Canada has begun discussions with the United States on allowing more foreign dairy products into the Canadian market – among the thorniest issues for Ottawa at the Pacific Rim trade talks, which have entered their final stretch this week in Hawaii.
Sources familiar with the Trans-Pacific Partnership talks say Canada has yet to specify exactly what volume of dairy shipments it would allow into its heavily protected market, but the talks are ongoing.
The Japanese government, one of the key players in the negotiations, was the only TPP member to publicly remark on the apparent change in Canada's conduct at the table.
"They are putting their cards on the table," said Akira Amari, Japan's Minister for Economic and Fiscal Policy, according to a translation provided by the Nippon Television Network.
Trade ministers from 12 countries, including the United States, Canada, Chile and Malaysia, have gathered on the island of Maui to try to conclude an ambitious accord that would set a new standard for commercial dealings in the Asia-Pacific region and eclipse the North American Free Trade Agreement in importance.
Canadian International Trade Minister Ed Fast refused to comment on the substance of the negotiations but said he has brought several dozen negotiators to cut a deal – if one exists that satisfies Canada's national interest.
"We're going to have four days of tough negotiations where difficult issues have to be resolved," Mr. Fast said in an interview. "Progress is being made, and Canada is a constructive partner at the negotiating table."
Mr. Fast is scheduled to hold a one-on-one meeting with his U.S. counterpart, United States Trade Representative Michael Froman, on Wednesday.
Although the TPP talks take place between a dozen countries, it is the one-on-one, or bilateral, discussions between the United States and other countries that have played a key role in advancing overall negotiations.
The scope of the talks is broad. It includes expanded protection for intellectual property such as copyright and drug patents as well as rules to constrain the conduct of state-owned enterprises.
Mr. Fast said Canada wants to see constraints on government-owned companies and sovereign wealth funds so they can't use their power to tread on private firms or pursue other ends. "We want to make sure that state-owned companies that could act in a manner that is contrary to free-market principles are subject to disciplines that ensure they don't compete unfairly with companies that are operating within a free market."
The Canadian government has come under repeated fire from Washington in recent weeks for neglecting to spell out how Canada would open up its sheltered dairy and poultry sectors to foreign competition. U.S. and New Zealand farmers are eager to find a way around the massive tariff walls that shield Canadian milk and chicken farmers.
Other sectors of Canada's farm industry are growing impatient with the focus on milk and chicken producers, saying there's far more at stake and that the cost to Canada if it is shut out of a deal would be great.
"Much of the public and political dialogue on the Trans-Pacific Partnership has been focused inward. This is a mistake," said Brian Innes, president of the free-trade-oriented Canadian Agri-Food Trade Alliance.
"We're ignoring how improved access to international markets will grow our economy, create jobs and support communities," said Mr. Innes, whose coalition includes beef producers as well as wheat and barley growers.
"Over the last 10 years in Canada, agriculture and agri-food exports have grown by 77 per cent, from $31-billion to over $56-billion. … An ambitious Trans-Pacific Partnership deal could enable even more growth, along with the jobs that come with it," Mr. Innes said.
Japan, the third-largest economy in the world, is the big prize in the TPP talks because it has signed relatively few trade agreements and the market is still relatively untapped by foreign firms.
The Obama administration is trying to wrap up a deal this week, but the timing is poor for the Conservative government in Canada, which faces an election in October and will have to weather a backlash if it grants significant access to foreign imports.
Asked whether he's prepared to close a deal this week, Mr. Fast said: "If there's an agreement on the table that represents a strong outcome for Canadian interests, that is very clearly in Canada's national interests, we are prepared to complete a deal."
John Manley, president of the Canadian Council of Chief Executives, said Ottawa's need to defend supply-managed goods such as dairy and poultry hinders its ability to be a leader in international trade talks. He calls these sectors, where prices and production are regulated, "the last vestige of Soviet-style central planning on the planet" and says a TPP deal is crucial to help boost weak Canadian economic growth.