EDITOR’S NOTE: The Trans-Pacific Partnership agreement has far reaching implications for Canada’s economy and its workforce. Carlo Dade, Director of the Centre for Trade & Investment Policy, and Janet Lane, Director of the Centre for Human Capital Policy, debate some of the big issues in the complex agreement.
CD: The Trans Pacific Partnership trade agreement (TPP) has the real prospect of being more impactful on the Canadian economy and workers than any other agreement that the country has signed – including NAFTA.
JL: Given what happened to our auto industry in the decades since NAFTA, I can see why the auto sector is concerned then.
CD: This is partially because of the size and complexity of the agreement – 12 countries instead of three – but also because the agreement is essentially an updating of NAFTA. The TPP will impact companies that export wholly or primarily to the U.S. as well as those looking to new markets across the Pacific.
Yet, the discussions to date about the agreement in Canada do not match its importance and potential impact.
JL: But we import more than we export don’t we? Is this really going to be a problem?
CD: The biggest change for Canadian companies and workers is that the agreement covers more than just the trade in goods, or things like oil, car parts, cheese and BlackBerrys, and the businesses that make and sell them. This is the first global agreement to substantially and significantly focus on opening the trade in services – health care, legal services, technical services, architects, engineers and so on.
More than 70 per cent of Canada’s GDP comes from the services sector. Four out of five Canadians are employed in services and job growth in services is about 18 times faster than for those who make ‘things’.
So all of those Canadians who thought the agreement did not impact them because they exported to the U.S. and not to Asia, or because they are in the service-not-the-things business, are in for a rude awakening.
JL: Who else is going to be affected?
CD: The chapter in the TPP on trade in services is 16 pages of dense legal text plus an additional 800 pages of notes and exemptions. It clearly states that trade in services, whether done by one country at home for use in another country or done by a company from one country in another country, is now open. The agreement sets out special notes for architects, engineers, lawyers, and express delivery services. All other professional services are to be discussed as needed, unless exempted by a country.
JL: How do you have free trade in services?
CD: The agreement specifies countries need to allow in as many people as needed to perform the service for as long as is needed. The agreement clearly states, however, that ‘as long as necessary’ is not permanent and that the agreement does not in any way impact immigration.
JL: So, if I hear you right, a TPP country could win the contract to design and build a hotel. The planners, architects, interior designers, lawyers, construction managers and other professionals associated with that design-and-build could come in temporarily while it was being built. I just peeked at the agreement and it looks like pretty much all the senior level trades people needed for the construction phase could come in too. Can that be right? That’s a lot of people! That’s a lot of what could be jobs for Canadians!
So many questions here. But first, how do we know these temporary workers will be competent?
CD: The agreement outlines steps for countries to agree on recognizing credentials and harmonizing regulations but states that this should be done, not that it must be done.
JL: OK. But we haven’t done a good job of recognizing credentials for immigrants up until now. Sounds like that’s going to be a lot of work to set up. We’re all going to need a system of competency frameworks like they have in Europe. There, people can move between countries with a resume that lists their recognized competencies.
Carlo, I think we need to do some real thinking about the implications of this agreement.
CD: There is a lot of fine print to work out but the broader intent is clear – trade in professional services is now open. This means huge new opportunities for Canadian firms to access opportunities in other markets. If demand in Canada or the U.S. is weak, Canadian firms will have 10 new markets to explore.
The flip side, competition at home, is also true.
Canada needs to prepare for both of these challenges: getting companies ready to take advantage of opportunities abroad and also preparing for competition at home.
JL: I know there are lots of opportunities coming out of this but I’m not sure Canada is ready to take full advantage of them. Let’s keep talking.
What kind of effect with the TPP have on Canada’s economy and its workforce? Have your say in the comments below, or email