BUSINESS

Trans-Pacific Partnership: 5 Questions About The World's Biggest Free Trade Area

09/29/2015 02:23 EDT | Updated 09/29/2016 05:12 EDT
ATLANTA — The Conservative government hopes to complete negotiations this week for the Trans-Pacific Partnership, billed as the largest trade zone in history — a trading bloc comprising 12 countries and 40 per cent of the global economy.

Should the meetings in Atlanta produce a deal, there would need to be ratification votes in various parliaments, including Canada's, making the pact an issue in the final weeks of the federal campaign.

Here are five questions about what's at stake with an agreement.

1. Would it eliminate NAFTA?

Not quite. The old continental trade deal would keep existing, but important parts would be superseded by the new agreement. In the case of a conflict, the newer agreement would generally prevail according to Canadian trade lawyer Mark Warner, trade arbitrator Debra Steger and her U.S. counterpart, David Gantz.

2. What will happen to Canada's auto sector?

Terrible things, if you ask the auto-workers' union. Unifor estimates that rules proposed in the latest round would kill 24 per cent of Canada's auto jobs, by allowing tariff-free cars to include parts sourced mostly from non-TPP countries like China. The government calls such calculus moot — after all, it rejected the proposal. Canada and Mexico refused to follow when the U.S. agreed to a demand from Japan: that cars with as little as 45 per cent content from TPP countries be sold without tariffs, with the quota for individual parts even lower at 30 per cent. That's compared to NAFTA's regional-content quotas of 62.5 per cent and 60 per cent. Sources say there's been small movement since the last round, but not enough for a deal yet.

3. Will there be more imports of foreign dairy?

Almost certainly. Sources say the U.S. has requested an opening of the Canadian dairy market that would be several times greater than the two-per-cent share Europe got in the Canada-EU deal. While the demands have been pared back slightly, countries are demanding access to Canadian grocery stores. A close reading of Stephen Harper's words suggests he's willing to grant some. The Conservative leader has promised to maintain the supply-managed system, in general, but when pressed specifically during Monday's debate about whether import levels would increase, he didn't deny it.

4. Will drug prices go up?

Health advocates and generic drug-makers sounded that alarm over a leaked TPP draft that showed greater protection for pharmaceutical companies, a U.S. demand. The U.S. has also pushed for longer exclusivity for cutting-edge biologics treatments — seeking 12 years, compared to zero currently guaranteed in some developing countries. But sources say the final deal will probably include something similar to the eight-year exclusivity period already in the Canada-EU deal. Published reports also suggest the U.S. has pared down some of the early positions in the leaked text.

5. Could this affect Canada's election?

Absolutely. The race is a nailbiter, and dozens of ridings rely on industries affected by TPP. Party war-rooms will undoubtedly be doing the electoral math. Interest groups already have. In the auto sector alone, Unifor counts a dozen swing ridings in southern Ontario reliant on the industry — with half belonging to Conservatives like Chris Alexander, Jeff Watson and Parm Gill. As for agriculture, Dairy Farmers of Canada counts 44 dairy-heavy ridings split between Ontario and Quebec. The NDP faces pressure from the Bloc in Quebec, and in Ontario there's a more complex three-way dogfight underway. Opposition parties are being pressured to reject the deal, by unions and the Bloc. Should a deal come together this week, Canada will provide the first electoral litmus test for the biggest trade zone in history. The next big test would come in the U.S. 

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