Ottawa, ON —Canada needs to immediately join a revamped Trans-Pacific Partnership that does not include the United States or it will miss its chance to deepen trade links with Asia, warns an ex-Liberal cabinet minister.
The urgency is self-evident because Canada’s relationship with its top trading partner —the U.S. —is in jeopardy with the Trump administration’s threats to tear up NAFTA, said John Manley, president of the Business Council of Canada and former finance and foreign minister for Jean Chretien.
“With the fragile condition of NAFTA, the trade agenda for Canada, as a narrative, writes itself. It’s about diversification,” Manley said in an interview Monday.
“It’s going to be difficult to replace the access we’ve had to the United States with access elsewhere, but we’ve got to start working at it.”
Manley said that is why his council has sent Prime Minister Justin Trudeau an open letter, signed by 18 chief executives, telling him Canada must immediately join the revamped version of the TPP.
President Donald Trump pulled the U.S. out of the Pacific Rim trade pact in January.
The letter comes after last month’s decision by Canada to withhold support from what appeared to be a breakthrough agreement by the 10 other remaining TPP countries to sign a newly-configured version of the deal.
Trudeau angered allies such as Australia and Japan at the APEC summit in Vietnam when he said Canada needed to address issues such as autos and culture before moving forward.
“Asia is moving really fast. If we let TPP by, it’s not coming back,” Manley said.
Other Asian powerhouses such as South Korea and Indonesia will likely join the original TPP countries, making the new pact even more pervasive throughout Asia, he added.
The Business Council organized the letter, the signatories of which represent a range of sectors, including natural resources, manufacturing, transport, food and financial services.
The letter doesn’t specifically mention the ever-present threat of a U.S. withdrawal from the North American Free Trade Agreement but says trade diversification is more important than ever.
Manley dismissed the government’s concern that agreeing to content provisions for automobiles in the new TPP might affect similar chapters in the ongoing NAFTA negotiations. The U.S. wants to increase the North American and American content of automobiles, known as rules of origin.
“Quite frankly, their concerns haven’t been very clearly articulated. If it’s rules of origin, it’s hard to see what the issue is. Rules of origin in TPP have no linkage to rules of origin in NAFTA,” said Manley.
“Quite frankly, the threat to the auto sector is not TPP; it’s the demise of NAFTA.”
A spokesman for International Trade Minister Francois-Philippe Champagne said the government is “redoubling” its efforts to consult with stakeholders to make sure Canada gets the best deal possible on a revived TPP.
“The Asia-Pacific region represents an unparalleled opportunity to diversify our trading relationships, secure more investment and create good jobs at home,” said Joe Pickerill.
Mexico backed Canada’s decision to go slow on the new TPP while Japan and Australia were leading a charge to strike a new version of the TPP without the U.S. at the APEC summit in Danang.
The decision angered the Australians in particular with one of its media outlets saying Canada “screwed” its fellow TPP countries.
Manley said he recently returned from Japan, where government officials made clear to him that they still want Canada to sign on to the new version of the trade pact.
“I heard a lot there from their government about how surprised they were at what happened in Danang, and also quite clearly, ‘You can do that once but you can’t do it twice,’” Manley said.
Canada needs to forge ahead with the revamped TPP because that will deliver a multilateral free trade agreement with Japan, its fourth largest trading partner, he said.
Japan has continually rebuffed Canadian overtures to negotiate a bilateral deal because it sees the TPP as satisfying that function.
“The notion of a bilateral with Japan —forget about it. So it’s now, it’s really time-sensitive,” said Manley.