John Weekes, a senior business advisor at Bennett Jones LLP, was Canada's ambassador to the WTO and chief negotiator for the North American free-trade agreement (NAFTA)
This week's visit to Canada by Indian Prime Minister Narendra Modi is a good moment to take stock of how well the federal government's trade agenda is serving the interests of Canadians.
In March, Trade Minister Ed Fast marked the conclusion of the ninth round of negotiations toward a Canada-India Comprehensive Economic Partnership Agreement (CEPA), reaffirming that "Canada remains committed to concluding an ambitious agreement with India". Curiously, Prime Minister Stephen Harper's March 25 press release announcing Mr. Modi's visit makes no mention of the fact the two countries are negotiating a trade agreement. Earlier this week, The Globe's Barrie McKenna described the talks as a "mostly aspirational goal."
Canada, like many countries, is pushing ambitiously for new trade agreements with key foreign markets. In 2014, Canada concluded an agreement with the EU and implemented its FTA with South Korea, Canada's first agreement with an Asian country, as well as putting into effect an investment protection agreement with China. But, despite these positive efforts, there is enough evidence to suggest that Canada is falling behind some of our major competitors in the rough and tumble world of competitive trade liberalization.
When Mr. Modi visited his Australian counterpart Tony Abbott last November, a joint communiqué "directed that an equitable, balanced, mutually beneficial and high quality Comprehensive Economic Cooperation Agreement be brought to an early conclusion". Following on the heels of concluding free-trade deals with China, South Korea and Japan in 2014, Mr. Abbott publicly set his sights on concluding a pact with India by the end of 2015.
The most significant negotiation now going on involving Canada is the Trans-Pacific Partnership (TPP) negotiation among 12 Asia-Pacific nations, including the U.S., Mexico, Australia, New Zealand and Japan.
The biggest immediate TPP prize for Canada would come from opening the Japanese market for Canadian agri-food and industrial products. Canada has been pressing for major outcomes but has been hamstrung at the negotiating table by the Harper government's refusal to put an offer in play for opening the Canadian market for dairy and poultry products. A byproduct of this defensive stance has been the virtual exclusion of Canada from the negotiations setting the terms of how Japan will open its agricultural markets. This negotiation has been driven by the U.S., and we can be certain that it has negotiated a deal which will serve its interests very well.
Worse, there are serious voices in the United States arguing that Canada should be excluded from the final TPP deal unless it steps up to the plate on dairy and poultry. Mr. Harper was right when he said last month in Saskatoon that "we have difficult choices in this one (the TPP negotiations), we have some areas where obviously we see great advantages for Canada, but others where there will be challenges."
Canada is in the process of negotiating a separate bilateral free-trade agreement with Japan. The government should continue to give this top priority. Unfortunately, Japanese negotiators see this as a distraction as they focus on the deal with the United States, which they consider much more important. However, Australia last year concluded a bilateral FTA with Japan which came into force on Jan. 15. It gives Australian exporters a leg up on their competitors in other countries, including in both the US and Canada.
China is now at the top of the heap with the U.S. and the EU in terms of the export and import of goods and services. Canada has decided not to embark on free-trade negotiations with China at this time. However, New Zealand is already benefiting from an FTA with China, and Australia has just concluded a high-quality agreement.
Furthermore, outside the TPP context, Australia and New Zealand are both well ahead of Canada in negotiating free-trade access to various Southeast Asian nations.
This is an uncomfortable picture. Trade agreements don't guarantee Canadian firms sales in foreign markets, but they are an essential prerequisite to allowing them to compete for sales.
If the Harper government doesn't pursue these negotiating opportunities as ambitiously as other nations are doing, Canadian exporters will be virtually excluded from these markets. We saw this happen in South Korea when the U.S. had an agreement and Canada didn't. Despite this lesson we see our competitors pulling ahead of us in other markets. It is time for the government to move to offense and secure the best deals possible for hard pressed Canadian exporters.