By Carlo Dade
In iPolitics.ca
June 26, 2015
News out of Washington D.C. that the 12-nation Trans-Pacific Partnership (TPP) trade negotiations have lurched back to life, following the U.S. Senate’s vote to grant fast-track authority to President Obama, is being hailed as good news for Canada. And so it is — but not only for the reasons being articulated.
Political delays in the U.S. have pushed consideration of a final deal on the TPP — a proposed international trade agreement being negotiated by Canada, the United States, Mexico, Australia, Japan, New Zealand, Malaysia, Singapore, Vietnam, Chile, Peru and Brunei — past the coming federal election. That lets the government off the hook — or pitchfork — on making the inevitable concessions on Canada’s farm supply management system in the teeth of an election campaign, which is good news for the prime minister.
The delay also offers a much needed breather for the rest of the country. Most Canadians have no idea if the TPP is a trade agreement, a rock band or a brand of toilet paper. The government and industry supporters have a lot of explaining to do — and they’d better get cracking, before the usual suspects in the anti-trade and NGO community get some traction going against the deal.
But it’s not just the general public that needs time to think through and understand the impacts of the TPP; government and industry need to do this as well.
With the TPP, the critical question may not be what happens in Canada, but rather what happens when nine other countries join our special trade relationship with the U.S. In other words, what happens when the TPP — for all intents and purposes — replaces the NAFTA?
It has been an open secret in Washington that the Obama administration long ago tacitly abandoned any attempt to bring NAFTA into the 21st century. While there may be tweaks to the decades-old agreement, any hopes of a rejuvenated, 2.0-type agreement have been dead a long time.
Unlike his predecessors, Obama entered office with a massive oeuvre of criticism bordering on contempt for NAFTA, which has encouraged and stiffened the still-influential, vocal and large U.S. anti-trade movement.
This has been a problem for the TPP, and it’s been worse for any attempt at updating NAFTA. Critics of the U.S.-E.U. agreement — officially the Transatlantic Trade and Investment Partnership, or TTIP — have taken instead to calling it the “Trans Atlantic Free Trade Agreement”, or ‘TAFTA’. The best way to derail a trade agreement in Washington is to give it a name that rhymes with NAFTA — which explains Obama’s reluctance to re-fight a losing political battle.
But on the other hand, a shiny new agreement like the TPP — focused on Asia, with 12 partners — is, apparently, an easier sell. The president gets to update NAFTA in ways that benefit the U.S. without ever mentioning the word ‘NAFTA’.
While this works for the U.S., the concern for Canada is less the economic impacts — which some analysts think will be negligible — and more the bigger picture: How does this country advance its interests in a far more crowded and noisier room?
Canada has been here before — when NAFTA brought Mexico into the Canada-U.S. trade space 20 years ago. Arguably, it did not go well for us.
NAFTA gave Canada privileged access to a second market beyond the U.S., one that has grown to become majority middle class and will soon be the world’s 9th largest economy. Yet much of Canada sees the glass as half empty and views Mexico as a threat. Instead of getting on the bus, Canada opted to get run over by it.
If the entry of one rising economy into Canada’s special trade relationship with the U.S. caused this much trouble, what happens when the TPP brings nine others into the tent?
Step one to surviving the coming changes with the TPP is to start correcting — and avoid repeating — mistakes made with Mexico under NAFTA.
There is now a brief window before the implementation of the TPP to harden those North American institutions vital to our success. But Mexico and, increasingly, the Americans do not see Canada as a partner interested in more robust trilateral efforts. Leader’s summits have been postponed; Canada appears disengaged. The theme is ‘drift’.
If North America falters, Mexico has the Pacific Alliance trade group with Chile, Peru and Colombia as Plan B; the Americans feel they’ll be okay regardless. So it’s Canada that must convince its neighbours of its seriousness — and that starts with repairing the relationship with Mexico.
The reason for this is self-interest: getting the Americans to focus on tri-lateral issues is difficult but getting them to focus on bi-lateral ones is even harder. And that will only get more difficult under the TPP.
The last North American Leaders’ Summit offered a great example what is possible: It produced an agreement to link the two separate bi-lateral trusted traveler programs in North America. Movement of people for trade and investment is an area where North America has lagged behind other Pacific economies. A similar idea, raised at recent Parliament hearings, is for Canada to join the North American Development Bank, allowing all three countries to avoid a dysfunctional U.S. Congress in seeking funding for critical cross-border infrastructure.
These are the kinds of ideas on which Canada could take a leadership position at the North American Leaders’ Summit this fall — but we have to show up with something to convince our partners that we’re serious.
With increased economic and political competition in what was once a privileged North American space, Canada is going to have to up its tri-lateral game. Luckily, we still have a bit more time to do so.
Carlo Dade is the director of trade and investment policy at the Canada West Foundation. www.cwf.ca.
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