The Liberals return to power much like they did in 1993, with a decision to make on an important trade deal negotiated by a despised former government, writes MLI Managing Director Brian Lee Crowley in the Globe and Mail. Trudeau’s government should approve the TPP, as Chrétien did NAFTA, in large part because of the benefits to trade with the US.
By Brian Lee Crowley, Feb. 5, 2016
It’s 1993 all over again. In that year the Chrétien Liberals swept out of office a decade-old Tory regime whose legacy they despised. Yet sometimes governments you detest nonetheless do things that are in the national interest. That presented the Chrétien Liberals with the dilemma of what to do about the NAFTA agreement their predecessors had negotiated with the US and Mexico. Chrétien squared that circle by declaring he would renegotiate the agreement but found that no one showed up from the other two countries for such talks. Having satisfied honour with a token resistance he quietly let the deal go forward.
Fast forward to 2016. The Trudeau Liberals have swept aside the Tories, one of whose last acts was to complete the negotiations for the Trans-Pacific Partnership, a Pacific-basin trade deal comprising 12 countries. This time the Grits were cannier politically — during the election they declared themselves pro-free trade and said that once in office they would study the TPP and decide what to do on its merits.
Now, however, the election’s over, and the new government clearly wants to eat its cake and have it. On the one hand they want to be seen as favouring trade and market diversification. On the other hand, they don’t want to cheer a Harper achievement and they want any disaffected sectors (like, say, autos or supply management) to blame the Tories, not the Liberals.
Ottawa’s strategy, led by the able International Trade Minister Chrystia Freeland, is to ask Canadians to give them reasons to approve the TPP because, gosh, they are not sure they should like this deal. Thus Ms. Freeland announced, for example, that while she would sign it at a ceremony in New Zealand, this was by no means an endorsement of the TPP. Uh-uh. No way we are approving this, said she. This is a purely technical requirement, she intoned, looking all the while like a bad smell was wafting up from the text she had just signed.
Hence we now get “consultations” with Canadians so that, the government hopes, those who benefit from the deal will speak loudest and the government can then say that Canadians told them to sign.
If that’s what they want I for one am happy to oblige. In addition to the usual benefits of freer trade, there are two main arguments in favour of TPP, each of which is sufficient in its own right. Together they make a compelling case why Canada would be foolish to miss the TPP boat.
The first reason is our relationship with the US. Everyone knows that the US is our biggest trading partner, taking more than two thirds of our exports; we negotiated free trade with them in the 80s because we couldn’t afford to have such a foundational relationship subject to unilateral politicking by Washington. If this argument passes you buy, I have three things to say: Buy America, softwood lumber and Keystone XL. These are all examples of how trade issues not governed by NAFTA can be and are manipulated by US politics to harm Canadian interests.
Many will believe that our relationship with the US is already fully covered by NAFTA, but no. NAFTA is incomplete and outdated and TPP is a chance to modernise its provisions in a way we and Mexico would not obtain on our own.
Here are just a few examples of improvements over NAFTA that TPP offers according to international trade expert Larry Herman. We get much-better-than-NAFTA access to lucrative US markets like government procurement and financial services, a whole series of protections for e-commerce (something not even touched on in NAFTA), and new intellectual property protection rules that benefit Canada’s creative industries such as music, software and publishing. The fact that we gain this access to other TPP signatories’ markets too, such as Japan’s, is just icing on the cake.
Put the other way round, Canada would be ill-advised to allow our NAFTA partner Mexico to gain the benefits of improved access to the US market not available to Canadian companies. At a stroke we would be a second-class NAFTA partner and every other TPP signatory would have better access to the US than we would.
The second reason to embrace TPP is China. China was not part of the TPP negotiations for a very good reason. The market-oriented nations of the Pacific wanted to set the rules for regional trade before China became so powerful it could dictate them unilaterally. TPP now creates a huge trading bloc China will want to join, and it will have to accept the rules pretty much as they are. Canada’s interests would be far better protected by working with its TPP partners to entice China into their tent than attempting to negotiate a Canada-China deal in which we would be the weaker party.
The Chrétien Liberals chose the national interest over partisan squabbling on trade. We are about to find out if the Trudeau Liberals can pass the same test.
Brian Lee Crowley is Managing Director of the Macdonald-Laurier Institute. An edited version of this column appeared in the Globe and Mail.