Thanks to Wednesday’s cabinet shuffle, Canada now has a Minister for International Trade Diversification, and he is Jim Carr. Mr. Carr should get right to work on what could be Canada’s single most important contribution to global peace and prosperity: forging a new Atlantic-Pacific trade agreement.
The United States under Donald Trump has − we pray temporarily − partly withdrawn from the global trading order that it created in the wake of the Second World War. This rogue President has imposed heavy tariffs, pulled the United States out of the Trans Pacific Partnership, threatens to pull out of the North American free-trade agreement, calls the European Union “a foe” and undermines the World Trade Organization.
Mr. Carr’s portfolio is supposed to respond to this disruption by seeking to expand Canadian trade beyond the American market. A major opportunity to do so presents itself right here, right now.
Earlier this week, the leaders of Japan and the European Union signed the EU-Japan Economic Partnership Agreement (EPA), eliminating tariffs and other barriers on goods and services. The deal also has, among other things, provisions on intellectual property and data exchange, making it a very 21st-century trade agreement.
Canada has already ratified its own free-trade agreement with the European Union, known as CETA. And Japan and Canada are part of the 11-nation Trans Pacific Partnership (TPP), whose members decided to carry on without the United States.
The major elements of the Canadian and Japanese trade agreements with the European Union are similar. And those agreements also bear strong similarities with the TPP. The next step is clear.
To preserve momentum for global free trade, which, in the long run, increases prosperity for all, the European Union and the Trans Pacific Partnership should conclude an Atlantic-Pacific Partnership, a free-trade zone that would stretch from Estonia to Australia, encompassing 39 countries representing about 40 per cent of global GDP.
"With America no longer willing to lead and with China inherently protectionist, these countries would be saying 'We agree to have free trade among ourselves, even if the first and second largest economies in the world are not a part of it,’ " says Eric Miller, an international trade consultant and fellow at the Canadian Global Affairs Institute.
As a country situated both physically and culturally between Europe and the Pacific, Canada is ideally suited to lead such talks.
“This is something Canada should be leading with,” Mr. Miller says. “'How do we weave together CETA rules with Japan-EU rules with TPP rules?”
The fact that other countries are willing to carry on expanding free trade without the leadership of United States would not go unnoticed south of the border, Laura Dawson says. She is director of the Canada Institute at the Wilson Center, a Washington think tank.
“If you opt out of the system, then you are watching from the sidelines while somebody else is making the rules," she says. “This is not lost on a lot of Americans.”
Forging an Atlantic-Pacific accord would be no easy task. For one thing, each country has its own special interests, such as Canada’s obsession with protecting dairy farmers. Getting 39 member states to agree on much of anything might be a challenge. The accord might not be particularly ambitious, at least at first.
But even a first step would be a very large step. And there would always be the hope that, somewhere along the line, the Americans would return to their senses and rejoin the global trading system. In that sense, the Atlantic-Pacific Partnership would serve, if nothing else, as a light in the window.
Canada must also improve its trading relationship with China, which exports goods while importing (some would say stealing) intellectual property. But even here a big Pacific-Western Hemisphere-Europe trade deal could be helpful. “Being able to create as much free-trade space as possible around those who are recalcitrant is essentially a good thing," says Barbara Martin, who teaches at Queen’s University after three decades in Canada’s foreign service.
Yes, negotiating an Atlantic-Pacific trade deal would be difficult. Yes, it might fail. But if it worked, just think.
John Ibbitson