Trans-Pacific Partnership building momentum for deal this summer

Source: The Globe and Mail

8 July 2015

Canada and the 11 other countries taking part in Pacific Rim trade talks will push for a deal at a meeting of ministers expected to take place in late July or early August, sources say.

It is a sign of the increasing momentum of the Trans-Pacific Partnership talks and sets the stage for Ottawa to make what are expected to be controversial concessions in the weeks before a federal election campaign begins.

Canada’s chief trade negotiator, Kirsten Hillman, was in Washington last week for TPP meetings, and preparations are under way for trade ministers to meet as soon as the participating countries feel they’ve made sufficient progress.

In such a ministers-level meeting, elected officials take over from their civil servant negotiators – and the most intense bargaining and horse-trading takes place.

The focus of the next few weeks will therefore be to narrow the outstanding differences between countries to such an extent that a political deal is within reach.

U.S. and Japanese media are reporting that trade ministers will gather in Hawaii on July 28 and 29, but Canadian government officials say the date could shift into August to accommodate all the countries involved. July 28 is a national holiday in Peru, for instance.

The price of entry for Canada is expected to include more duty-free dairy and poultry imports from countries such as the United States, Australia and New Zealand.

Tariffs of as much as 300 per cent currently shield Canadian dairy and poultry farmers from foreign competitors. A rise in imports could easily destabilize Canada’s carefully calibrated supply-management system, which tightly regulates the price and production of milk, chicken and eggs – industries worth about $10-billion a year.

International Trade Minister Ed Fast used a speech in Vancouver Monday to tout the Trans-Pacific Partnership, which would create a massive free-trade zone, calling it the “biggest game on the planet.”

He said it would give Canadian investors and businesses unhindered access to a market of 800 million people with economic activity worth $28-trillion annually.

Adam Taylor, a former senior adviser in Mr. Fast’s office, said he foresees a TPP deal coming together fairly quickly.

“The train’s leaving the station. You’re either on or you’re off. It ain’t waiting for you,” said Mr. Taylor, now a trade consultant with government relations firm ENsight in Ottawa.

Canada’s dairy industry recently launched a public relations campaign designed to make it harder for the Harper government to grant concessions that would hurt the sector. The industry says it adds almost $6-billion to the economy and generates tax revenue of more than $1.5-billion annually – revenue that helps pay for “the nurses, teachers and community infrastructure that Canadians value.”

The lead trade negotiator for the United States has been publicly prodding Canada in recent weeks to offer major concessions in dairy and poultry imports. “We’re still waiting for them to come to the table with a meaningful offer,” Michael Froman said.

But Canada is expected to keep its cards close to its chest for now.

“The dynamic of these kinds of negotiations is that all countries hold back their most sensitive sectors – their offers in those sectors – as late as possible to get a picture of how badly their trading partners want something there and to see what they can get in return,” said Matthew Kronby, a former Canadian trade negotiator who is now with law firm Bennett Jones.

“I think for something like this Canada would resist tabling [concessions] as long as possible.”

Mr. Kronby said he’s not sure the trade ministers will be able to resolve all the outstanding issues at the Hawaii meeting.

The challenge for the Conservative government will be persuading Canadians that they reaped sufficient benefits from the United States – this country’s largest trading partner – for the concessions asked of them.

“What are they offering Canada as an improvement on the North American Free Trade Agreement?” veteran trade consultant Peter Clark said of the United States.

Mr. Clark, whose clients include dairy farmers, said Canada should hold out for a commitment to exempt Canadian companies from proliferating Buy America government purchasing rules. The protectionist measures are increasingly causing havoc for Canadians looking to bid on state and municipal procurement in the United States.

“How are you going to sell the deal if you don’t have tangible benefits coming out of this for Canada?”

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