tpp why so secret? by Public Citizen (CC BY-NC-SA 2.0) https://flic.kr/p/daKbUD
President-Elect Donald Trump has ended any further speculation about the future of the Trans Pacific Partnership by announcing that he plans to formally withdraw from the agreement on his first day in office. I’ve written extensively about why ratification for Canada would be a mistake and argued last week in the Globe that Canada should use the death of the TPP as an opportunity to re-examine its approach to trade agreement negotiations including working toward greater transparency, focusing on tariff reduction rather than regulations, and dropping controversial ISDS provisions.
The need for Canada to wait on the U.S. has been readily apparent for months. As currently structured, the TPP cannot take effect without the U.S. since entering into force requires ratification by at least six signatories who represent at least 85 percent of the GDP of the countries in the original deal. That provision effectively gives both the U.S. and Japan veto power. With the U.S. pulling out, the agreement will not enter into force no matter what Canada (or anyone else) does.
The central role of the U.S. in the TPP is no accident. For most TPP countries, access to the U.S. market was the primary reason for entering into the agreement and as Japanese Prime Minister Shinzo Abe said over the weekend, “the TPP would be meaningless without the United States.” Indeed, the reason Canada, Japan, and Mexico all joined the TPP talks late was that without a clear commitment from the U.S., the agreement was of limited value.
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.
Donald Trump’s stunning win of the U.S. Presidency on Tuesday night has sparked numerous articles speculating about the implications for various policies and issues. Given how little Trump said about digital policy, predictions about telecom or IP policy are little more than educated guesses. Trade policy was a major Trump issue, however, as his opposition to the Trans Pacific Partnership and vow to renegotiate NAFTA was repeated at virtually every campaign stop. Senate Majority Leader Mitch McConnell confirmed yesterday that the TPP would not be brought up for a vote this year, leaving Trump to decide on its future. Officials in other TPP countries such as Australia, New Zealand, and Malaysia have now acknowledged that the TPP is likely dead.
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.
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.