WASHINGTON - Canada's absence from talks on a proposed Trans-Pacific Partnership agreement has been dominating bilateral chatter in the U.S. capital with the Obama administration under pressure to welcome Canadians to the negotiating table.
Twice this week, senior Obama administration officials have been pressed publicly about whether Canada will be allowed to join the negotiations on TPP, a trade deal many believe will have more economic might than the North American Free Trade Agreement.
Canada, Japan and Mexico have spent months attempting to convince the White House to grant them admission to the talks.
Mike Froman, deputy national security adviser for international economic affairs, said the U.S. has yet to determine whether to consider all three countries at once, or to decide if they should be admitted separately.
"We have to leave the issue for further discussion," Froman told a think-tank discussion earlier this week when pressed by an official from the Canadian American Business Council.
Bill Craft, a top international trade guru at the U.S. State Department, faced questions about Canada's admission to the TPP at the business council's conference on Thursday delving into China's impact on the United States and Canada.
He replied in a similarly non-committal fashion, saying the matter was still being discussed.
In the run-up to the G20 summit in Los Cabos in two weeks, questions about TPP are becoming more urgent in the face of such vague responses from the Obama administration. It's been the dominant bilateral issue privately between Canadian government officials in D.C. and their American counterparts.
It's a situation that's frustrating stakeholders on both sides of the border amid fears that Canadian businesses will be cut out of rapidly expanding Asian markets if excluded from TPP.
"It is a no-brainer that Canada should be in on the negotiations in partnership with the U.S. because our economies are so integrated; our supply chains feed off each other," Sam Boutziouvis, a top official at the Canadian Council of Chief Executives, said Friday.
"We depend upon each other right now for so much trade, and there are so many jobs dependent upon that trade.... Canada, within the TPP, will mean jobs in both the U.S. and Canada and the stimulation of growth for both countries."
If the TPP is truly going to be the "21st century trade agreement" heralded by its proponents, Boutziouvis added, there will likely be changes to rules of origin standards and supply chains, meaning Canada must be involved.
The U.S. and eight other nations — Australia, New Zealand, Chile, Peru, Vietnam, Malaysia, Singapore and Brunei — are currently hammering out a free-trade agreement.
The nine countries hope to reach a deal that would increase standards in areas that include labour, the environment and intellectual property rights protection, in addition to facilitating trade. They'll hold the next round of negotiations next month in San Diego.
But the office of the U.S. Trade Representative said recently it's made no decision about the seven-month-old bid by Canada, Mexico and Japan to come aboard.
Trade Minister Ed Fast said Friday he has had "very productive discussions" with all of the nine TPP partners and that Canada's interest in joining has been welcomed.
Fast made the comments as he wrapped up a trip to the Asia-Pacific Economic Co-operation meeting of trade ministers and a trade mission to Russia.
"I believe that we've made a very compelling case that we should be at the table and that we will be a very positive contributor to the negotiating process," he said.
"I'm still hopeful that we'll be at the table soon."
Canada's trade restrictions on dairy and poultry products are presenting a particular obstacle for Canadian efforts to join the negotiations. Canada has a supply management system that controls milk and egg prices while setting prohibitively high tariffs on imports.
Prime Minister Stephen Harper has long defended upholding the supply management system, but he's been urged to reconsider by international trade experts, including John Manley, the former Liberal cabinet minister who's now president of the Canadian Council of Chief Executives.
Both Boutziouvis and Manley were at the CABC's China confab on Thursday in Washington. Manley's presentation to the conference focused almost entirely on the importance of admitting Canada into the TPP talks; he also met privately with American officials to press his case.
"Mr. Manley is on the record as saying the time has come in this era of seeking international markets to take a good, hard look at reforms to our supply management system," Boutziouvis said.
China's middle class is set to explode in the next two decades, he pointed out, and with fatter Chinese wallets will come increased demand for countless goods and services.
"Just in terms of poultry and dairy, in addition to all the other areas where Canada will benefit — the Chinese are going to be eating more protein, they're going to be eating better, and Canada is very well-placed to take advantage," he said.
Discussions about Japan's admission to TPP are reportedly moving at a slower pace than those involving Canada and Mexico, with the U.S. auto industry and some lawmakers raising concerns that Japan isn't willing to address longstanding American complaints about access to its automotive market.
There are also fears that the Japanese are unwilling to liberalize services and agricultural trade.
Mexico, meantime, is considered to have the best chance of joining the talks.
Here are a few details of the major investment deal coming soon between Canada and China, as well as a list of what CBC chief political correspondent Terry Milewski calls a "small blizzard of incremental agreements," signed in Beijing. <em>With files from CBC</em>. (Diego Azubel-PoolGetty Images)
The Big One: FIPA
Prime Minister Stephen Harper called the foreign investment promotion and protection agreement (FIPA) between Canada and China the first "comprehensive economic agreement" between the two countries. In fact, what was signed by Harper and Chinese Premier Wen Jaibao in Beijing is not the final deal, but a declaration of intent: Now it must be legally reviewed and ratified by both governments, which for Canada will mean a debate in the House of Commons. Once both countries complete this process, it will need to be formally signed to take effect. This deal will protect Canadians investing in China, as well as Chinese investors in Canada, from "discriminatory and arbitrary practices." Once in place, investors can have more confidence that rules will be enforced and valuable business deals will be subject to predictable legal practices. Harper told reporters in Beijing he "absolutely" expected that it will make a "practical difference." "The agreement does not override existing Canadian law in regard to foreign investment and foreign investment review," Harper said. "Those laws remain in place." Negotiations for this agreement took 18 years, and key players in manufacturing, mining and the financial sectors were consulted to get to this stage. It's not unusual for Canada to have this kind of an agreement with a trading partner. FIPAs are in force with 24 other countries that trade with Canada, and active negotiations are underway with 10 other countries, according to the government's announcement. (Diego Azubel-PoolGetty Images)
The 'Blizzard' (By Sector):
(AP Photo/Valentina Petrova)
- A new protocol, building on a 2010 agreement to restore Canada's market access to the Chinese market for Canadian beef following the 2003 BSE outbreak and resulting border closures, to allow industrial beef tallow (fat) to be imported for the first time in almost a decade. China used to be Canada's top export market for tallow ($31 million in 2002), and now Canada has a shot at a share of the $400 million in tallow China imports from around the world. - A memorandum of understanding (MOU) on canola research, to address a recent fungal disease in canola and rapeseed that threatens Canada's valuable trading relationship with China in canola. - On Tuesday, Chinese aquaculture feed company Tongwei announced it will increase its purchase of Canadian canola by up to $240 million per year by 2015. (DAVID BUSTON/AFP/Getty Images)
- A MOU between Natural Resources Canada and the Chinese Academy of Sciences to collaborate on scientific research on sustainable development of natural resources. The government release touts benefits including new technologies for resource firms, carbon emissions reduction strategies, reduced environmental impacts and natural hazards from resource development, and new opportunities for Canadian suppliers of equipment and services. - A MOU spelling out a "framework" for Parks Canada and China's state forestry administration to collaborate and share scientific expertise in the management of national parks, natural reserves and other protected areas. The agreement includes language around ecological restoration, conservation measures for endangered wildlife, wetlands development, and the preservation of forests and wetlands. (<a href="http://www.flickr.com/photos/47096398@N08/" target="_hplink">Flickr: eleephotography</a>)
- A continuation of the MOU, first signed in 2001 and renewed in 2006, on energy co-operation to "engage China on energy issues" through a Canada-China joint working group on energy co-operation, chaired by Natural Resources Canada and China's national energy administration, which is responsible for Chinese energy policy. The working group oversees joint research projects, exchange of expertise, and co-operation between energy companies in both countries, including the promotion of energy efficiency and renewables. It aims to both attract capital investment and improve market access for Canadian energy resources and technology. (MARK RALSTON/AFP/Getty Images)
Science and Technology
- Approval of seven projects, valued at $10 million, under the Canada-China framework for co-operation on science and technology and innovation, including: a diagnostic kit for acute kidney injuries, a wind energy seawater desalination system, a waste heat-recovery system to help oil refineries consume less fuel, new solar cells for renewable energy panels, a real-time multi-sensor navigational tracking device for hand-held devices, a blue-green algae bloom warning system and "next generation" large-scale geographic information systems. - Two more calls for proposals, valued at $18 million ($9 million from each country) for joint research under the same framework. These proposals are for the development of "innovations with high commercial potential" in the areas of human vaccines and clean automotive transportation. The Canada-China joint committee on science and technology, made up of individuals from industry, academia and government, sets the priorities and oversees these projects. (To date, 21 projects ranging from nuclear power to AIDS drugs, to clean technologies for pulp and paper have received some $28 million in funding.) (TOSHIFUMI KITAMURA/AFP/Getty Images)
- A renewed MOU extending and modifying the Canada-China scholars' exchange program, which has seen 900 students travel between Canada and China since 1973. New eligibility rules and scholarships will be in place for the next round of competitions in 2012, including eight to 12 Canadian scholarships for Chinese professionals and 20 awards for Canadian university students. (<a href="http://www.flickr.com/photos/plutor/" target="_hplink">Flickr: Plutor</a>)