activists of every shade who descended on Seattle in 1999, stalling the launch of what is now the World Trade Organization’s Doha round.
Trade negotiations today are less about tariffs and more about harmonizing standards and setting rules around trade-distorting internal barriers.
Canada has a major stake in the Trans Pacific Partnership.
First, the TPP includes three of our top five trading partners – the U.S., Mexico and Japan. It complements the negotiated, but still-to-be-implemented, agreement with the European Union, our second-biggest market after the U.S.
Second, TPP positions our companies to take advantage of the economic opportunities in the rapidly growing Pacific region. Our trade commissioners should be matching Canadian capacities in food, resources and financial services – sectors where we already have Asian market share – to TPP partners’ needs.
Third, because the member nations collectively comprise 40 per cent of the world’s economy, we give ourselves positional “first advantage” by setting the standards for the negotiation of future trade deals.
The TPP is constructed to allow expansion. South Korea is interested and those non-TPP members of the Association of South East Asian nations (ASEAN) should come aboard. We should actively encourage China and India to join TPP.
Complaints about trade negotiations usually focus on secrecy, job loss, and specifics such as investor-state dispute settlement and patent protection.
All contracts, public and private, are traditionally negotiated behind closed doors so negotiators can test options. But once the deal is done, the agreement is publicized for open discussion, including hearings around parliamentary implementation. The U.S. Trade Representative is already sharing elements of the agreement with affected interests. We should do the same.
Trade is disruptive. It expands economic growth, creating more choice, with better prices for consumers. With a population of only 35 million, Canadian prosperity depends on freer access to world markets.
Our economy has grown in tandem with our ability to expand our trade in goods and services, especially in finding our niche within supply chains. Industries that governments have hitherto shielded from competition will have to step up and specialize.
Supply management now faces its Uber moment.
Uber, with its clever technology, creates more choice, with better prices, for its passengers. But it disrupts the traditional, regulated taxi business. Owners of taxi permits have seen their value plummet. Some cities have tried to ban Uber, but the new ride option is not going away. Our protected dairy and chicken industries face a similar dilemma. Blocking competition is not the answer.
The public policy challenge is determining the adjustment assistance. We provided it to grain farmers and vintners. Both have since expanded production internationally (although our wine still faces inter-provincial barriers). Like wine and wheat, our chicken and cheese should be premium brands, marketed internationally, especially to growing Asian appetites.
Governments and business need to better explain the link between jobs, wages and trade. Trade creates new, usually better paid jobs in competitive industries while obliging previously protected industries to up their game.
The purpose of investor-state dispute settlement is to defend Canadian investment and assets abroad. ISDS depoliticizes disputes, extending the rule of law by providing companies with remedies against confiscatory or discriminatory government action. We have also learned from the NAFTA experience. Criteria for triggering dispute settlements within TPP are more tightly defined and do not undermine legitimate government initiative.
Innovative medicine creates the drugs that cure diseases and ease pain. For governments, it is a balancing act between access to lower-priced generic drugs and incentivizing the innovators. The extension of patent protection for pharmaceutical manufacturers will mean generic drugs will take longer to get to market.
There continues to be majority support for trade agreements in Canada and in the U.S. But it needs nourishment. Education on trade should be included in the school curriculum. With all-party support, expanding trading opportunities should be Canada’s national forte.