All it took, apparently, was a 25-minute walk with U.S. President Barack Obama in the gardens of Kapolei, Hawaii, for Prime Minister Stephen Harper to swing 180 degrees on the Trans-Pacific Partnership trade negotiations. The change was so abrupt that even International Trade Minister Ed Fast seems to have been caught unaware. Just the day before, Mr. Fast had declared that Canada was unwilling to move on a deal that did not let Canada keep its prohibitive tariffs on foreign dairy and poultry imports. But face-to-face meetings at the Hawaiian APEC session have apparently increased the Prime Minister’s confidence that Canada can meet the negotiating criteria.
What has changed? Has a majority government given Mr. Harper the mojo to dismantle Canada’s expensive but politically powerful supply-management system? Have the TPP parties lowered the bar from a year ago, when they told Canada it was “not ready” to join the agreement? Or has the growth of Asian markets, the failure of Doha and the addition of Japan and Mexico to the negotiations made the TPP too important for Canada to ignore?
All three are probably true to some extent. Mr. Harper must keep in mind that wishing does not make it so. Canada’s attempts to join the negotiations in late 2010 were rebuffed. New Zealand made no secret of the fact that it did not want Canada arguing in favour of restrictive dairy policies at the same negotiating table where it was trying to gain access to the lucrative U.S. dairy market. The United States, while not overtly opposed to Canada’s membership, was given little reason to advocate on its behalf with the other TPP parties, especially since Ottawa was showing little progress on upgrades to copyright legislation – an issue of high importance to Washington.
The original Trans-Pacific Strategic Economic Partnership Agreement was signed by Brunei, Chile, New Zealand and Singapore in 2005. Canada was invited to join negotiations, but declined them as small stuff. Five additional countries – Australia, Malaysia, Peru, the United States and Vietnam – were accepted by the original four to begin negotiations on an expanded agreement in 2010. The current nine negotiating parties account for about 28 per cent of global GDP. Before the weekend APEC meeting, Japan announced its willingness to roll back its agricultural supports in order to participate in the TPP talks, and Mexico also asked to join. There is speculation that South Korea and the Philippines may not be far behind.
The TPP is Canada’s best hope for short-term access to vital emerging markets in Southeast Asia. Canada has tried and failed to get a trade deal with South Korea, and the sclerotic negotiations with China for an investment protection agreement have stretched beyond seven years. But the TPP is not just about Asia; it is also about Canada’s relations with the United States and the importance of maintaining a competitive North American trading bloc within Asian and global markets. Secretary of State Hillary Clinton announced last month that the United States is embracing the Pacific century; ramped-up trade and investment agreements with Asia are top priority. If Canada is not at the table when the United States is negotiating the terms of its future economic relations in Asia, Canada will soon find itself passed over for foreign investment, paying too much for market access and governed by trade rules we had no hand in negotiating.
Mr. Harper’s sudden turnaround will not guarantee Canada a seat at the TPP table. The Department of Foreign Affairs tried this in 2010, when it sent a senior official to “observe” the negotiations in Brunei, hoping for an invitation that never came. Canada has failed to forcefully push the case that U.S. interests in Asia are better served with Canada at America’s side. Although Mr. Harper seems confident of a U.S. invitation, yesterday’s White House announcement simply says that that the U.S. negotiating team will “continue talks with [others]who have expressed interest.” Hardly a green light.
Canada gave up too soon last year. It failed to launch a serious advocacy campaign in the United States and it did little to build support and minimize opposition from other TPP negotiating parties, particularly Australia – a potential ally – and New Zealand.
If Canada is going to get a real seat at the table, it must be willing to show flexibility on issues of interest to key trading partners. It must also convince potential U.S. allies of the importance of a united front at the TPP on issues of importance to North American businesses and consumers.
Laura Dawson is a member of the C.D. Howe Institute International Economic Policy Advisory Council and president of Dawson Strategic. A former economic specialist at the U.S. embassy in Ottawa, she is the author of a forthcoming Institute paper on next steps for Canada in joining the TPP negotiations.