This fall Canada was formally accepted into the Trans-Pacific Partnership (TPP) agreement, a deal that promises to open up trade between a range of countries doing business in the dynamic Asia Pacific region. For Canada’s agri-food industry, the TPP offers access to a potential market of 658 million people and $20.5 trillion in combined GDP.
A new deal
The TPP began in 2005 as the Trans-Pacific Strategic Economic Partnership Agreement, a trade pact designed to break down barriers to business between founding countries New Zealand, Brunei, Chile and Singapore. Also on the agenda was the development of production and supply chains, job creation, raising living standards, ensuring greater regulatory coherence, and promoting sustainable growth across the region.
After the U.S., Australia, Peru, Malaysia and Vietnam joined in 2008, and once it became apparent that the World Trade Organization’s momentum on free-trade talks had stalled following the Doha Round, the ambitious arrangement gained added prominence. For Canada, it became an attractive and dynamic trade opportunity, especially with the possibility of additional trade partners, such as Japan, Korea and China, joining in the future. It would also offer an advantage over competing non-TPP countries, and open another door to discussions on issues currently affecting trade, such as country of origin labelling.
The region is already becoming an increasingly lucrative destination for Canadian products. By 2011, agri-food exports to countries in the TPP topped $20 billion, according to Statistics Canada, comprising 51 per cent of total agri-food exports. Just some of the products doing significant trade here include wheat, canola oil, soybeans, pork, beef, pulses and other grains. It follows then that with further liberalization of tariff and non-tariff barriers, and the establishment of agreements with new trading partners, the deal will offer unique opportunities for Canada’s food industry.
A 21st-century agreement
Canada and Mexico officially joined the TPP in October. At the time, International Trade Minister Ed Fast said the TPP would create jobs, growth and long-term prosperity, referring to the deal as a “21st-century agreement that advances Canadian interests.” But there is still much uncertainty surrounding the pact, especially as there are many details of the agreement yet to be disclosed.
As a latecomer to the partnership, Canada was required to sign off on all previous provisions of the agreement, a fact that has drawn some criticism about the lack of transparency with which the negotiations are being handled. It’s also drawn the ire of advocacy groups such as OpenMedia and the Council of Canadians, which say the deal raises concerns about the protection of Internet freedoms, privacy, security and digital rights. Questions over potential challenges to Canadian domestic policy, such as environmental regulations and healthcare, have also been raised.
But of most concern for the Canadian agriculture and agri-food industry has been the matter of producer subsidies to sectors such as pork production, as well as our often-maligned supply management systems for poultry, dairy and eggs. Although initial concerns that these programs would bar Canada’s entry into the TPP this proved not to be the case, showing there’s still much room for negotiation between the countries.
Potential for growth
With a commitment from the Harper government to protect consumers and producers, major industry players are optimistic about Canada’s role in the deal. This summer Chicken Farmers of Canada chairman Dave Janzen confirmed the group’s support, noting that supply management has not been a barrier to negotiations in past trade pacts. A similar message came this fall from Dairy Farmers of Canada president Wally Smith, who noted that Canada has and is conducting bilateral trade deals with Jordan, Columbia, Peru, Costa Rica, Chile, Israel, and European Union countries, without compromising Canadian interests such as supply management.
Other agri-food groups showing support for the TPP include the Canadian Pork Council, the Canadian Agri-Food Trade Alliance, and the Canadian Federation of Agriculture (CFA). On its website, the CFA quotes president Ron Bonnett describing the TPP as representing “significant market opportunities for Canadian farmers and a strong boost to the Canadian economy,” and calling it an “important strategic decision for our country’s long-term economic growth and prosperity.”
While it’s undoubtedly important for Canada to have a seat at the bargaining table, there is some uncertainty around what that growth will really mean. Bob Seguin, executive director of economic research institute the George Morris Centre, says it’s still too early to determine whether trade growth will be moderate or significant, although he says some food sectors and commodity groups will benefit more than others. The real gains may also only happen in the long term, once other large population partners have joined.
Seguin believes grains, oilseeds and processed foods may be key winners under the deal, especially if our processing capacity is able to increase. He notes too that there are still concerns being raised by the U.S. in protection of its own domestic agri-food sectors — particularly its dairy market — meaning that discussions still have some ways to go before being finalized. “There is a lot of play here, but not much clarity yet as to how it will play out,” he says.
The 15th round of TPP negotiations will take place in Auckland, New Zealand in early December, with completion optimistically projected for late 2013. If that happens, and there’s as yet no guarantee, Seguin expects to see trade benefits beginning sometime in 2015.