ATLANTA — Twelve nations, including Canada, have reached a tentative deal on a massive Pacific Rim trading bloc billed as the largest-ever deal of its kind, with implications for a staggering scope of industries, workers, and for long-term international relations between countries on four continents.
After five days of marathon, around-the-clock negotiations, a deal was announced Monday to create the Trans-Pacific Partnership — which would cover 40 per cent of the world's economy, for starters, and participants predicted it would become the building block for future trade deals.
"Today is a historic day; it is a great day for Canada, it is a great day for Canadians," Prime Minister Stephen Harper beamed during a news conference Monday in Ottawa.
"With this agreement, the largest economic partnership in the history of the world, Canadian exporters will gain nearly tariff-free access to almost 800 million customers in the Asia-Pacific region.
"The 11 countries with which we will partner have a combined GDP of nearly $30 trillion, including — crucially for us — Japan, the world's third-largest economy and a vast new market for Canadian enterprise and Canadian goods."
First, however, the deal requires political approval.
To take effect, the deal must be ratified by the parliaments and lawmaking authorities of all 12 member countries. Canada will be the first political testing-ground — the agreement lands smack in the midst of a federal election campaign that will decide who will control the Parliament that determines whether it lives or dies.
The drama reached a high point overnight Monday, as a series of delays culminated in an agreement around 5 a.m. on a persistent irritant involving dairy and the future of Canada's tightly controlled sector.
The Canadian government appears to have guaranteed the long-term entrenchment of the supply-managed sector, which is detested by free-market economists but backed by every major political party, provincial governments, and the domestic dairy lobby.
Canada agreed to 3.25 per cent more foreign imports, a minuscule change compared to what some countries asked for. That means a bit more international products like butter on grocery shelves now 90-per-cent dominated by domestic content. For their loss, the government would compensate Canadian farmers billions of dollars under a series of programs over at least 10 years.
"We will keep our supply-managed farmers whole from any loss of income or quota value stemming from this agreement," Harper said.
"Cabinet has approved a $4.3-billion fund to be paid to farmers and processors over the first 15 years of this agreement."
It's a little less clear what impact the deal could have on the auto sector. The agreement would allow a 17.5 per cent greater tariff-free share of cheaper intercontinental parts compared to the standard set out in NAFTA, although the formula is apparently complex and includes a series of exemptions.
"I want to reassure the Canadians who depend on it for their livelihood that we have reached an agreement that will clearly benefit our auto industry here at home," Harper said.
"This agreement will mean the well-paying jobs in the auto sector that they continue to support thousands of Canadian families for years to come."
New measures to attract auto investment and protect auto-assembly operations in Canada will be forthcoming shortly, he added.
While he didn't make any promises specific to workers in any individual sector, the Canadian envoy to the talks appeared to insist there would be no net negative impact on Canadian employment as a whole.
"We certainly don't anticipate that there will be job losses," said International Trade Minister Ed Fast, who suspended his re-election campaign in B.C. for nearly a week to attend the Atlanta talks.
''Obviously there will be some industries that will adapt.''
His eminently quotable New Zealand counterpart elaborated on the big picture. Tim Groser, earlier this week, apparently referring to the smaller-than-hoped-for concessions in dairy, said that to complete a deal would require every country to take a deep gulp and swallow a few ''dead rats.''
But he painted the agreement as a historic geopolitical event. He predicted others would join, without naming specific countries. Hallway chatter at the five-day talks focused on whether this might become the blueprint for a trade deal with China, or maybe even a partnership with other regional blocs like the European Union.
''Long after the details of this negotiation on things like tonnes of butter have been regarded as a footnote in history, the bigger picture of what we've achieved here remains,'' Groser said.
''It is inconceivable that the TPP bus will stop in Atlanta. The TPP bus will move on.''
Several countries including Thailand and Colombia have already mused about joining TPP, which involves North America, Chile, Peru, Japan, Brunei, Singapore, Vietnam, Malaysia, New Zealand and Australia.
The proposed agreement reduces or eliminates barriers in a wide range of sectors and could lead to more Canadian exports of pork, beef, canola, high-tech machinery and a variety of other products.
As one example among hundreds, the beef industry predicts exports to Japan will triple. The 39 per cent current tariff in Japan will become nine per cent over the next few years, and barriers will completely disappear in other areas.
But voters can't yet see the fine print.
The actual text of the deal is undergoing a legal review, and it's not clear when it will be available. The government offered no guarantees at a news conference. It simply expressed hope the 12 countries might manage to make it available in the next few days — before voters pick a government Oct. 19.
Until that text is out, every detail the public sees from the TPP will have been pre-selected and released by their national governments.
SOME HIGHLIGHTS OF THE NEW 12-COUNTRY TRANS-PACIFIC PARTNERSHIP TRADE DEAL
Here are some highlights of the 12-country Trans-Pacific Partnership agreement as described by the Canadian government Monday as it shared details of a deal to create the largest-ever regional trading bloc.
The full text is not yet released, and the agreement would need to be ratified by the parliaments and governments of all 12 countries to come into effect.
If implemented, the agreement could mean:
— Elimination or reduction of tariffs on a broad series of products including pork, fruits, wines and spirits, canola, barley, machinery, minerals and forestry products. As one example, the beef industry expects to see exports triple to Japan, with a multi-year phase-out in tariffs there from 39 per cent to nine per cent.
— More foreign car parts likely entering Canada, likely benefiting producers and consumers but hurting some auto workers. Cars will be allowed without tariffs as long as they have 45-per-cent content from the TPP region. That's significantly down from the 62.5 per cent regional-content provision under NAFTA, which mostly kept out pieces from places like China and Thailand. But the formula is more complex than that: the government says it will "encourage" producers to use Canadian ingredients, parts and materials when making goods exported to other TPP countries.
— Canada's protected dairy sector remains mostly intact. Currently, 10 per cent is set aside for foreign products. Now another 3.25 per cent share of imports would be allowed. An even smaller rate of imports will be allowed for supply-managed sectors including eggs, chicken and turkey.
— Farmers will be compensated for losses under the TPP and the recent Canada-EU deal, through a multibillion-dollar series of programs. The most important will see farmers paid up-front annually over 10 years to maintain 100 per cent income protection, and the program would taper off the five following years. The program is worth $2.4 billion. Smaller programs apply to quota-protection, modernizing equipment, and marketing assistance.
— Buy American provisions won't disappear. The deal does not eliminate buy-local provisions for state- and municipal-level infrastructure projects. But it does simplify bidding for contracts with six regional U.S. power authorities, and also addresses sub-national procurement with some smaller countries.
— Better labour mobility for some high-skilled and business workers.
— Next-generation pharmaceuticals, including cell-based biologics, will have patent-style protections for eight years. That's in line with Canadian policy, but will disappoint some countries who declared anything beyond five years would be unacceptably expensive for patients and taxpayers.
— Rules protecting the digital economy, and practices likes cloud computing. It would prevent national governments from cutting off data flows, by limiting laws that require local storage of data.
— State-owned enterprises will face more regulation. Companies backed by governments will have new transparency requirements and rules when competing with private companies. The government says cultural exemptions would protect the CBC and Telefilm Canada.
— New workers' rights, including rules on child labour, forced labour and discrimination.
10 QUESTIONS ON THE NEW TRANS-PACIFIC PARTNERSHIP DEAL: WHAT IT DOES, DOESN'T DO
ATLANTA — A historic new trade agreement was announced Monday, which is certain to prompt a spirited political debate in a number of countries — starting with Canada's election.
Here are 10 questions about the Trans-Pacific Partnership, answered:
Who's in it? Brunei, Chile, New Zealand and Singapore started the project years ago. The United States, Canada, Mexico, Japan, Vietnam, Australia, Peru and Malaysia are now joining, bringing the membership to 12 countries. More have expressed interest in entering later, including Colombia, Thailand and South Korea.
How big is it? It's the biggest trade zone in the world, spanning four continents and representing 40 per cent of the world's economy — a far higher share than the European Union.
Is it more important than the EU? Not even close. Europe has truly open borders, allowing a free flow of people and products from one country to another. This simply changes regulations, and reduces trade barriers across a larger area.
What does it do, then? It reduces or eliminates barriers on a staggering array of Canadian exports to several countries, most notably Japan. This applies to everything from machines to canola, beef and pork, minerals, forestry products and seafood. It allows up to 3.25 per cent more foreign dairy into Canada. It allows more foreign car parts into North America without tariffs. It also creates new rules for the digital economy, such as restricting governments' right to shut off data flows.
Why does it matter? This brings the economies of a fast-developing region into the American sphere of influence. It sets new trade standards in China's backyard. It sets precedents for future agreements, including any involving China and its state-owned-enterprises. It increases trade and establishes unique rules for the 21st-century, cloud-computing digital economy.
So what's the problem? It also exposes middle-class workers to additional low-cost competition from foreign labour, notably in the auto sector. It would also cut into the profits on dairy farms, although the government promises a multibillion-dollar 10-year program to protect current farm revenues. Government decisions could be overturned in special tribunals, as they are in NAFTA and at the WTO, when companies sue over democratically adopted laws.
Is it a done deal? No. It still needs to be ratified in national parliaments, including Canada's, once the federal election is over. A vote is expected early next year in the U.S. Congress, and it could prove difficult.
So can we see the full text? No, not yet. It's undergoing a legal review. The details that have been released are coming from the various governments. One Canadian official expressed hope the parties would manage to release the agreement within a few days. But it's unclear whether Canadians will get to see it before they vote on Oct. 19.
Does this end NAFTA? No. The North American Free Trade Agreement still exists, but in areas where the two agreements conflict the newer one will usually prevail. In a way, this is what Barack Obama promised when he first ran for president and said he'd revisit NAFTA — which prompted a controversy back in 2008. He promised new labour and environmental provisions, and this agreement has chapters on both those things.
Does this end Canada Post and the CBC? No. There's a popular online theory to that effect, based on the provisions limiting the rights of state-owned-enterprises. But insiders insist those provisions were written with China in mind.
VANCOUVER BOARD OF TRADE EAGERLY SUPPORTS TRANS-PACIFIC PARTNERSHIP
VANCOUVER — A business advocacy group in British Columbia is applauding a tentative agreement on the Trans-Pacific Partnership between Canada and 11 other nations.
The Vancouver Board of Trade says the pact will provide increased and privileged market access for Canadian exports, services and investments.
Board of Trade CEO Iain Black says the ambitious deal will further deepen B.C.'s trade ties with the Asia-Pacific region.
He says the T-P-P will cut regulatory barriers on B.C. exports from fruit and seafood to wood, forestry products, metals and minerals.
The board of trade also believes the agreement will mean improved B.C. access to a broad range of services ranging from financial to architectural, engineering, environmental and transportation.
The Trans-Pacific Partnership creates a massive Pacific Rim trading bloc, covering 40 per cent of the world's economy, 800-million consumers and countries including the United States, Australia, New Zealand, Japan, Peru, Singapore and Brunei.
CANADIAN AUTO UNION SLAMS TPP TRADE DEAL; CALLS NEW CONTENT RULES 'OUTRAGEOUS'
TORONTO — Canadian auto workers' union Unifor predicts that 20,000 auto industry jobs could be lost as a result of the Trans-Pacific Partnership trade deal announced today.
Under the deal, Canada's 6.1 per cent tariff on imported vehicles will be phased out over a five-year period.
And domestic content requirements — rules that dictate what percentage of a vehicle or auto part must be made within the TPP in order to be sold within the region tariff-free — will be slashed.
Under the North American Free Trade Agreement, or NAFTA, an auto part needed to contain 60 per cent North American content in order to remain duty free.
For a fully assembled vehicle, the minimum content requirement was 62.5 per cent.
The new trade deal will allow for the tariff-free movement of vehicles that have as little as 45 per cent domestic content.
"It is outrageous that the Harper Conservatives have signed a deal that would allow the majority of a car to be made in China, yet still come into Canada tariff-free," Unifor's national president Jerry Dias said in a statement.
TPP DEAL COULD REDUCE DAIRY PRICES OUTSIDE QUEBEC, SAYS PROFESSOR
MONTREAL — Canadian consumers outside Quebec could see lower dairy prices from a new massive trade deal signed Monday, says an industry observer.
Retail prices could fall if dairy processors like Saputo (TSX:SAP) pass along savings from lower imported milk costs to consumers, says Sylvain Charlebois, professor of distribution and food policy at the University of Guelph's Food Institute.
"When you look at prices dropping at farm gate, usually consumers do win over the long-term; that's what we've seen over the last five to 10 years," he said in an interview. "There are no guarantees but you actually do increase that possibility."
Canada's protected dairy sector remains mostly intact under the Trans-Pacific Partnership. However, another 3.25 per cent share of imports would be allowed over five years, adding to the pressure from 17,700 tonnes of cheese permitted under a separate trade deal with Europe. The increase in exports from 11 other TPP countries will displace about 250 million litres of Canadian milk.
Still, 86.75 per cent of dairy products sold in Canada will remain domestically sourced and protected by production, price and import controls, said Saputo analyst Irene Nattel.
In exchange for lost income, Ottawa would compensate Canadian farmers and processors $4.3 billion over 15 years.
In Quebec, dairy is regulated with minimum retail prices are higher than elsewhere in Canada and the United States. However, retailers outside Quebec could take advantage of lower prices to use dairy even more as a way to attract consumers to their stores, he said.
Charlebois, who sits on the national board of the Canadian Food Inspection Agency, said one concern that needs to be addressed is the lack of harmonization over the use of hormones. They are permitted in the U.S. but banned in Canada.
Groups representing dairy farmers in Quebec and Ontario said they're disappointed by the deal which they argued will result in lost revenues for farmers and the Canadian economy.
While they would have preferred no additional market access, the Dairy Farmers of Canada said the federal government fought hard against demands of other countries and lessened the burden with a "fair compensation package."
"We have come a long way from the threat of eliminating supply management. The government has clearly understood the importance of supply management dairy farms in rural Canada and the economic activities they generate," said president Wally Smith.
HARPER HAILS TRANS-PACIFIC PARTNERSHIP, PROMISES $4.3B TO PROTECT DAIRY FARMERS
OTTAWA — Prime Minister Stephen Harper says the federal cabinet has already approved a plan to spend $4.3 billion over the next 15 years to protect Canadian farmers from the impact of the Trans-Pacific Partnership.
Twelve nations, including Canada, have reached a tentative agreement on the massive Pacific Rim trading bloc, which Harper bills as the largest-ever deal of its kind.
Harper says the historic pact would set a new gold standard for future global trade deals, protecting Canadian jobs today and create more for generations to come as it secures access to crucial markets overseas.
"This deal is, without any doubt whatsoever, in the best interests of the Canadian economy," Harper told a news conference Monday.
"Ten years from now, I predict with 100 per cent certainty people are looking back, they will say if we've got in it, they'll say that was a great thing. And if we haven't, they'll say that was a terrible error."
Harper said the concessions Canada has made in the dairy sector are modest — an additional 3.25 per cent of foreign imports would be allowed — and cites the compensation fund as more than enough to protect dairy producers.
The announcement marks a watershed in the Conservative leader's election campaign, if not his time in power, and could alter the landscape of the Oct. 19 election.
But it still needs to be ratified in national parliaments and the NDP has already said it does not feel bound by any agreement reached by the Conservative government.
The Liberals have said they would need to see the details of the agreement before throwing their support behind it, but have stressed they're a pro-trade party.
According to the federal government, Canada's dairy industry remains mostly intact, with a modest increase in permitted imports for supply-managed sectors and farmers would be compensated for losses through a multibillion-dollar series of programs.
Foreign-made cars would be allowed into Canada without tariffs, as long as they have 45-per-cent content from the TPP region — lower than the 62.5 per cent regional-content provision under NAFTA.
Canada's auto industry has been alarmed about the prospect of loosening domestic requirements for car components.
"I know there is also concern in some parts of our auto industry about the implications of this agreement for that vital sector," Harper said, promising to soon announce measures to attract new auto investment and ensure the stability of car assembly operations in Canada.
"I want to reassure the Canadians who depend on it for their livelihood that we have reached an agreement that will clearly benefit our auto industry here at home. This agreement will mean the well-paying jobs in the auto sector that they continue to support thousands of Canadian families for years to come."
