Canada’s absence from Trans-Pacific agreement dominates trade talks

Obama administration under pressure to bring Canada to the table for major trade deal.

June 11, 2012   by The Canadian Press

WASHINGTON: Canada’s absence from talks on a proposed Trans-Pacific Partnership agreement has been dominating bilateral chatter in the US capital with the Obama administration under pressure to welcome Canadians to the negotiating table.

Twice this week, senior Obama administration officials have been pressed publicly about whether Canada will be allowed to join the negotiations on TPP, a trade deal many believe will have more economic might than the North American Free Trade Agreement.

Canada, Japan and Mexico have spent months attempting to convince the White House to grant them admission to the talks.

Mike Froman, deputy national security adviser for international economic affairs, said the U.S. has yet to determine whether to consider all three countries at once, or to decide if they should be admitted separately.

“We have to leave the issue for further discussion,” Froman told a think-tank discussion earlier this week when pressed by an official from the Canadian American Business Council.

Bill Craft, a top international trade guru at the US State Department, faced questions about Canada’s admission to the TPP at the business council’s conference on Thursday delving into China’s impact on the US and Canada.

He replied in a similarly non-committal fashion, saying the matter was still being discussed.

In the run-up to the G20 summit in Los Cabos in two weeks, questions about TPP are becoming more urgent in the face of such vague responses from the Obama administration. It’s been the dominant bilateral issue privately between Canadian government officials in D.C. and their American counterparts.

It’s a situation that’s frustrating stakeholders on both sides of the border amid fears that Canadian businesses will be cut out of rapidly expanding Asian markets if excluded from TPP.

“It is a no-brainer that Canada should be in on the negotiations in partnership with the US because our economies are so integrated; our supply chains feed off each other,” Sam Boutziouvis, a top official at the Canadian Council of Chief Executives, said Friday.

“We depend upon each other right now for so much trade, and there are so many jobs dependent upon that trade…. Canada, within the TPP, will mean jobs in both the US and Canada and the stimulation of growth for both countries.”

If the TPP is truly going to be the “21st century trade agreement” heralded by its proponents, Boutziouvis added, there will likely be changes to rules of origin standards and supply chains, meaning Canada must be involved.

The US and eight other nations—Australia, New Zealand, Chile, Peru, Vietnam, Malaysia, Singapore and Brunei—are currently hammering out a free-trade agreement.

The nine countries hope to reach a deal that would increase standards in areas that include labour, the environment and intellectual property rights protection, in addition to facilitating trade. They’ll hold the next round of negotiations next month in San Diego.

But the office of the US Trade Representative said recently it’s made no decision about the seven-month-old bid by Canada, Mexico and Japan to come aboard.

Trade Minister Ed Fast said he has had “very productive discussions” with all of the nine TPP partners and that Canada’s interest in joining has been welcomed.

Fast made the comments as he wrapped up a trip to the Asia-Pacific Economic Co-operation meeting of trade ministers and a trade mission to Russia.

“I believe that we’ve made a very compelling case that we should be at the table and that we will be a very positive contributor to the negotiating process,” he said. “I’m still hopeful that we’ll be at the table soon.”

Canada’s trade restrictions on dairy and poultry products are presenting a particular obstacle for Canadian efforts to join the negotiations. Canada has a supply management system that controls milk and egg prices while setting prohibitively high tariffs on imports.

Prime Minister Stephen Harper has long defended upholding the supply management system, but he’s been urged to reconsider by international trade experts, including John Manley, the former Liberal cabinet minister who’s now president of the Canadian Council of Chief Executives.

Both Boutziouvis and Manley were at the CABC’s China confab on Thursday in Washington. Manley’s presentation to the conference focused almost entirely on the importance of admitting Canada into the TPP talks; he also met privately with American officials to press his case.

“Mr. Manley is on the record as saying the time has come in this era of seeking international markets to take a good, hard look at reforms to our supply management system,” Boutziouvis said.

China’s middle class is set to explode in the next two decades, he pointed out, and with fatter Chinese wallets will come increased demand for countless goods and services.

“Just in terms of poultry and dairy, in addition to all the other areas where Canada will benefit—the Chinese are going to be eating more protein, they’re going to be eating better, and Canada is very well-placed to take advantage,” he said.

Discussions about Japan’s admission to TPP are reportedly moving at a slower pace than those involving Canada and Mexico, with the U.S. auto industry and some lawmakers raising concerns that Japan isn’t willing to address longstanding American complaints about access to its automotive market.

There are also fears that the Japanese are unwilling to liberalize services and agricultural trade.

Mexico, meantime, is considered to have the best chance of joining the talks.

©The Canadian Press

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