The Trans-Pacific Partnership (TPP): An Overview

Abstract

Canadians may have good reason to feel generally positive about the outcome of the negotiations that resulted in the Trans-Pacific Partnership agreement in October. There are, after all, many important sectors that will benefit from the mega-regional trade deal, and in its current form, the agreement will benefit Canada overall. But it would be premature to allow hopes to get too high just yet. There are still a number of things that must go right for Canada to fully enjoy those benefits, and there is no guarantee that they will. One of the major uncertainties is whether the most important TPP country of all, the United States, will even approve and implement to the deal. While the current administration in Washington is obviously a champion of the TPP, Americans are embarking on what will be a heated electoral cycle, both a presidential election and congressional elections. The politics of the TPP are very much unsettled in the U.S. in a way that they are not in all the other TPP countries, including in Canada, and it is not entirely implausible that the TPP as it has been negotiated will never see the light of day. Without U.S. congressional approval, the deal is as good as dead. Even if the TPP is implemented as negotiated, the deal fails yet again to deal with many of the trade irritants between Canada and the U.S. that have existed since before the Canada-U.S. Free Trade Agreement, but have yet to be cleared up. Both Canada and Mexico were shrewd enough to realize that once the U.S. entered into TPP negotiations, it was incumbent on them both to join in as well, to preserve their preferential trade status in the American market, which they had already secured through NAFTA, and would not want to lose. But since NAFTA and even for many years before, the U.S. has continued to utilize countervailing tariffs and related measures to interfere with the intended free-flow of trade across North American borders. The TPP does not bring any further discipline to these practices, again leaving Canada to deal with ongoing irritants in its most significant trading relationship. And if Canada is ever to enjoy the TPP’s full potential benefits, there will also need to be a regulatory realignment of standards in our U.S. trading relationship, reducing barriers to entry in areas such as approval for pharmaceuticals. That is not part of the TPP as negotiated. That said, there are provisions in the TPP that have not previously appeared in Canadian trade deals, and could have interesting and possibly important impacts. Specifically, the TPP includes provisions that require state-owned enterprises (SOEs), common in many TPP countries, to operate on a more commercial and transparent basis. Provisions on labour and the environment are integral to the agreement in a way that they are not in NAFTA, and are spelled out clearly. And there are novel chapters on new technologies, including digital trade and e-commerce, which raise interesting questions about privacy, security and the collection and location of data. These are innovative elements and, much more than NAFTA and other current trade agreements, make this agreement a model for future agreements and perhaps even for the World Trade Organization’s global trade framework.