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Why is Canada giving a cold shoulder to an Asian trade deal?

Date: November 23, 2017

Publication Type: Articles

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By John Manley, as originally published in The Globe and Mail. 

 

What a difference a year makes. Just over a year ago, as I was returning from Europe, I wrote to praise the Trudeau government’s success in saving a Stephen Harper legacy – the Canada-EU Comprehensive Economic and Trade Agreement (CETA).

 

Led by then-trade minister Chrystia Freeland, Canada gave a little here and a little there from the agreement that had been negotiated. By dint of Ms. Freeland’s intelligence, perseverance and personality, an important part of our trade infrastructure came into being. At the time, we didn’t know how important it was, as the North American free-trade agreement had not yet come under sustained U.S. attack. A major advantage of CETA is that it gives Canadian companies an edge over their U.S. competitors in the European market. Plus, it contributes to Canada’s trade diversification, thereby reducing our reliance on the United States.

 

Now I am returning from Japan and wondering whether Canada still believes in the principles that made CETA so important. In the recent Trans-Pacific Partnership negotiations in Vietnam, Trade Minister François-Philippe Champagne didn’t give a little here and there as his predecessor had done. Instead he asked for more – and to the surprise of many observers, he achieved all of his objectives.

 

What is mystifying is that in the aftermath of Canadian negotiating success – doubtless enabled by Japanese Prime Minister Shinzo Abe’s strong desire to reach agreement at a time when the United States is increasingly hostile to the international trading order – Canada seemed to shrug and leave Mr. Abe and other leaders at the altar. Mr. Champagne must be wondering what else he could have done to win a word of praise from his boss.

 

What an opportunity for Canada: the second-largest economy in the TPP (now renamed the CPTPP with the addition of “Comprehensive and Progressive”), sharing leadership in a multilateral Asian trade agreement, reaffirming that the multilateral trading system that has so benefited our country over generations is alive and well. It’s another arrow in our trade-diversification quiver when the future of NAFTA is in doubt.

 

On top of being an important statement, the CPTPP provides Canada with an enormous opportunity. It gives our exporters – particularly in the agriculture and agrifood sectors – access to the huge Japanese market ahead of the United States.

 

But stay tuned. The Trump administration wants bilateral trade deals in which it can use America’s size advantage to greatest effect. To be stranded outside the CPTPP while the United States negotiates a bilateral agreement with Japan would be the worst possible outcome for Canada. Not to mention the damage that would be done to Canada’s relationships with partners such as Japan, Australia and New Zealand, all of which appear to have been surprised by Canada’s reluctance to fully commit to the deal.

 

I am unaccustomed to hearing harsh words about Canada from the Japanese, who are normally polite and muted in criticizing others. But this week I have sensed anger and hurt, a feeling of having been betrayed by a partner that was not negotiating in good faith. The only thing that could make this worse would be to launch trade negotiations with China while not concluding the CPTPP.

 

Mr. Prime Minister, say it isn’t so. Say we’re in Asia as leaders and as builders. Show that Canada is back.

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