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Politics TPP deal puts Trudeau in tight spot as Liberals seek votes from auto workers

The dairy farmers have been bought off to accept what they don't like about the Trans-Pacific Partnership, but it's not so easy to use money to cover the political repercussions in the auto sector. And that's more of a conundrum for Justin Trudeau than anyone else.

Stephen Harper, the Conservative Leader, has promised billions to mitigate the impact of the TPP on two politically important groups: He pledged a massive $4.3-billion over 15 years for dairy farmers, and $1-billion over 10 years for incentives to the auto sector to open or keep plants in Canada.

But they're not the same. It's easy enough to put money in farmers' pockets so they'll accept losing revenue as their protected market is opened – a little – to competition. It's harder to tell auto workers that money for their industry will save their jobs. That makes it a conundrum for Mr. Trudeau.

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Mr. Trudeau will probably have to eventually support the 12-country trade deal. It's a take-it-or-leave-it choice – and Canadian industry can't afford to leave it – now that negotiations are over and no country will be able to reopen them unless the U.S. Congress rejects the pact.

Mr. Trudeau wants to signal his party is pro-trade. But the TPP is making auto workers nervous, and many live in Southern Ontario, including ridings in the 905 area code outside Toronto, that the Liberals must win to take power. That's why he's skating on the TPP.

NDP Leader Thomas Mulcair has taken another tack. He's sliding in polls, and playing to the concerns of key groups affected by the TPP, dairy farmers and auto workers. He's come out against joining.

But it's a limited strategy. For one thing, dairy farmers, promised billions, don't seem very upset. And keeping Canada out of the TPP won't help this country's auto-industry workers – their jobs are being threatened by the opening of the U.S. market under the TPP and that can go ahead even if Canada doesn't sign.

Still, Mr. Mulcair's vocal stirring of resentment against the TPP can still hurt Mr. Trudeau where the Liberal Leader needs to win a swath of tight races, in the southern ridings where many auto workers live.

Mr. Harper, of course, has made his bed: he is campaigning on the TPP. He'll hope some auto-sector workers will be placated by the subsidy package, and will gamble that those that aren't were not going to vote for him anyway. He's managed to mollify the dairy farmers, who have a vocal presence in rural communities, especially in Ontario and Quebec.

Dairy and poultry farmers fought to avoid a weakening of the supply-management system that protects them from competition and keeps the prices that Canadian consumers pay artificially high. But they knew the TPP was going to mean some opening of their industry – it was always a key demand of other countries in the talks. In the end, Canada gave up a relatively small concession. And Mr. Harper promises a gold-plated compensation package. Dairy industry associations have given it a quiet okay.

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But the auto sector is a different story. Canadian auto plants produce mainly for U.S. exports, and had preferential, tariff-free treatment under the North American free-trade agreement. Now, TPP countries will be able to do the same. And under TPP, a bigger share of the parts in the car can come from other countries such as China and India.

That means tougher competition for the Canadian auto sector. And even if Canada pulls out of TPP, countries such as Japan would still get tariff-free access to the United States. And they'd be able to use more cheap Indian or Chinese parts than Canadian plants, so they'd have an advantage.

Many of the Canadian companies will be fine – they have plants in Asia. But jobs will be lost. Mr. Harper can offer subsidies to attract plants, but that hasn't really been successful in recent years, as more new investments have gone to Mexico, where labour is cheaper, and the southern United States, where states offer subsidies, too. Mr. Harper's package doesn't guarantee jobs will stay.

That leaves Mr. Trudeau stuck with a political dilemma. He'd be better off if Mr. Harper's auto-sector package reassured auto workers, so he could support the TPP without controversy. Politically, he has to find a way to accept the deal without the crucial Southern Ontario votes of those who resent it.

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