Harper defends push for TPP deal despite looming election

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The federal Conservatives have dispatched Trade Minister Ed Fast to Atlanta in hopes of striking a massive Pacific Rim trade pact among 12 nations that could open new markets but also cause pain for Canada's auto-parts makers and dairy farmers.

In a preview of the political backlash that might follow a deal, dozens of tractors and several milk cows stopped traffic in front of Parliament Hill Tuesday as hundreds of dairy farmers from Ontario and Quebec brandished signs such as "No to imports."

Farmers were protesting against what they fear would result from a Trans-Pacific Partnership deal: a major opening of the country's heavily sheltered dairy and poultry sectors to further foreign competition.

An agreement in principle could be announced as early as Friday if the United States and Japan, the two most influential players at the TPP, get their way.

On the campaign trail Tuesday with the election less than three weeks away, Conservative Leader Stephen Harper promised he would safeguard the protectionist system of import tariffs and production quotas that underpins milk, egg and poultry industries in Canada.

"Decisions to be made on whether we have such a system or not are decisions we want Canadians to take, not foreigners to take," Mr. Harper said during a campaign event in Kleinburg, Ont.

But he didn't rule out allowing more foreign farm imports into Canada.

And Mr. Harper defended his government's willingness to remain at the TPP negotiations with less than three weeks before election day and, even though, as he's already acknowledged, some in the auto sector may not like the ultimate deal. He said Canada has no choice but to be part of new trading networks that lower barriers for Canadian business abroad.

"Unlike the other parties, we're not going to walk away from a trade negotiation at the first sign of worry," Mr. Harper said. "The jobs of the future in a global economy are going to depend on our privileged access to international markets."

NDP Leader Thomas Mulcair has questioned whether Mr. Harper has the legitimacy to negotiate for Canada so close to an election. He has vowed to protect the supply management system and would fight for stronger rules to support homegrown manufacturing.

Liberal Leader Justin Trudeau on Tuesday attacked the Conservatives' record on trade, saying the deal is being negotiated in "secrecy." He said his party would only support a pact that boosted employment and protected farmers.

New Zealand's Trade Minister Tim Groser has praised the Harper government's willingness to hammer out a trade deal during an election campaign – a period when Ottawa is run in caretaker mode until a new government is elected. "The Canadians are negotiating as if there's no election," Mr. Groser told New Zealand media last week. Canada's Privy Council Office, the bureaucratic support arm of the Prime Minister's Office, released guidelines in August that justify Mr. Fast's presence at the talks, saying that to skip negotiations "could negatively impact Canada's interests."

The United States and Japan are anxious to conclude a deal as quickly as possible and are pushing to reach an agreement in principle before the Canadian federal election on Oct. 19. One of the reasons cited by Japan is the possibility the Conservatives might lose power, and a new government could be less willing to conclude the TPP on an expedited basis.

Trade ministers, including Mr. Fast, from 12 countries are gathering Wednesday to try and conduct the political horse-trading necessary to finalize a deal that is largely complete.

Canada, however, is at the centre of two major obstacles that have prevented a TPP deal so far, including dairy and, most important, autos.

An agreement will almost certainly expose the Canadian auto-parts sector, which employs 80,000 people, to far more foreign competition and erode the preferential position the industry enjoys under the North American free-trade agreement (NAFTA).

It will also open Canada's sheltered dairy industry to significantly more foreign imports.

What's at issue is how big these concessions will be. When it comes to dairy, Canada is sure to grant TPP countries a bigger slice of the market than it gave the European Union in negotiations that ended in a deal last year – where Ottawa agreed to let another 18,500 tonnes of cheese enter Canada tariff-free each year. That represents the annual milk output of 20,000 cows, according to the Dairy Farmers of Canada, who note the average farm has 77 cows.

The Americans are seeking new markets to unload U.S. milk in the event an expected increase in imports from New Zealand under a TPP deal displaces their domestic production. They've long sought market access in Canada equivalent to 10 per cent of Canadian consumption – a very ambitious goal on their part.

"If they bring in so much milk from the States, our Canadian market will be flooded pretty easily … it's stressful to think that the government will sell us out to the Americans," said Chris Ryan, who was protesting in Ottawa with his cow, Ninja.

"I'm usually a Conservative voter, but this year I don't think I'll be going for them," said Mr. Ryan, who comes from St. Isidore to the east of Ottawa. The area is currently represented by the Conservatives.

Mexico and Canada walked away from the TPP negotiating table in Maui this July after learning of a deal struck by Japan and the United States that could sideswipe Canada's auto-parts manufacturing jobs. It would allow cars, and auto parts, to be sold in North America with significantly less domestic-content requirements than exist under NAFTA.

For the past two months, Canada's Auto Parts Manufacturers' Association (APMA) and its Mexican counterparts have been warning that unduly low domestic-content rules would lead to an influx of foreign car parts, produced by cheaper labour, that would displace auto-parts jobs in both countries.

The TPP would create a free-trade zone stretching from Chile to Japan and comprise 40 per cent of the world's global annual economic output.

A deal would increase protection for patents and copyrighted goods and place new constraints on the conduct of state-owned enterprises.

The big prize, however, for many at the table is access to Japanese consumers. It would also open up the once-protectionist Japanese market to more foreign imports of items such as Canadian beef and pork.

The United States-led TPP talks are trying to establish a North American-style trading and investment regime for commerce in Asia that becomes the dominant standard and acts as a counterweight to Chinese influence in the region.

With a report from Reuters