Morning News Wrap: "Cyber-NORAD," CAN-U.S. Border and Generic Drugs, Toronto’s Mayor Wins Stay, U.S. Loses Out at WTO, Canada’s Provinces Steal the Show, and More

By Keith Edmund White, Editor-in-Chief

Woodrow Wilson Center’s Canada Institute Talks NORAD and Cyber-Security @ 1 PM.  Cyber-security and protecting critical infrastructure are big (and irksome) issues facing both Canada and the United States.  You can watch the event here.

From WWC: 

Experts expect that cyber attacks from hostile nations and rogue actors will represent one of the most dangerous threats to Canada and the United States in the coming decades. The perils are numerous and the consequences are severe for such an attack. However, there are many measures that both nations can take, individually and collectively, to ensure peace and prosperity, free from the threat of a "cyber Pearl Harbor" disaster. The Canada Institute is pleased to host a distinguished panel to discuss these threats as well as the most effective measures and best practices that the private and public sector actors can use to make both countries more secure. The panel will discuss many issues including: the vulnerability of our linked supply chain system, the role of the private sector in enhancing the national security of the United States and Canada, policy options for creating a better information sharing process while respecting privacy rights, threats to energy production in Canada, and the possibility of creating a “cyber-NORAD” to help deal with our shared threats in the most efficient way possible.

Provincial Politics Take Center Stage.  The Globe and Mail offers an excellent province-by-province political round-up piece.  (Note to self:  copy G&M.).  In short:  Alberta—character politics are beating out attempts for Alberta’s Conservatives to push a national energy policy; British Columbia—the NDP seems on course to capture to provincial parliament; Quebec—between the Charbonneau corruption commission and the PQ’s PR blunders (they tired to remove the Maple Leaf from Quebec’s parliamentary building!), the great fear a of a resurgent PQ and separation anxiety has been allayed.    

Generic Drugs Crashes Canada-U.S. Border Policy Competing Economic, Security, and Public Health Demands.   Prescription Drugs + Border Security + Generics + Health Advocates = Border Policy Nightmare.  From WSJ: 

The White House has alerted police and border agents to prepare for a possible influx of addictive pain drugs from Canada, where cheaper, generic versions of OxyContin will soon become available. U.S. drug czar Gil Kerlikowske also called Canada's health minister last week to discuss the issue and offer assistance to address the wave of prescription-drug abuse sweeping both countries, Mr. Kerlikowske's office said. In an alert to law-enforcement agencies sent Tuesday, the White House Office of National Drug Control Policy warned law enforcement to be on the lookout for cheap copies of OxyContin, which it said could hit the market as soon as next month.

Will Toronto’s Mayor Be Out Next Week, Or Live to Appeal in Office?  Globe and Mail offers real-time court updates.  Update:  Rob Ford won a temporary stay, and will stay in office while his conflict-of-interest case is appealed.

America Given Deadline to Comply With WTO Country-of-Origin Meat-Labeling Rules.  The ever-fast wheels of international trade justice!  Having lost on an meat-labeling case to Canada and Mexico in June, the United States has been given a May 2013 compliance deadline.  The Kansas City Star reports on progressive unease with the WTO tinkering with U.S. labeling requirements: 

“Consumers in the U.S. have been clear: They want dolphin-safe tuna, and if we’re not able to label tuna in the way we want to label it, I think U.S. consumers are going to be pretty angry,” said Democratic Rep. Rick Larsen of Washington state, who likened the situation to having replacement referees decide the outcome of games in the National Football League.In the most recent development, Larsen and 21 other members of Congress sent a letter last month to U.S. Trade Representative Ron Kirk, complaining that the WTO is threatening to turn back the clock to the days when tens of thousands of dolphins were killed each year "in a tuna fishing free-for-all." Critics say the WTO is running roughshod over U.S. laws that govern everything from the environment to food safety and public health.

Joan Crockatt Gets the Hill Times Treatment.  And in a nice ‘slice of life’ piece at The Hill Times, Bea Vongdouangchanh writes on one of Parliament's newest members:  Joan Crockatt.

From The Hill Times: 

Prior to getting elected, Ms. Crockatt was an outspoken pundit who appeared on several political TV panels. Mr. Martin said he hopes the PMO, known for its tight message control, will allow her to continue to be a spokesperson on several issue.  “She’ll be as scripted as any of them [Conservative MPs], I’m sure, but Joan sometimes does freelance a little bit in her commentaries and that’s always a good thing. I hope they make her into a bit of a media presence because she does do good television. But if she takes one misstep, they’ll take her off the tube and never put her back on,” he said, adding that Ms. Crockatt does give a good first impression as an MP. “She’s always walked to her own beat type of thing and suddenly becoming shoe-horned into a borg-like group think is something that’s going to be a new experience for her.” Meanwhile, both the Liberal and Green parties increased their vote share in the byelection in Calgary Centre. The Liberals increased by 15.4 percentage points and Green candidate, Chris Turner, by 14.7 percentage points from 2011 election results. That increase came at the NDP’s expense, with Dan Meades losing 11 percentages points from 2011.

The Toronto Star tells Canada to look to the United States on climate policy.  From the op-ed: 

In other words, nearly three-quarters of U.S. gains will come from tougher regulation to curb emissions, “green” government procurement, grants and loans to promote renewable electricity, and fuel conservation in vehicles and buildings. Pollution taxes, higher oil pricing and emission trading systems will also have an impact. The implications for Canada, and Ontario, are obvious. The Canadian Council of Chief Executives has called for a coherent federal climate policy, including “a clear, nationally consistent carbon price” across the economy. And the National Round Table on the Environment and the Economy has urged more investment in low-carbon innovation, a major growth sector.
Until now the Harper government has adopted a wait-and-see-what-the-U.S.-does attitude, repudiated the Kyoto Protocol as too costly, and failed to come up with a credible plan to make the painful adjustments that will be necessary to develop the oil and gas sector in a more balanced and sustainable fashion, mitigating emissions. As things stand there’s no federal constraint on oilsands pollution, Pembina argues. Now Ontario, too, is falling short. The Americans don’t have all the answers. They remain huge polluters. But they are bending the curve in a better direction. We should aim to do no less.

Will the Trans-Pacific Partnership Jump-Start a Stalled WTO? Richard Cunningham's CUSLI Distinguished Lecture

By Keith Edmund White

Editor-in-Chief, CUSLI-Nexus

Not heard much about the Trans-Pacific Partnership (TPP)?  The TPP is a U.S.-led push to liberalize trade among 11 countries that is entering its 15th round of deliberations next month.   It's also, according to Salon, "the biggest trade deal you've never heard of," like a hush-hush, super-sized NAFTA in the Pacific region.

Richard O. Cunningham

But, according to Richard O. Cunningham, the TPP is much more than a long-running series of trade talks.  The TPP may not only determine the WTO's future, but set the trend lines of the Sino-American relationship in the 21st century.  And Canada may play a critical role in whether the TPP revitalizes or cripples multilateral trade liberalization efforts.

Richard Cunningham, Senior Partner at Steptoe & Johnson LLP in Washington D.C., spoke on the Doha tragedy and sized-up America’s TPP gambit at the Sixth Annual Canada-United States Law Institute Distinguished Lecture.  Cunningham delivered his speech, Trade After Doha:  The Growing Divide Between the Emerging Nations and the Developing World, last week at the University of Western Ontario Faculty of Law in London, Ontario.

Watch Cunningham's speech at Western Law's Vimeo page, or at the bottom of this post.  Below is a summary of the Cunningham's speech, accompanied with some key quotes. 

• International Trade Talks Stalled From 3-Pronged WTO Dilemma:  (1) the ‘old guard’ of the WTO (i.e. developed nations like America and leading EU member-states) need export-led growth, but are finding further multilateral trade concessions tough to swallow; (2) emerging developed nations, like India and China, have little interest in forging a new trade consensus; and (3) developing countries—whose economies are heavily hampered by remaining textile and agricultural trade barriers—believe all trade negotiations should be viewed in the greater, and far more murky, context of development.

Key Quotes: 

“[M]any people regard [the GATT and WTO] as probably, until this juncture, as the most successful of mankind’s efforts at a truly international organization on a truly international issue—that is trade.”

“Fundamental misconception of how a trade negotiation is conducted.  Trade negotiations are about doing a deal.  Yes, there can be an emphasis on greater benefits to the developing world, but to have a deal it has to go both ways.  Otherwise, look at your Parliament in Canada, look at the Congress of the United States, can you imagine the ratification of an international deal that further lowered tariff barriers and made other concessions by the United States and Canada that gets nothing in return?  Can you imagine that being ratified?” 

• America’s Trade Gambit: The TPP Plan Could Resuscitate or Cripple Multilateral Trade Liberalization Efforts.  The Trans-Pacific Partnership (TPP) is a U.S.-led effort to conclude a 11-nation trade liberalization pact.  Why does the TPP merit our attention, even though it includes a nation most readers probably have never heard of (Brunei Darussalam) and does not include Japan, India, or China?  Because America is hoping that the diverse TPP group can reach a model trade agreement that will break the Doha logjam.  But real pitfalls exist:  (1) Pressure to include more nations in the TPP—especially Japan—risks turning the TPP into a Doha Disaster 2.0;  and (2) the desire of some U.S. officials to use the TPP as a diplomatic tool to ‘box in’ China:  a strategy that risks creating two competing trade blocs, not to mention increased tensions between the world’s two top economies.

Key Quotes:

“To the curious case of the Trans-Pacific Partnership.  It is the Obama administration trade policy.  There is no Obama administration trade policy other than the trans-pacific partnership…but it’s not clear…what [the United States] is doing with it.”

“But trade gets involved with politics and geo-politics.  And if you ask…a government official who is not a trade official…they’ll say TPP sounds great for an entirely different reason.  A geo-political reason.  They will say the big issue today is China…China [has] embarked upon bringing Asian under its wing, [and] we need to setup a counter-balance to China, and therefore we’re going to use TPP to do that."

• Canada’s Key TPP Role.  So what's Canada's TPP role?  Well, Canada—along with Mexico—recently joined the TPP talks, with Canada firmly supporting America’s TPP push.  And, according to Cunningham, “Canada is viewed as a voice of moderation, a voice to be listened to” even if not always followed by the United States.  Thus, it may be Canadian nudging that ensures the TPP remains a tool to jump-start multilateral trade talks, and not let the TPP morph into a anti-China trading bloc, or--worst yet--repeat Doha's failure.

Key Quotes:

Is it in Canada’s interest to pick up the TPP banner?  “Canada, I submit, has an even greater interest than the United States to [gain] access to the emerging markets, particularly in minerals, energy, and in agricultural.  Secondly, Canada has more flexibility than the U.S. politically to seek trade accommodations with China, India, countries like that.”

“So I will leave it to you, I leave the fate of the world’s trading system where it deserves to be, namely in the hands of Canada.  And I will leave it to you to pressure your government to pressure the U.S. and our trading partners to do the right thing and get things back moving.  Otherwise, the report I gave you today has grim implications that couldn't come at a worse time for the world economy…You don’t want Balkanization of trade in a time like this.  Maybe we can do something constructive instead.” 

Will Trans-Pacific Partnership Talks Update or Downgrade NAFTA?

By Keith Edmund White, Editor-in-Chief

New Zealand's trade minister thinks Trans-Pacific Partnership (TPP) trade talks could be a springboard for opening up NAFTA.  Is he right?  CUSLI-Nexus looks at how TPP talks could update NAFTA, but then asks the tough trade question:  do bilateral and regional free trade agreements help international trade, or do they just kick the can on the big divides within the international trading system?  Thanks to iPolitics, Rabble.ca, Skynews.com.au, and Tax-News.com from their excellent reporting that stretches from Toronto to Singapore.

On Monday, New Zealand’s trade minister—at a convention hosted by the Canadian Council of Chief Executives—“said the TPP [Trans-Pacific Partnership] talks could allow negotiators for Canada, the United States and Mexico to update the 18-year old NAFTA deal.”

How would TPP update NAFTA?  From an excellent iPolitics report by Elizabeth Thompson:

In an interview with iPolitics following his speech, [NZ trade minister Tim] Groser said changes to NAFTA wouldn’t be part of the formal TPP agenda but the TPP agreement could trump NAFTA provisions the same way NAFTA superceded the original Canada-U.S. free trade deal.

So what is there to update in NAFTA? U.S. chicken and dairy sectors want more access to the Canadian market, with other U.S. industries wanting to keep pushing Canada on strengthening their intellectual property regime. From a Rabble.ca Wednesday article reviewing the lingering Canada-U.S. trade barriers in the NAFTA-era:

U.S. industry groups, including the main poultry and dairy associations, complained about Canada's supply management policies and intellectual property regime during a Monday hearing at the United States Trade Representative on Canada's entry to the ongoing Trans-Pacific Partnership trade negotiations. Meanwhile, in its presentation to the USTR, the AFL-CIO urged the U.S. government to incorporate "a new approach to trade policy, one that prioritizes benefits for working families, not simply benefits for multi-national or global enterprises (MNEs)."

Reuters reported Monday that the U.S. dairy and chicken sectors are sore they never received access to Canada's market as promised in NAFTA. High tariff walls and low quotas prevent exports of these goods from any country from flooding the Canadian market, which is supplied mainly by Canadian farmers and farm production.

Now getting a TPP agreement is by no means a sure thing.  From an excellent article in today’s SkyNews.com.au emphasizing that 2013 will be the make-or-break year for TPP:

While it's believed around half of the TPP's 29 chapters are finished, Australian Trade Minister Craig Emerson concedes most of the low-hanging fruit has been picked.

'It'll be 2013 when the big negotiations on the hard issues are conducted,' Emerson told AAP on the sidelines of the APEC Summit in Russia this month.

Emerson points to market access as the toughest nut to crack.

And, of course, what about the macro-question:  Do ‘small’ regional trade pacts or possibly ‘big’ regional trade pacts like TPP good or bad for encouraging a free-flow of trade world-wide?  From this there’s perhaps no better—if perhaps biased—source than Pascal Lamy, the Director General of the World Trade Organization (from today’s Tax-News.com):

While noting that the increased negotiation of regional trade agreements has contributed to freer trade, he drew attention to the fact that regional trade agreements have sprung up due to an impasse in global free trade talks under the auspices of the Doha Development Agenda.

He reiterated that on average, each member of the WTO belongs to no fewer than 13 separate preferential trade agreements. "This means that in addition to their multilateral commitments, WTO members on average have to manage an additional 13 separate trade regimes. I do not think you will disagree with me that this cannot be the most efficient way to trade and to do business across national frontiers."

In addition, Lamy—talking at a Singapore event hosted by the European Chamber of Commerce—lists five drawbacks of pursuing free trade agreements (FTAs) on a bilateral and regional level, skipping over WTO talks:

• FTAs create trade costs:  multiple, overlapping trade pacts create their own trade costs.

• New FTAs undermine old FTAs.  Newer FTAs-instead of building on past ones--lower of the value of existing trade pacts.

• The FTA box-out factor:  If you’re not in the FTA club, the FTA is—in effect—now a trade barrier to non-members.

• FTAs reward procrastination:  Countries are selectively picking how to pursue free trade, skipping over tougher issues, which mainly impact smaller, weaker members of the world trading system.

• FTAs Undermine WTO consensus:  the more bilateral and regional FTAs you make, the harder it can be to get countries to agree to world-wide agreements on trade.

Naturally, there's an easy rejoinder these concerns:  let's have freer trade where we can have it. 

In any case, international trade may be the big, under-reported story of 2013.  And it will be interesting to see if TPP can be finalized, and what impact a finalized TPP agreement--a trans-Pacific trade pact that would exclude China--might have on trade disputes between China and the United States, and--from that--on divisions at the WTO.