Our previous international trade brief discussed having a contingency plan in place should NAFTA renegotiations fail. In this international trade brief, we discuss the resurgence of the goal to renegotiate the Trans-Pacific Partnership among the remaining 11 nations and the reaching of an agreement over the past weekend on the “core elements” of a deal.
Since the withdrawal of the United States from the Trans-Pacific Partnership within three days of President Trump’s inauguration, which many thought would result in a fatal blow to the deal, negotiators from the remaining TPP-11 have been quietly meeting to revive the agreement. The TPP-11 is made up of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. At the Asia-Pacific Economic Cooperation (APEC) Summit this past weekend, the TPP-11 announced that an agreement on the “core elements” had been reached, but that aspects of the agreement still needed to be finalized.
Canada’s interest in becoming a party to TPP-11 is also said to be contingent on several additional improvements including in relation to the auto sector (in view of the fact that U.S. content may not count in the determination of TPP-11 origin requirements, with the U.S. being outside of the TPP), intellectual property rules, protection of supply management in certain agricultural sectors and Canada’s cultural industries.
As we have discussed in an earlier Osler update, the implementation of the TPP-11 would present Canadian businesses with an unprecedented and unparalleled opportunity. Assuming that a trade agreement with the U.S. continues to exist, whether through a renegotiated NAFTA or a bilateral deal with the U.S. (should the U.S. withdraw from NAFTA), Canada could be in the enviable position of being the only member of the G7 to have trade agreements with the European Union (through CETA), much of the Pacific Rim, and the United States. This would bolster Canada’s position as a hub of international trade and investment thereby making Canadian goods and services more competitive in some of the largest consumer markets in the world. It would also make manufactured inputs of goods and services from TPP-11 and EU more competitive in the Canadian market. Along with the liberalization of the rules for trade in goods and services, CETA and the TPP-11 would provide enhanced ability for trade in the services sectors, and liberalize labour mobility rules and investment rules.
Now more than ever, Canadian businesses will be faced with the imperative to revise their business plans to consider both the opportunities and the challenges that will exist with the implementation of the new CETA provisions and the likely implementation in the near future of TPP-11.