The Trans Pacific Partnership effectively died with the election of U.S. President Donald Trump, who wasted no time in announcing that the U.S. would not move forward with the agreement. Since the TPP cannot legally take effect without U.S. ratification, the decision to withdraw effectively kills the deal. The remaining TPP countries will meet in Chile next week to discuss what comes next. In advance of that meeting, Foreign Affairs Minister Chrystia Freeland appeared before the Senate on Tuesday and was specifically asked by Senator Joseph Day about the possibility of trying to salvage the agreement.
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Donald Trump’s surprise U.S. presidential election victory promises to result in an overhaul of U.S. trade policy, including the immediate end of support for the Trans Pacific Partnership, the controversial trade pact involving 12 Pacific countries including Canada, the U.S., and Japan. While President Barack Obama held out hope that the TPP could be salvaged during the “lame duck session” of Congress that occurs immediately after the election, his administration was quickly forced to concede that the deal has become politically toxic and stands no chance of passage. Since U.S. ratification is required for it to take effect, it’s effectively dead.
My Globe and Mail column notes that the Canadian government’s view of the TPP was always difficult to discern. It was negotiated by the previous Conservative government, but Prime Minister Justin Trudeau and International Trade Minister Chrystia Freeland have been non-committal, focusing instead on TPP public consultations that are still scheduled to run until early 2017.
Their ambivalence was not a function of trade skepticism – the Liberals emerged as enthusiastic backers of the trade deal between Canada and the European Union – but rather stems from the recognition that Canadian interests in the TPP were largely defensive in nature. With agreements already in place with many TPP countries, the agreement offered at best limited benefits for Canada’s economy.
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International Trade Minister Chrystia Freeland has faced a challenging week given the possible collapse of the trade agreement between Canada and the European Union. Freeland and the Liberal government have worked hard to get CETA to the finish line with some changes to the investor – state dispute settlement rules (the rules should be dropped altogether) and frequent travel across Europe to garner support for the deal.
Back at home, the reaction to the CETA problems from the Conservative opposition has been embarrassing. Trade critic Gerry Ritz criticized Freeland, speaking of the need for adult supervision and calling on the government to get the job done. Freeland rightly called him out on the comments, but she could have also noted that the record suggests that it is the Conservatives that failed to get the job done on CETA. In April 2010, the Conservative government said it would be finished in 2011. In 2011, reports said it would be done in 2012. In October 2012, the projection was a deal by year-end. It took until the fall of 2013 for a ceremony marking an “agreement-in-principle”. That too proved to be premature as there was another event celebrating an official draft in 2014 followed by more legal drafting and the renegotiation of controversial ISDS provisions that led to the release of another text earlier this year. In other words, Freeland inherited far less than advertised on CETA and the Conservatives might not want to remind the public that their biggest trade accomplishment never actually involved a signed, final text.
The Ritz remarks have attracted attention, but comments yesterday from Prime Minister Justin Trudeau may have a longer and more damaging impact on Freeland.
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The seeming collapse of the trade agreement between Canada and the European Union (CETA) has created obvious disappointment for International Trade Minister Chrystia Freeland and the entire Canadian government, which made the deal as its top trade issue. Efforts to salvage CETA will undoubtedly continue, but my Globe and Mail column points out that the underlying problem with the agreement is not the complicated European political system that requires support from all member states.
Rather, it is the expansion of trade negotiations from agreements that once focused primarily on tariff reductions to far broader regulatory documents that now mandate domestic legal reforms and establish dispute resolution systems that can be result in huge liability for national governments. This enlarged approach to trade deals, which can also be found in the controversial Trans Pacific Partnership (TPP), run the risk of surrendering domestic policy choices to other countries or dispute tribunals.
If CETA were limited to tariff reductions, it would be relatively uncontroversial. The discomfort with the agreement lies instead in the mandated changes to domestic regulations and the creation of investor – state dispute settlement mechanisms that may prioritize corporate concerns over local rules.
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International Trade Minister Chrystia Freeland has walked out of talks aimed at addressing Belgian opposition to the Canada-EU Trade Agreement, stating:
I have personally worked very hard, but it is now evident to me, evident to Canada, that the European Union is incapable of reaching an agreement – even with a country with European values such as Canada, even with a country as nice and as patient as Canada. Canada is disappointed and I personally am disappointed, but I think it’s impossible. We are returning home.
Leaving aside the odd reference to how nice Canada is, this is remarkable language that lays bare the obvious frustration and disappointment for the government which prioritized the CETA agreement above all others. The prospect of the deal falling apart has been evident for months. I wrote in July that the agreement was in more trouble than the Canadian government would admit, noting that opposition from any national or regional government could kill CETA altogether. Canadian officials downplayed the risk, but it was obvious that CETA faced stiff opposition that would not be easy to overcome.
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