At the conclusion of the G20 Summit in Los Cabos, Mexico on June 19, 2012, Prime Minister Stephen Harper and President Barack Obama jointly announced that Canada has been invited to join the Trans-Pacific Partnership (TPP) negotiations, pending the approval of the U.S. Congress.1 The TPP is a Free Trade negotiation aimed at liberalizing trade between North and South American and Asian-Pacific countries. With the inclusion of Canada and Mexico, invited to the talks on June 18, there are now eleven countries in the TPP. The other parties are the United States, Australia, New Zealand, Singapore, Chile, Peru, Vietnam, Malaysia and Brunei.

If Canada is included in the eventual TPP, Canadian business will have improved access to a market with over 660 million people and a total annual economic output of $20.5 trillion. In the context of Canada’s aim to increase exports and improve trade relations with Asian countries, the TPP includes some of the fastest growing Asian markets in Singapore, Vietnam and Malaysia.2 In addition, Japan has been involved in negotiations to join the talks, potentially opening the door to another massive Asian economy.3

FTAS: ECONOMIC INTEGRATION AND LIBERALIZING TRADE

The TPP is being billed as a next generation Free Trade Agreement (FTA). As Professor Raj Bhala, who serves as a foreign legal consultant with Heenan Blaikie, has defines FTA as:

“An agreement among two or more countries (more specifically, customs territories) to drop all internal trade barriers as among the countries. Each party to an FTA, however, retains its own separate schedule of tariffs for imports from third countries, thus making the FTA a less economically integrated entity than a customs union.” 4

FTAs can be bilateral, like the Canada-United States FTA, or between multiple countries, like the North American Free Trade Agreement (NAFTA) between Canada, the U.S. and Mexico. The aspects of international trade covered by FTAs vary from agreement to agreement but basic elements common to most FTAs includes:  

  • Trade in goods
  • Sanitary and phytosanitary issues
  • Technical barriers to trade
  • Customs procedures and rules of origin
  • Investment
  • Government procurement
  • Regulatory cooperation
  • Intellectual Property
  • Competition policy
  • Institutional arrangements and dispute settlement
  • Provisions on the environment, labour rights and corporate social responsibility  

Canada currently has eight FTAs in force, three signed and waiting to come into force, and 15 more in negotiations or preliminary discussions.5

THE TPP: THE NEXT GENERATION FTA

As an “FTA plus”, the TPP is being championed as an agreement that will shape the politics and policies of its member nations. As former Ambassador Joseph Caron has pointed out, “what is being sought is nothing less than the next generation of comprehensive, structural and across-the-board liberalization, whose objectives go beyond the standard hacking away at tariffs and trade barriers, towards much more comprehensive market access and integration.”6 Some TPP negotiators cite the TPP as a model FTA that could eventually become the basis for a Free Trade Area of the Asia-Pacific. This, in turn, would allow countries like Canada and the U.S. to play a role in shaping the region’s trade policies rather than be passive signatories to an agreement negotiated by other parties.7

Canada was presented with an opportunity to join negotiations with Brunei, Chile, New Zealand and Singapore in 2005 but declined. Canada’s interest grew when the U.S. joined in 2009.8 In 2011, Canada formally declared its interest in joining the TPP talks.9 There was initial resistance to Canada joining the talks because of its agricultural policies and intellectual property laws. The U.S. and New Zealand appeared to be the strongest opponents of Canada gaining a seat at the TPP table. While little information is yet available about how the Canadian Government changed the minds of their critics, it is widely speculated that Canada at least expressed an openness to discuss the aforementioned policies at the talks.10

The TPP negotiating texts are confidential but in 2011 leaders of the nine member countries released a fact sheet with an outline of the defining features of the TPP. The TPP will have five defining features:  

  • Comprehensive market access to eliminate tariffs and other trade barriers;
  • A fully regional nature to facilitate the development of supply chains between member countries;
  • Cross-cutting trade issues including
    • Regulatory coherence
    • Promotion of competition and business facilitation in the region
    • Focus on small- and medium-sized businesses
    • Policies to help countries develop and implement the TPP Agreement;
  • Promotion of new trade initiatives; and
  • A living agreement that will address new trade issues as they emerge.12

The different Negotiating Groups focused on a different aspect of commercial relations. Groups are as follows: competition, cooperation and capacity building, cross-border services, customs, e-commerce, environment, financial services, government procurement, and intellectual property. The specific details of the Agreement will not be available to the public until the Agreement is finalized—which member countries hope will be by the end of 2012.13

The 13th round of negotiations has taken place in San Diego, California from July 2-10. During this round the United States negotiator has indicated that the goal is essentially to close out as many as 10 to 12 TPP chapters including those on sanitary and phytosanitary measures, technical barriers to trade, regulatory coherence, customs, competition, and business facilitation.14 Canada and Mexico will not be present since the U.S. government must give congress 90 days’ notice before negotiating with a new trading partner. As of this writing, notice has yet to be given. Assuming notice is given within the next few weeks, Canada and Mexico could join the talks in the fall.