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Canada's Trade Minister Ed Fast looks on during a news conference during the Trans Pacific Partnership meeting of trade representatives in Sydney October 27, 2014. (JASON REED/Reuters)
Canada's Trade Minister Ed Fast looks on during a news conference during the Trans Pacific Partnership meeting of trade representatives in Sydney October 27, 2014. (JASON REED/Reuters)

Tension builds between Canada, U.S. over TPP deal Add to ...

The U.S. government is frustrated with Canada over Pacific Rim trade talks because it believes Ottawa promised greater foreign access to its dairy and poultry markets as a condition of joining – and yet has offered nothing as discussions enter the final stretch, sources say.

This friction between Canada and the U.S. is exposing a fundamental disagreement over precisely what the Canadian government signed up for when it joined Trans-Pacific Partnership (TPP) talks in the fall of 2012.

American officials including chief U.S. negotiator Michael Froman have repeatedly publicly prodded Canada to produce a “meaningful offer” and disclose to the U.S. what kind of agriculture concessions it will make. Trade ministers from 12 countries are preparing to gather in Hawaii shortly for what some describe as a final push for a TPP deal.

Canada’s Trade Minister Ed Fast dismisses these challenges from Washington, telling The Globe and Mail last week that “the Americans prefer to negotiate this agreement through the media” and he won’t.

Sources say as far as the U.S. is concerned, Canada promised that “things that weren’t addressed in the North American free-trade agreement – poultry and dairy – were going to be addressed” in the Pacific Rim talks.

“That was very clear; that was agreed upon,” a source familiar with the trade talks said.

A condition of joining the TPP talks for Canada and all countries was that they would be “comprehensive” – that is, member countries could not protect sacred trade cows and must put everything on the table for possible negotiation.

The Canadian government is adamant, however, that it made no particular trade-concession promises in order to gain a seat at the TPP negotiations.

“Canada did not agree to any specific measures in terms of an eventual Trans-Pacific Partnership agreement prior to joining talks,” Rick Roth, spokesman for Mr. Fast, said Wednesday.

The Canadian Trade Minister and counterparts from countries including the United States, Japan, Malaysia and Chile are heading to Maui near the end of July, with U.S. President Barack Obama seeking a speedy conclusion after obtaining “fast-track” negotiating authority from Congress in June.

Tariffs of as much as 300 per cent shield Canadian dairy and poultry farmers from foreign competitors. A rise in imports could mean cheaper chicken, milk and cheese for consumers but could also destabilize Canada’s carefully calibrated supply management system, which tightly regulates the price and production of milk, chicken and eggs.

Countries normally hold back on concessions for their most sensitive economic sectors until the last minute.

Washington is frustrated, however, that Canada has not even put forward its first offer on agriculture as the U.S. is trying to wind up talks. U.S. farmers stand to be a big beneficiary of any new inroads into Canadian dairy and poultry markets.

Using the analogy of the bell that marks the final lap in a track race, “the bell has rung” and the U.S. is still waiting on its first offer from Canada, a source familiar with talks said.

Japan’s minister of state for economic and fiscal policy, Akira Amari, this week publicly raised the possibility of a deal concluding without one or two of the negotiating countries. He would not name the countries but Japanese-based news services including Kyodo News cited sources identifying Canada as a laggard.

“If there are countries that are … not willing to reach an agreement at the Hawaii meeting, we can’t afford to let the TPP go adrift for their sake,” Mr. Amari told a news conference Tuesday, according to Kyodo News.

The Conservative government, which is seeking re-election this fall amid a weakening economy, risks a political backlash if it opens the door significantly wider for foreign dairy and poultry imports. Mr. Fast told The Globe and Mail last week he’s in no hurry to clinch the Pacific Rim trade deal.

“Our focus is not so much the timelines as it is the quality of the outcome for Canadians.”

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