The federal government has signed on to the ambitious Trans-Pacific Partnership deal, but Canada’s participation in the world’s largest trading bloc may very well depend on whom Canadians elect Oct. 19.
With just two weeks left in the federal campaign, the political and economic stakes couldn’t be much higher, and the three major parties swiftly explained where they stand Monday.
Calling it a “historic day for Canada,” Prime Minister Stephen Harper announced that Canada had signed on to the trade partnership (known as TPP) after several years of negotiations. The sweeping deal will open new markets even as the government spends billions to protect Canadian farmers.
Liberal Leader Justin Trudeau, who is neck-and-neck with Harper in several recent opinion polls, strongly suggested his party would support the trade deal among 12 Pacific Rim nations, stressing the Liberals have “resolutely and consistently” been pro-trade.
But NDP Leader Tom Mulcair said the Conservatives have sold out Canada’s auto sector and dairy farmers, and said he will not support the deal if it means potentially thousands of job losses.
Harper maintains the agreement will have significant long-term benefits for the Canadian economy, and said it was an opportunity that could not be passed up.
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“This is a once-in-a-lifetime agreement, a once-in-a-lifetime moment of decision. You are either in or out, and we choose to be in because there is simply too much to gain for Canada,” Harper told reporters in Ottawa.
“Ten years from now, I predict, with one 100-per-cent certainty, people are looking back, they will say if we got in it, they will say ‘That was a great thing,’ and if we haven’t, they will say ‘That was a terrible error.’ ”
Trade ministers meeting in Atlanta, including Canada’s Ed Fast, wrapped up frantic overnight negotiations just hours earlier on an agreement that will have enormous economic ramifications – including in sensitive sectors such as dairy and autos – and is sparking significant controversy in the home stretch of the campaign.
Harper said “the decision for the next Parliament” will be whether or not to accept and implement the deal. But he said “this deal is without any doubt whatsoever in the best interests of the Canadian economy,” and is one that “frankly exceeded my best expectations.”
Trudeau said the Liberal party would listen to the concerns of Canadians and closely scrutinize the deal. However, he all but endorsed the Conservatives’ deal.
“The Liberal party has always understood how important trade is and we will continue to stand for trade and for engaging with the world,” the Liberal leader said.
Asked if that means his party supports the TPP deal, Trudeau replied, “I look forward to seeing the details of the deal, but we go into it from a position of being resolutely – and consistently, I might add – pro-trade.”
The Canadian government has agreed to make what it calls “limited” concessions on its supply managed dairy and poultry sectors to allow more duty-free imports of products from TPP countries into Canada. But it has kept the pillars of the controversial supply management system intact. The details include:
– Compensating Canadian dairy and poultry farmers for potential financial losses from the deal. The government is promising to invest $4.3 billion over the next 15 years in new income- and quota guarantees, and other programs to keep dairy and poultry farmers “financially whole.”
“I know what the criticisms are, but the supply management system is the basis of the rural economy in significant parts of our country. It’s continuity and stability is essential for those parts of our country,” Harper said.
– Additional duty-free access to Canada’s dairy and poultry market for TPP partners through quotas phased in over five years. These amount to 3.25 per cent of Canada’s current dairy production; 2.3 per cent for eggs; 2.1 per cent for chicken; two per cent for turkey and 1.5 per cent for broiler hatching eggs.
– Total compensation to a typical dairy farmer of approximately $165,600 over the next 15 years, with an average chicken farmer receiving $84,100 and turkey farmer receiving $88,000. A typical egg farm could expect $71,500 and a hatching egg farm would receive approximately $191,700.
Canada’s supply management system hands dairy and poultry farmers production quotas and protects them behind a tariff wall from foreign competition. There are approximately 12,000 dairy farms in Canada.
The Canadian government also says that it has secured better terms for the rules of origin for vehicles and automotive parts than other TPP partners such as Japan and the United States had initially been pushing for.
The TPP deal sets 45 per cent for what are called net-cost domestic content rules for cars, 45 per cent of net-cost content for “core parts,” and 40 per cent for other parts. North American Free Trade Agreement (NAFTA) rules up to now have stipulated that cars must have 62.5 per cent North American content for finished vehicles and 60 per cent for auto parts before they can be sold tariff-free in Canada, the U.S. and Mexico.
Harper maintained the agreement on autos and parts will “clearly benefit our auto industry here at home.”
The Conservative leader said he will announce new measures over the next few days to attract new auto investment to Canada and “to ensure the long-term stability and presence of assembly operations here in Canada.”
Mulcair swiftly accused Harper of “selling out” auto workers and “sacrificing” farming families as part of the sweeping trade accord.
The NDP leader demanded Harper “come clean” and release the full text of the TPP agreement before voting day Oct. 19, and reiterated an NDP government “will not be bound” by any trade deal completed during the campaign.
Canadian auto parts makers are worried they will lose business to low-cost Asian producers that aren’t part of the trade deal, such as China and Thailand.
Unifor, the largest private sector union in Canada that represents thousands of auto workers, assailed the deal Monday and said it will put an estimated 20,000 Canadian auto jobs at risk.
Canadian auto parts manufacturers and Unifor have raised concerns about the agreement allowing Japanese auto companies to export cars to North America with significantly less North American content than is currently required.
Mulcair is campaigning heavily against expected parts of the deal in hopes of shoring up support in Quebec and Ontario.
“If elected, Canada will not be a part of an agreement that removes 20,000 Canadian jobs, period,” Mulcair said.
The agreement will potentially increase Canadian exports in a wide variety of products and services, including beef, pork, canola, wines and spirits, and seafood, among many others.
Canada will gain preferential duty free market access or reduced tariffs in key TPP markets of Japan, Malaysia and Vietnam, where Canada currently faces high tariffs and no preferential access.
The deal will substantially lower or eliminate tariffs on Canadian beef, pork and other agricultural products going to the lucrative Japanese market. For example, tariffs of 38.5 per cent on fresh/chilled and frozen beef will be reduced to nine per cent within 15 years.
Harper said he expects the full text of the agreement to be released in the next few days, with signatures on the finalized deal early in the new year, and the process completed over the next two years. The agreement must be ratified by lawmakers in several countries, which could prove a serious challenge and take years to complete in the various countries.
The 12-country TPP – which includes Canada, the United States, Japan, Mexico, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam – represents a market of nearly 800 million consumers and almost 40 per cent of the global economy, with a combined GDP of about $28.5 trillion.
While the deal will have a huge economic impact on Canada in the coming years, there could be political fallout in the coming days if affected dairy farmers, auto workers and others take their concerns to the ballot box.
Ontario, home of Canada’s auto sector and second-largest number of dairy farms (about 4,000), also holds 121 of the country’s 338 seats; Quebec, with its 78 federal seats, is home to the largest number of dairy farms in Canada (about 5,900).
