The Trans-Pacific Partnership: a club where membership has advance costs

Prime Minister Stephen Harper’s decision to seek to join in the Trans-Pacific Partnership free trade and investment negotiations was not a surprise once it was clear that Japan would join in and Mexico would be invited. Canada could not be the odd man out.

Prime Minister Stephen Harper’s decision to seek to join in the Trans-Pacific Partnership free trade and investment negotiations was not a surprise once it was clear that Japan would join in and Mexico would be invited. Canada could not be the odd man out.

But the ramifications are still not clear. What does seem apparent is that the negotiations will be driven in large part by the United States, which has apparently taken charge of the process although it was not an original participant.

In effect, there will be two sets of negotiations for Canada. First, Canada has to show that it is prepared to accept the negotiating terms set by the nine Trans-Pacific Partnership countries (Australia, New Zealand, Chile, Peru, Singapore, Brunei, Malaysia and the United States).

This has been made clear by the U.S. trade representative, Ron Kirk. In a statement, he said the U.S. welcomed Canada and Mexico “seeking to join the Trans-Pacific Partnership talks.”

But he also made it clear that there will be demanding negotiations to obtain commitments from Canada as the price for being allowed even into the talks. As Kirk put it, there will have to be consultations with Canada and “with Congress and our domestic stakeholders “ and discussions on “the TTP’s high standards for liberalizing trade and specific issues of concern to the United States.”

These specific issues, he said, “will include stronger protection of intellectual property rights, additional specific opportunities for U.S. goods, services and investment, and the elimination of various non-tariff barriers.”

In other words, it appears Canada will have to make important concessions even before it is even admitted to join the actual Trans-Pacific negotiations. We need to know in much more detail what those are. No doubt the U.S. will try to force concessions it was unable to get in NAFTA.

Most attention has focused on Canada’s system of supply management, which provides Canada’s dairy, poultry and egg producers with a basic income for their efforts.

The Harper government has been adamant in its defence of supply management. In its June throne speech, for example, it again pledged that “in all international and bilateral negotiations, our government will continue to stand up for Canadian farmers and industries by defending supply management.”

How it will handle this in negotiations remains to be seen.

The U.S. has already achieved another goal —- the weakening of the Canada Wheat Board. That means its big trading houses can move in and control at least part of Canada’s grain trade. The Harper government has already conceded on that.

Yet while the U.S. spends considerable energy attacking trade policies of other countries, it pursues highly protectionist policies of its own, for example in dairy, sugar, peanuts and cotton in agriculture, and also in manufactured products.

Ballard Power Systems, Canada’s leading fuel cell company, recently won a key contract from a fuel cell bus company in California. But it had to meet Buy America regulations, which require the manufacture of the bus and the Ballard fuel cell module will have to be built in the U.S. and use U.S. components — despite Canada-U.S. so-called free trade.

Agriculture is only one element on the table.

The broad outlines of the Trans-Pacific agreement, tabled earlier this month, show that it will seek to eliminate policies that impede trade and foreign investment, including takeovers, as well as improvements in trade and investment disciplines.

It will seek broad access for services and regulatory harmonization, although there will be some opportunity for countries to negotiate exceptions.

It seeks to liberalize financial services, telecommunication, government procurement, rules of origin, and many policy areas that are “behind the border,” meaning policies traditionally seen as purely domestic.

So there is great uncertainty about the nature of the Trans-Pacific Partnership, the kinds of concessions that will be sought from Canada, and what opportunities exist for changes in U.S. policies.

This is why it is critical that our government pursue a transparent negotiation, keeping Canadians fully informed on what is being asked of Canada and what our government is prepared to give.

The House of Commons Committee on International Trade must hold hearings soon to determine what this means for Canada.

As with Canada-U.S. free trade, there will be enormous pressure, especially from the United States, to abandon policies or weaken institutions that many Canadians value as important for our way of life.

We live in a democracy and these things must not be negotiated in secret.

Economist David Crane is a syndicated Toronto Star columnist. He can be reached at crane@interlog.com.

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