Canada’s Asian Trade Strategy & the Trans-Pacific Partnership

By Thomas H. Au, Staff Writer

Critics concerned that key Canadian interests in intellectual property, pharmaceuticals and agriculture were impaired by ‘sitting out’ of Round 14 of the Trans-Pacific Partnership (TPP) are focused on a relatively insignificant scene within a much larger mural. Rather, the issue is whether the TPP compliments other Canada trade agreements, or if it conflicts with the function and purpose of other bilateral agreements. Only then can we determine whether the TPP is part of a cohesive, beneficial trade strategy in Asia, or a fractured approach that will create confusion for Canadian businesses operating overseas.

First, this piece outlines the calls for a more aggressive Canadian trade strategy in Asia. Second, it discusses the implications of Canada’s lacking a true seat at the TPP negotiating table in Round 14. Third, it addresses other potential bilateral trade agreements with China and Japan. It concludes that the TPP functions as a baseline to expand trade, upon which other more specific trade agreements can be built, such as those with Japan or China.

Calling for a More Aggressive Asian Trade Strategy

In the last six months, there have been increasing calls for Prime Minister Harper to adopt a more aggressive Canadian trade strategy in Asia.[i] The underlying impetus appears to be a perception that “Canada must negotiate solid, ambitious trade agreements...to help replace declining trade with the USA.”[ii] However, individual initiatives, including the TPP and bilateral trade agreements with China and Japan have received harsh criticism from political opponents[iii] and interest groups.[iv] These mixed messages create a challenging political environment where leaders can be faced with what appears to a “no-win” situation in domestic Canadian politics.

Looking Back at TPP Round 14 and Forward to TPP Round 15

Initially, Canada’s so-called “absence” raised the important question of whether it will “lose” by sitting out Round.[v] At the heart of this issue is Canada’s agreement to abide by the texts that have already been negotiated and agreed upon by the nine current TPP members.[vi] However, this absence has not harmed Canadian interests on key issues including intellectual property, pharmaceuticals, and agriculture.

Canada’s “absence” is simply explained by the fact that each negotiating country must first ratify Canada’s participation through their own internal, domestic processes. This process was only completed on October 9, 2012.[vii] Now that Canada has formally joined negotiations, the key is to look forward towards Canadian goals and aspirations for what the TPP should look like in the end.

TPP: A “High Standard” Trade Agreement In Canada’s Interests? 

Some Canadians have raised concerns that not only is the TPP mostly beneficial to the U.S., but that the TPP is redundant in light of other Canadian trade agreements.

First, many consider the U.S. to be the driving force behind the TPP’s most restrictive obligations.[viii] Of the nine countries currently negotiating the TPP, the United States has some of the ‘highest’ levels of regulation across a number of economic sectors. Likewise, the United States is well known for viewing the TPP as a vehicle for a “state-of-the-art” or “high standard” trade agreement.[ix] While not confirmable, the inference that could be drawn is that the United States may attempt to use the TPP either to develop unique “high standards” (think not of NAFTA-2, but more likely something akin to a next generation Paris[x] or Berne Convention[xi] or to conform the rights and obligations available in other nations with those available under existing U.S. law. This has created political friction in Canada. Critics are concerned that participating in a “high standard” agreement means radical changes in Canadian policies, ranging from “drugs [pharmaceuticals], copyright, [to] environmental and public health rules.”[xii]

Second, some dispute that the TPP actually adds any benefit that Canada does not already receive through NAFTA or other bilateral trade agreements (consider Chile and Peru).[xiii] Simply, NAFTA already includes the United States and Mexico, which “make up the lion’s share of the TPP” in terms of market size and trading power.[xiv] This leads to a legitimate question: “How much more free access can yet another [multilateral] free trade agreement provide?[xv]

While the draft texts of the TPP are not public, official statements from the United States do not suggest that any extensive agreements were reached on the issues most pressing for Canadians. For instance, the United States Trade Representative’s press release on the Leesburg Round noted “progress” on issues including market access, customs, rules of origin, technical barriers to trade, sanitary and phytosanitary standards, cross border services, telecommunications and government procurement.[xvi] However, the release only reported a “continued focus” on intellectual property issues.[xvii]

If more extensive agreements had been reached on intellectual property rights, it is likely that these issues would have been listed in the first “progress” or “mov[ing] forward” statements. This suggests that no major agreements were reached regarding intellectual property rights. On the other hand, it is not clear from this statement what types of agreements where reached regarding key Canadian agricultural products, such as dairy, grain, and (loosely defined) lumber. Again, while pharmaceuticals were not directly mentioned, it is unlikely that any significant progress was made on these issues. However, pharmaceutical issues are frequently addressed as a component of intellectual property rights, or even investment or manufacturing (depending on how one wishes to address these issues). This should relieve Canadian concerns, indicating that Canada still has time to make its positions clear and exert significant influence over the outcome of the TPP.

TPP Negotiations: Multilateral, Bilateral, or Other? 

On September 24, 2012, the Office of the USTR held a hearing regarding Canada’s entry into TPP negotiations.[xviii] While seen as a forum for discussing specific interests and objectives,[xix] what is peculiar about the hearing is the official silence from the Canadian government. In fact--during, immediately prior to, and immediately after the 14th Round (as well as the USTR’s public hearing on Canada’s entry into the TPP), there were no official news releases on the subject from Prime Minister Stephen Harper, Foreign Affairs and International Trade Canada (Canadian Ministry), or the Embassy of Canada in Washington, D.C. One would think that participation or comment on these proceedings would give Canada the opportunity to publically advocate for its most important values (for both domestic and international audiences) as well as exert pressure just before Round 15.

In fact, on the eve of Canada’s official joining to the TPP, Ed Fast, the Canadian Minister of International Trade and Minister for the Asia-Pacific Gateway only released a short statement, remarking that “[o]pening new markets and increasing Canadian exports to fast-growing markets throughout the Asia-Pacific region is a key part of our government’s plan to create jobs, growth and long-term prosperity.”[xx]

Canadian Bilateral Trade Agreements with China and Japan 

In Canada’s view, Japan and China are two markets that have remained largely untapped. In 2011, the Canadian-Chinese trade relationship was valued at approximately $46.8 to $65.6 billion USD.[xxi] Similarly, a joint study concluded that a bilateral free trade agreement between Canada and Japan could add $4.4 to $4.9 billion to Japan’s GDP and $3.8 to $9.0 billion to Canada’s GDP.[xxii] While Canada has had a tepid response to Chinese calls to begin a bilateral trade negotiation,[xxiii] Canada and Japan have announced that their first round of negotiations in support of a bilateral trade agreement will commence on Nov. 26, 2012.[xxiv]

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[i]Don Campbell, Paul Evans & Pierre Lortie, A Coherent Strategy Towards Asia Needed (Sept. 12, 2012), http://www.asiapacific.ca/editorials/canada-asia-viewpoints/editorials/coherent-canadian-strategy-towards-asia-needed.

[ii] Peter Clark, TPP Negotiations Present Far More Questions Than Answer, iPolitics (Oct. 12, 2012) http://www.ipolitics.ca/2012/10/12/peter-clark-tpp-negotiations-present-far-more-questions-than-answers/.

[iii] CTVNews Video, Opposition Grills Harper Over China-Canada Trade Deal,

http://www.theglobeandmail.com/news/news-video/video-opposition-grills-harper-over-china-canada-trade-deal/article4796558/.

[iv] Heather Scoffield, Investment Deal with China Would Leave Canada a Resource Colony: Opponents, Canadian Business (Oct. 30, 2012), http://www.canadianbusiness.com/article/104651--investment-deal-with-china-would-leave-canada-a-resource-colony-opponents; Sheila Harrington, Trade Agreements Costly for Taxpayers, Canada.com (Nov. 2, 2012), http://www.canada.com/Trade+agreements+costly+taxpayers/7487585/story.html.

[v] See, e.g., Inside U.S. Trade, Canada, Mexico To Join TPP Talks In October After Leesburg Round, World Trade Online, August 31, 2012, available at http://insidetrade.com/Inside-Trade-General/Public-Content-World-Trade-Online/canada-mexico-to-join-tpp-talks-in-october-after-leesburg-round/menu-id-896.html.

[vi] CBC News, What Is the Trans-Pacific Partnership? CBC News World, June 20, 2012, available at http://www.cbc.ca/news/world/story/2012/06/20/f-trans-pacific-partnership-explained.html.

[vii] Press Release, Honourable Ed Fast & Foreign Affairs and International Trade Canada (Oct. 9, 2012) available at http://www.international.gc.ca/media_commerce/comm/newscommuniques/2012/10/
09a.aspx?view=d.

[viii] Peter Clark, TPP Negotiations Present Far More Questions Than Answer, iPolitics (Oct. 12, 2012) http://www.ipolitics.ca/2012/10/12/peter-clark-tpp-negotiations-present-far-more-questions-than-answers/ (“The TPP could result in extra-territorial application of U.S. laws, particularly in the Intellectual Property area including criminalization of non-commercial infringement.”).

[ix] See, e.g., USTR, FACT SHEET: The United States in the Trans-Pacific Partnership: Increasing American Exports, Supporting American Jobs, June 19, 2012, available at http://www.ustr.gov/about-us/press-office/fact-sheets/2012/june/us-tpp-increasing-american-exports-supporting-american-jobs; see generally, Banyan, Parners and Rivals, Another Ambitions Trade Agreement Gets Bogged Down, Sept. 22, 2012, http://www.economist.com/node/21563292.
[x] World Intellectual Property Organization, Summary of the Paris Convention for the Protection of Industrial Property (1883), WIPO.int, http://www.wipo.int/treaties/en/ip/paris/summary_paris.html (last visited Nov. 13, 2012). 

[xi] World Intellectual Property Organization, Summary of the Berne Convention for the Protection of Literary and Artistic Works (1886), WIPO.int http://www.wipo.int/treaties/en/ip/berne/summary_berne.html (last visited Nov. 13, 2012).

[xii] Brent Patterson, NEWS: Council Critiques Canada’s Entry into the Trans Pacific Partnership Talks, Council of Canadians, June 20, 2012, available at http://canadians.org/blog/?p=15828; but see UPS, Canada Using Global Trade to Grow Economy, Says UPS COO (June 19, 2012) available at http://pressroom.ups.com/Press+Releases/Archive/2012/Q2/ci.Canada+Using+Global+Trade+to+Grow+Economy,+Says+UPS+COO.print.

[xiii] John Hancock, The Wrong Trade Agreement, Canadian Int’l Council, June 21, 2012, available at http://www.opencanada.org/features/blogs/roundtable/the-wrong-trade-agreement/.

[xiv] Id.

[xv] Id.

[xvi] USTR, Progress Continues in Trans-Pacific Partnership Talks, USTR.gov, Sept. 15, 2012, available at http://www.ustr.gov/node/7751 (emphasis added).

[xvii] Id.

[xviii] USTR, USTR Holds Public Hearing on Canada and the Trans-Pacific Partnership, USTR.gov, Sept. 24, 2012, available at http://www.ustr.gov/about-us/press-office/press-releases/2012/september/USTR-hearing-Canada-TPP.

[xix] See, e.g., John Kelly, Clay Hough Testifies on Canada Joining TPP Talks, IDFA.org, Sept. 26, 2012, http://www.idfa.org/key-issues/category/global-markets/details/7689/.

[xx] Press Release, Canada Formally Joins Trans-Pacific Partnership, Foreign Affairs & International Trade Canada (Oct. 9, 2012), http://www.international.gc.ca/media_commerce/comm/news-communiques/2012/10/09a.aspx?view=d.

[xxi] Economic Partnership Working Group, Canada-Chinese Economic Complementaries Study. 3.4.1, Foreign Affairs & International Trade Canada (Oct. 29, 2012), http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/china-chine/study-comp-etude.aspx?view=d#cn-tphp.

[xxii] Randall Palmer, Canada, Japan to Start Trade Talks Next Month, Reuters (Oct. 29, 2012), http://ca.reuters.com/article/domesticNews/idCABRE89S19320121029.

[xxiii] Paul Vieira, Canada Trade Min: Committed to Deeping Trade/Investment Ties with Canada, WSJ (Oct. 1, 2012), http://online.wsj.com/article/BT-CO-20121001-708453.html.

[xxiv] Plamer, supra note 20.