TPP talks: Canada on outside, looking in

Since stalling in what was clearly an overambitious and politics-laden Doha Round of trade talks under the World Trade Organization in 2001, countries have begun to split themselves into smaller groups in a bid to cut deals.

The most notable is the Trans-Pacific Partnership, a collection of nine countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam.

These countries, according to international trade analyst William Brock at the Congressional Research Service in Washington, have expressed an interest in allowing a proposed “living agreement” to cover new trade topics and to include new members willing to adopt the proposed agreement’s high standards.

That’s the rub.

Canada is very keen to be among the negotiating countries but will not get there unless it agrees to that last principle. And that would entail offering up Canada’s long-protected dairy and poultry industries to foreign competition.

The next negotiating round of the Trans-Pacific Partnership will take place in San Diego, Calif., July 2-10, according to the U.S. Trade Representative’s Office in Washington.

U.S. Trade Representative Ron Kirk will be hosting what he calls “a direct stakeholder engagement” event on July 2. This event will provide stakeholders the opportunity to speak one-on-one with negotiators, raise questions and share their views.

“We tried this format at the last round in Dallas, and most stakeholders expressed their preference for this one-on-one engagement,” Kirk said in a release.

“Some stakeholders said they would like the opportunity to make presentations to negotiators as in earlier negotiating rounds, and we will accommodate these requests.”

While that may seem to be negotiating semantics, it appears to be aimed at not only streamlining the talks but trying to build in more flexibility than in previous negotiations.

Canada has made a number of probes going back to last year about getting into the TPP Round.

It even says one of its goals is to “increase and diversify commercial engagement in key markets in Asia, in particular with China, India, Japan, Korea and Mongolia and the Trans-Pacific Partnership.”

Brock notes the same thing in a recent report on the Trans-Pacific Partnership.

“To that end, Canada, Japan and Mexico have begun consultations with the partner countries about the possibility of joining the negotiations.”

It is understandable the three would want to get involved.

As Laura Dawson of the C.D. Howe Institute notes in a recent report on Canada and the Trans-Pacific Partnership: “It is important for Canada to be at the table in these talks, which currently involve economies comprising 28 per cent of world gross domestic product.

“Membership in the TPP would facilitate a more solid foothold in emerging East Asia for Canadian businesses.

“The potential is for the TPP to expand and one day include all of APEC, even China; a grouping representing 54 per cent of global GDP.”

Brock also points to the significant economic growth potential in Asia.

“The region is home to 40 per cent of the world’s population, produces over 50 per cent of global GDP and includes some of the fastest-growing economies in the world,” he wrote, urging Congress to take a keener interest.

“While current TPP negotiating partners made up about five per cent of U.S. trade in 2011, Asia-Pacific economies as a whole made up over 60 per cent.”

There is little downside for those already at the table. They have the best seats.

Canada was offered one in 2005 but declined. It, Japan and Mexico have lately been trying to get in.

It is not as if the U.S. and other TPP partners do not want the outside three involved. Adding their economies to the TPP pool would, according to Brock, increase the economic significance of the agreement on several metrics — trade talk for levels.

Because Canada did not join in 2005, Dawson points out that New Zealand remains opposed to Canada’s attempts to maintain existing dairy supply management.

The U.S. is also declining to support Canada’s case for entry into the Trans-Pacific Partnership.

The supply management conundrum continues to haunt Canada’s efforts to join.

John Weekes, a former Canadian trade negotiator, has blamed supply management and dairy protection in particular as keeping Canada out of what he described last year as a “bold new trade strategy to ensure that Canadian producers will have access to the high-growth markets of the Asia-Pacific region.”

Ottawa trade consultant Peter Clark, in a report to the Dairy Farmers of Canada, simply says the U.S. wants to keep Canada at bay to become the hub of the sparkling new trade agreement when it emerges.

But as Dawson and others have pointed out, the worth of the Trans-Pacific Partnership goes beyond trade among its own members. It would be invaluable in dealing with economic relations with powerhouse China.

And that might make it worth its weight in gold.

June 13, 2012

Source: Business Herald