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International Trade Minister Chrystia Freeland holds a media availability in Ottawa on Monday, Oct. 31, 2016. THE CANADIAN PRESS/Sean Kilpatrick (Sean Kilpatrick/THE CANADIAN PRESS)
International Trade Minister Chrystia Freeland holds a media availability in Ottawa on Monday, Oct. 31, 2016. THE CANADIAN PRESS/Sean Kilpatrick (Sean Kilpatrick/THE CANADIAN PRESS)

Globe editorial

In the Trump era, free trade is in trouble. What should Canada do? Add to ...

The Trans-Pacific Partnership is not officially dead, but in the wake of an American election season in which free trade served as a punching bag for both parties, the trade deal that was supposed to bring together 12 Pacific Rim countries is showing zero signs of life. That comatose state won’t be lifted any time soon.

And TPP’s troubles are hardly unique. Across the world, the idea of free trade has lost political currency. New, global deals lowering borders to trade and investment may be negotiated against some day, but that day is a long, long way away.

Which leaves Canada, the G8’s most trade-dependent country, in a quandary.

The Harper government backed the TPP, and more free trade in general. Justin Trudeau’s Liberals are just as enthusiastic about trade liberalization. But the United States, our biggest trading partner and the original driver behind the TPP, is now dancing to a very different tune.

That means Canada now has to figure out how to construct an international trade strategy for itself.

It is tempting to blame all of this on president-elect Donald Trump and his often incoherent protectionist proclivities. But he may be more symptom than cause. Even before Mr. Trump showed up, most Democrats in Congress were opposed to the TPP, and President Barack Obama was relying on Republicans to get the deal passed. During the primary season, Democrat Bernie Sanders got a lot of mileage out of attacking the TPP and free trade; by the time the election rolled around, Ms. Clinton had also distanced herself.

A few years ago, when the TPP looked likely to come to fruition, former prime minister Stephen Harper’s government was still pursuing bilateral trade agreements with several countries. At the time, those looked unnecessary. They now look indispensable.

In the post-TPP world, big, globe-spanning trade deals are off the table. But one-on-one negotiations between Canada and other countries should still be on. Exhibit A: Japan.

Japan is the world’s third-largest economy, and Ottawa and Tokyo have been talking about free trade for years. But in part because the TPP was moving forward, Canada-Japan negotiations were shunted onto a rail siding, and little progress was made.

Now that TPP is virtually dead, it’s time for Canada to re-energize free-trade talks with Japan.

As far back as 2005, when Paul Martin was prime minister, Canada and Japan signed a document called the Canada-Japan Economic Framework. In 2012, under the Harper government, there was a joint study between Canada and Japan on the “benefits and costs of further promotion of bilateral trade and investment.” Mutual interest continued to be expressed, and documents proliferated, but no deal has ever been reached.

Along with Japan, India and Singapore are probably the most important bilateral trade negotiations that Canada now has under way. These talks should be pursued, and other countries should be added to the list.

The Conservative government undertook several other bilateral trade negotiations, and succeeded in reaching deals on a respectable number. The Canada-Korea Free Trade Agreement, which came into force two years ago, is the biggest of these.

So far, the Liberal government has completed a bilateral treaty with Ukraine. At this point, that’s more a political than economic accomplishment. Still, if Ukraine can overcome corruption and get some relief from pro-Russian subversion in its eastern region, the country of 45 million with deep personal connections to Canada, holds real promise.

And most important of all, there’s the trade deal with the European Union. The provisional conclusion of CETA, the Comprehensive Economic and Trade Agreement, is a coup for Canada. The Harper government brought it to the finish line; the Trudeau government pushed it across. The EU originally viewed CETA as a dry run for reaching an equivalent free trade deal with the U.S. But given the new political realities on both sides of the Atlantic, a U.S.-EU trade pact isn’t going to happen any time soon.

Which leaves Canada in an enviable position: We have a trade and investment agreement with each of the world’s two largest economies – but neither has a free trade deal with the other. For companies looking to locate in one market but export to many, Canada offers a unique proposition.

Finally, there’s China. The TPP wasn’t just a trade deal: It was about cementing an American-led Pacific Rim, under trade rules set by America and its allies. That’s a neighbourhood that suits Canada much more than one led by China.

Beijing wants a trade and investment deal with Canada; the question is whether a deal would be good for Canadians. Negotiating one-on-one with China will not be easy; that goes doubly for enforcing any agreement. Ottawa should tread very carefully.

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