Skip to main content

Canada offered other countries small amounts of duty-free access to its protected dairy and poultry markets.CHRISTINNE MUSCHI/Reuters

Canada stands to make "relatively modest" economic gains by joining the Trans-Pacific Partnership, while the bulk of the spoils from the 12-country trade deal go to the United States, Japan and Vietnam.

That's the conclusion of a C.D. Howe Institute study being released on Thursday.

"There is some money in the TPP for Canada, but the trade gains are relatively modest," say the authors, C.D. Howe fellow and economist Dan Ciuriak and colleagues Ali Dadkhah and Jingliang Xiao. "Even ambitious, so-called deep and comprehensive agreements like the TPP have limited traction in what is an already highly open global economy."

The TPP deal was reached last year, but has yet to be ratified by Canada and other member countries. A House of Commons committee is now studying the deal, and federal Trade Minister Chrystia Freeland has said the government will consult Canadians before putting the deal to a vote in Parliament.

The gains from the deal are relatively limited because tariffs are already generally low in the region, countries kept their most protected sectors off the table and some companies will not bother going through the red tape to get the preferential access the deal offers, the study says.

"The bottom line is that the TPP was a difficult negotiation that ended in a small and unbalanced outcome," the authors conclude. "In the end, the parties were not prepared to put that much money on the table in terms of liberalizing areas or in terms of opening up services markets."

For example, Canada offered other countries small amounts of duty-free access to its protected dairy and poultry markets. But it will maintain the steep tariffs that protect these sectors from full import competition.

The report estimates the potential trade gains for Canada and other countries by applying a special trade analysis economic model. By 2035, Canada's two-way trade would increase by about $4.3-billion, gross domestic product would increase by 0.08 per cent and household incomes would rise by $3-billion.

The study says roughly 90 per cent of the trade gains from the deal will go to the United States, Japan and Vietnam. Canada, New Zealand and Malaysia get modest benefits, and for the other six member countries, the deal is "essentially a wash."

The authors say their projections should be treated as the "upper bound of likely impacts." But they cautioned that the TPP is a complex agreement with many possible effects that could take years to sort out.

In Canada, the sectors that stand to benefit most include the agriculture and food industries – most notably beef and pork producers – forest products, fisheries, transportation equipment and financial services.

The losers include the dairy, auto, chemicals, plastics and metal-products industries.

The authors also tested what would happen if the TPP goes ahead without Canada. They estimate that the welfare loss to the country would reach $1.7-billion by 2035, reflecting a 0.026-percentage-point hit to GDP. Auto makers, for example, would still lose some of their existing preferential access to the U.S. market, even if Canada stays out of the TPP, they point out.