Japan’s imminent entry into the Trans-Pacific Partnership talks is a vivid reminder that the dream of global free trade is all but dead as countries turn to regional and bilateral quick fixes.
The TPP would span the Pacific Ocean, linking Canada and as many as a dozen other countries comprising 40 per cent of the world economy. But, like Canada’s still-elusive agreement with the 27-member European Union, these regional deals fall short of the stalled efforts to get a deal at the World Trade Organization, experts say.
For one, China and other new trade superpowers aren’t at the table, leaving vast areas of trade untouched.
And the proliferation of sometimes overlapping agreements raises the prospect of conflicting trade regimes from region to region and country to country.
“In the world of global supply chains, bilateral agreements are a second-best option,” explained John Weekes, a former top Canadian trade negotiator and now a consultant with law firm Bennett Jones in Ottawa. The best option remains the WTO, he said.
Canada is wasting its limited trade negotiating energies on deals that don’t address key challenges, including insidious protectionism in countries such as China, argued Michael Hart, another former Canadian trade official and now the Simon Reisman chair in trade policy at Carleton University.
“As it is, this isn’t real,” Mr. Hart said of the TPP and other proposed regional agreements. “These are elaborate dances on peripheral issues.”
And yet the list of proposed free-trade agreements keeps getting longer. On Friday, Japan and the United States struck a deal that paves the way for Japan to become the 12th TPP negotiating partner.
Meanwhile, Canada is in talks with the EU, the TPP, Japan, South Korea and India. The U.S., already Canada’s partner in the North American free-trade agreement, recently announced it would start free-trade negotiations with the EU in June. And next week, Europe will open a first round of talks with Japan.
Others worry that this patchwork of regional deals, all with different time lines, will leave some players out in the cold.
“The question becomes one of timing, and how these things become implemented,” said David Worts, executive director of the Japan Automobile Manufacturers Association. “You need to have a balance in the marketplace so no one is disadvantaged.”
The Japanese auto makers, for example, have warned that their Canadian operations could be harmed if Ottawa eliminates the 6.1-per-cent tariff on European and Korean goods without offering the same to Japan.
WTO member countries launched the Doha round of global free trade talks in 2001. But they stalled four years later amid a growing rift between developed and developing countries. Now, the WTO risks being left behind as countries and businesses look elsewhere for more “modern rules and faster rules,” warned Erminio Blanco, a former Mexican trade minister and one of nine candidates vying to become the next head of the WTO.
“The WTO, if it wants to remain relevant, has to compete with those agreements, and complement those agreements,” Mr. Blanco said in a recent interview.
Speaking in Geneva last week, deputy U.S. trade representative Michael Punke said the WTO is already hurtling “towards irrelevance” because member countries can’t agree on a modest deal to cut red tape, while others slide back into protectionism.
“The Doha round has been dead for years, but governments refuse to bury it,” Carleton University’s Mr. Hart said. “It’s all been Kabuki theatre since then.”