Those who are old enough to remember the Canada-U.S. free-trade agreement negotiations in the 1980s may recall that the process was as angst-ridden as a high-school prom. Were we doing the right thing? Could we conclude an agreement with the Americans? Were free-trade agreements worth the effort?
A quarter century later, Canada is negotiating fearlessly and successfully with trading partners around the world. Unlike those tentative first forays intro bilateral and regional free-trade agreements, Canada has now become one of the cool kids.
We play the field, court many prospective suitors, invest the time in those that are worthwhile, and assiduously pursue our strategic interests.
We've got active negotiations with the Trans-Pacific Partnership (TPP), Japan, and India and we've recently concluded deals with South Korea and Honduras. We're chatting up Latin American countries in the Pacific Alliance and our most recent conquest is the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
This confidence couldn't come at a better time. As the 20th anniversary year of the North American free-trade agreement comes to a close, there have been a lot of discussions about whether the three NAFTA partners should be negotiating as a group with EU and transpacific trading partners. So far, there has not been any meaningful co-ordination among Canada, the United States and Mexico. The reason most frequently cited is lack of U.S. leadership or interest in working as a bloc.
However, another reason is because Canada and Mexico are experienced and autonomous negotiators, each pursues national advantages that they are unwilling to subsume to U.S. interests. The reality is that we could create a NAFTA bloc, but it would never be a democracy. The U.S. will always call the tune.
With the CETA, Canada was able to achieve gains in sectors of national importance such as Atlantic seafood and professional mobility. These issues are not on the top of the U.S. priority list. Granted, our smaller market power means a relatively smaller deal from the EU, but completing our negotiations first gives us at least a couple of years of market access advantage ahead of the United States.
A defensive reading of Canada's interests in the TPP would recommend a strategy of foot-dragging while we wait for the U.S. and Japan to produce an acceptable and inclusive market access deal. With the U.S. lacking Trade Promotion Authority from Congress to even negotiate the TPP, there is a case to be made that Canada doesn't need to get serious about concessions on sensitive subjects until the U.S. legislature proves its commitment to an end game.
However, playing hard to get goes against Canada's interests as a relatively small global trader seeking new markets and diversification. Canada must vigorously pursue all available opportunities. While the TPP talks continue, Canada also should engage with the Asia-Pacific partners who have signalled their intent to join future TPP talks. Taiwan, for example, is one of the largest investors in Mainland China and can provide important lessons for Canada on how to do business with the global giant while retaining quality control and proprietary business information.
Closer engagement with Mainland China and Taiwan should be on the agenda horizon for Canada if we are serious about expanding our footprint in Asia. New Zealand already has an agreement with both. Australia's recent deal with China shows it is possible for a medium-sized economy to complete a rules-based agreement with this Asian giant.
The Canada of the 1980s lacked the confidence and experience to effectively pursue a globally diversified trade strategy. Now that we seem to be getting it right, the key is to maintain focus and momentum.
Laura Dawson, PhD, is president of Dawson Strategic and an expert in international trade and cross-border issues.