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CPTPP ratification a win for West

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Finally, unequivocal good news for the West and for Canada: what is arguably the most important trade agreement for future growth — the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) — has been ratified by Parliament.

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Opinion

Hey there, time traveller!
This article was published 05/11/2018 (1493 days ago), so information in it may no longer be current.

Finally, unequivocal good news for the West and for Canada: what is arguably the most important trade agreement for future growth — the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) — has been ratified by Parliament.

While the U.S-Mexico-Canada Agreement (USMCA) is of clear importance, its greatest advance turned out to be making concessions to simply hold onto what we already had. The CPTPP, on the other hand, is about opening new and growing markets, and better ways to increase and diversify trade.

For Asia-facing Canada (that is, the West), where trade with Asia is important, the CPTPP gives exporters preferential access in 10 markets that rim the Pacific Ocean, six of them in Asia, including Japan, Vietnam and Malaysia. Given that Canada has only one trade agreement in Asia, gaining the equivalent of six new agreements at once is in itself a huge win.

Esteban Felix / The Associated Press Files Then-trade minister François-Philippe Champagne (from left), Chilean Foreign Minister Heraldo Muñoz and New Zealand Trade Minister David Parker met in Chile in March.

For Canadian businesses, this represents hundreds of millions in potential tariff savings alone. It also puts exporters on the same playing field as competitors in Australia — and ahead of the Americans, who are not part of the pact.

This agreement is about much more than cattle and canola; it is also an agreement with huge benefits for smaller businesses. With one set of rules for 10 markets, it allows companies to accumulate inputs from any member of the agreement to make products alone or with companies in other member countries to sell anywhere inside the agreement.

This one set of rules is what made the original NAFTA so special. But with more members, the CPTPP improves on what Canadian firms have had in North America by offering more sources of inputs and more markets into which to sell. And, unlike the USMCA, the CPTPP will grow even larger as new countries join, as early as next year.

China is reportedly suddenly showing interest in joining the CPTPP. If true, this would give Canada a much-needed, and much better, alternative than negotiating one-on-one with China, or worse, negotiating alongside the Trump administration. Instead, we could negotiate as part of a team — with Australia, Japan, Chile, New Zealand and Singapore — that actually wants more in trade and better agreements.

Speaking of the Americans, one benefit of the CPTPP is the lack of American competition. When U.S. President Donald Trump withdrew the U.S. from the original Trans Pacific Partnership (TPP), he essentially put U.S. market share in these countries on the table for Canadian firms. And thanks to the Americans having been part of the original negotiations, there was more market share on the table as countries made concessions with the Americans at the table that Canada would never have achieved negotiating on its own.

All of this seems like a no-brainer for Canada to join, but it has been anything but. When the Americans pulled out, business, governments and especially unions in Ontario and Quebec said the agreement was dead, no benefit remained for Canada and participating in the trade deal would harm negotiations for a new North American trade pact. None of this was true.

The Canada West Foundation modelled the economic impact of the agreement without the U.S., and to no one’s surprise, found that Canada did better with the Americans out of the agreement. But the government and, reportedly, the prime minister, with an eye to the 2019 election, appeared focused on a different set of calculations. It looked as if Canada would join the U.S., and leave.

It took years and a long, persistent and uphill fight by producer associations, agricultural export groups and organizations, including the Canada West Foundation, to make the case. In the end, the Trudeau government, to its credit, went from almost pulling out and causing the agreement to collapse, to reversing course and shepherding the agreement through Parliament in record time.

Dealing with the Trump administration may have facilitated the government’s change of heart. But it was also hard behind-the-scenes work by groups working to defend western and Canadian interests.

Either way, ratification is a rare and much-needed win for the West. As we prepare for the hard work of gearing up to take advantage of the agreement, the Canada West Foundation has prepared an upcoming guide for western business on how to do this. We also need to remember the effort it took to get this good news; hopefully, we can also gain confidence that there is still room in Canada for the West to win on things that are important to our nation.

Carlo Dade is director of the Trade & Investment Centre at the Canada West Foundation.

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