NAFTA is becoming all-consuming. It is, without question, important for Canada.
But let’s be realistic. A best-case outcome for the North American free-trade agreement is that we don’t lose what we already have with the United States, not about actually expanding our trade. For that, we must look elsewhere. The good news is that “elsewhere” is right under our noses: the Trans-Pacific Partnership (TPP), or more precisely, without the United States, the TPP11.
Losing sight of this opportunity would be a big mistake.
U.S. President Donald Trump hated the TPP even more than NAFTA. So much so that he signed an executive order removing the United States from the 12-country deal immediately on taking office. But like many other things he does, this may come back to haunt him.
Not only would the TPP have benefited the U.S. economy (as many frustrated U.S. companies well know), the remaining signatories are going ahead without the Americans – they have realized that, despite the attraction of the large U.S. market, they are still better off together, without the United States, than not at all. In some ways, the United States will be left behind.
For us, the time is now. Not only is the original promise of the TPP still valid; according to a recent report by Carlo Dade and Dan Ciuriak, both Canada and Mexico stand to do even better without the United States under a TPP11.
The report shows how Canada and other TPP signatories would fare under a TPP11; what the United States stands to lose; and how the agreement would affect different sectors of our economy.
Unfortunately, when Mr. Trump exited the TPP, our own minister responsible, Chrystia Freeland, said the deal could not proceed without the United States. As it turns out, this was premature, but it is taking time to get the TPP back into the Canadian mindset.
For Canada, the original TPP promised an opportunity to close the trade-agreement gap with its major Asia-Pacific competitors. Other countries had been signing agreements with some of the rapidly growing Asian countries and quickly taking market share in both goods and services. Canada was being left even further behind. Despite a lukewarm start politically at home, it became clear Canada stood to gain significantly from the trade expansion held out by the TPP. We joined the effort, ultimately signing on with the other 11.
So how would TPP11 be even better for Canada?
The detailed modelling and analysis shows that Canada’s welfare gains would improve to $3.4-billion under TPP11, compared with $2.8-billion under the original. Real GDP gains would improve to 0.082 per cent from 0.068 per cent. Big winners would be Canadian agriculture and agri-food, as these sectors would no longer be competing with their U.S. counterparts in the TPP11 markets.
Beef, in particular, would benefit through access to the Japanese market without having to share with the Americans. Canola, too, would benefit because of the elimination of Japan’s tariff-escalating policy in the oilseed sector.
Canada is a trading country. We are far more dependent on trade, relatively speaking, than most countries, including the United States. Because the United States is our largest (and easiest) market, the NAFTA negotiations are very important, and the major focus and effort are appropriate.
We should be proud both of the multipartisan efforts by our elected officials, not only in Ottawa and Washington but across the country, as well as of the talent we have at the negotiating table.
But not only must we not lose sight of the opportunities of TPP11, businesses of all kinds – including manufacturers, resource firms, farmers, agri-food processors, professional service providers (pretty much anyone in Canada who works in an industry that benefits from trade, which in Canada means most of us) – should be encouraging these efforts and planning for the results.
And our government must commit some of our trade-negotiating talent for the TPP11 discussions under way. The deal is essentially done, save for revisions necessitated by the U.S. exit.
Not only should we be pursuing a TPP11 vigorously in its own right; doing so provides some leverage with respect to our NAFTA negotiations – the less dependent we are on the U.S. economy for our trade, the better. And particularly with NAFTA’s uncertainties, we do not want to be left behind in Asia again.