By Carlo Dade
In the Vancouver Sun

July 27, 2017

With all attention in Canada on the North American Free Trade Agreement (NAFTA) negotiations scheduled to start in August and the ongoing saga of the Comprehensive Economic and Trade Agreement (CETA), another crucial opportunity — and one that will benefit Vancouver more — is being missed.

The Trans-Pacific Partnership agreement is quietly moving toward ratification without the U.S. What was a blessing for Western Canada — Asian markets finally opening — could be even better with those markets opening without the presence of U.S. competitors.

Rather than killing the agreement, the U.S. withdrawal has actually made it better for Canada, as demonstrated in a recent Canada West Foundation research paper that modelled the potential economic impacts of a TPP without the Americans. It found that Canada actually does better in a TPP without the U.S.

As lower tariffs on Canadian goods increase demand from Asian buyers, the ports in B.C. will be ready thanks to their massive investments. Recently announced federal trade infrastructure money will help ease constraints elsewhere and could potentially help ease impacts from increased traffic around Vancouver.

But it is not just beef and other commodity exporters that stand to gain. In addition to substantial jobs and revenue for the city’s port and affiliated businesses, there are bigger opportunities on trade in services.

For Vancouver, a TPP 11 is a chance to accelerate the movement of production, especially in services like high-tech, from the U.S. If the TPP forges on without the U.S., and all indications from media in TPP countries are that a TPP 11 will indeed go ahead, then American manufacturers and service companies will have a sudden competitiveness problem in Asia — a gap Canadians can and should fill.

U.S. companies that want to remain competitive in Asia will have two choices: Either hope that the Trump administration comes to its senses and reverses itself on the U.S. withdrawal from the TPP, or move production to a TPP 11 country.

For U.S. companies that want to take advantage of the agreement and operate close to home in an English-language environment, the only real estate agent to call is one in Canada. And, since these companies will be shipping to Asia and not the U.S., any potential border adjustment tax is a non-issue.

Beyond U.S. companies like Microsoft increasing operations in Canada because of visa policy and hostility to immigrants in the U.S., we have seen this play out in our favour before. When the U.S. version of Export Development Canada (EDC), their Export Import Bank, was forced by the U.S. Tea Party movement to curtail services for large companies, G.E. and other U.S. companies moved production and jobs to Canada where EDC was offering services they needed.

With a TPP 11, this phenomenon should increase.

That type of opportunity under a TPP 11 gels nicely with work that HQ Vancouver and the airport have done to position YVR as a gateway between Asia and North and Latin America. Businesses working in Australia, Japan, Malaysia, Singapore, Chile and Mexico now have yet another reason to look at YVR and Vancouver. If you’re selling services to TPP markets and you’re moving people, Los Angeles and other U.S. options suddenly are less attractive.

The TPP 11 is an opportunity that has fallen into our laps. It is also one for which Vancouver is, fortuitously, prepared.

Canada currently has only one trade agreement in Asia and an agreement with China will likely take at least a decade to negotiate. For Asia-facing Vancouver, a TPP 11 could give us the equivalent of seven agreements in Asia at once.

However, this is an opportunity that we may lose. Few Canadians know that the TPP is still alive and proceeding without the U.S. The federal government in Ottawa has been quiet, hiding behind never-ending consultation instead of taking the lead in informing Canadians and making the case.

If Vancouver wants to realize this opportunity, then it will have to make its voice heard in Ottawa.

Carlo Dade is the director of the Trade & Investment Centre at the Canada West Foundation