US President-elect Donald Trump is threatening to mess around with trade pacts involving Canada when he assumes office in (yikes) 57 days. In a two-and-a-half-minute Big Brother-esque YouTube video released earlier this week, Trump promised to withdraw from the “potential disaster” Trans-Pacific Partnership trade deal, a 12-country commitment that aimed to create a free trade area spanning from Japan to Chile, making it the world’s largest trade pact. It is somewhat ideologically unconventional for a Republican President to reject anything resembling unbridled capitalism, but then again convention is the last thing we can expect from The Donald.
What is the TPP and why does Donald Trump hate it so much?
Think of the TPP as an expanded version of the current trade pact Canada has with the US, the North American Free Trade Agreement (NAFTA). Canadians have had special access to the Mexican and American economies for quite some time now, arguably getting the best deals for products bought and sold across both borders. With the TPP, 12 countries would have been able to share in the perks of this free trade bonanza. That involves the reduction or elimination of tariffs (a tax or duty to be paid on goods), new rules for resolving trade disputes, and the renegotiation of subsidies for the manufacturing and agricultural sectors, among many, many other very complicated things.
Trump’s beef with the TPP is that he claims it will hurt American workers and undercut US companies. His stance on trade is protectionist: he believes that the average American farmer and auto worker has lost out from the fact that labour is cheap in developing countries like China, Vietnam, and Malaysia. He’s definitely not wrong here—many low-skilled jobs that used to belong to the backbone of American industrial towns have been shipped overseas because, hey, if no one (read: the government) is stopping profit-driven corporations from lowering production costs, what incentive would they have to continue manufacturing products in higher cost jurisdictions like the US?
“Instead of negotiating with 12 countries in the TPP, he thinks he can get a better deal for Americans if there are fewer countries at the table,” says Stuart Trew, trade researcher at the Canadian Centre for Policy Alternatives and co-author of “The Trans-Pacific Partnership & Canada: A Citizen’s Guide.” “These are interesting times for trade. Trump is shaking up the orthodoxy.”
Canada’s involvement in this Trump-TPP shenanigan
According to Sylvain Charlebois, a food policy expert at the University of Guelph, it is not entirely negative for Canada if the TPP is dead. “Let’s not kid ourselves: the TPP was never about Canada. It was about Washington’s desire to undermine China, and increase its commercial footprint in the East Asian region.”
Indeed, the TPP has long been touted by critics as a grand American plan to plant their flag in East Asia and counter the perceived economic threat that is China, by getting first dibs in trade negotiations with key growth markets in Asia-Pacific like Australia, Brunei, Vietnam, and Malaysia.
So did Canada just come along for the TPP ride or did we actually stand to gain from this trade pact? In certain industries, we would have gained, says Charlebois. “Canadian consumers would have benefitted from lower prices for dairy products. Canada’s average cost for milk production is the second-highest in the industrialized world, after Switzerland. The only way to bring this cost down is to build international alliances.”
An opportunity for Canada?
In a joint op-ed in the Globe and Mail earlier this week, Derek Burney, Canada’s former ambassador to the US, and global security expert Fen Osler Hampson argued that Trump’s stance on free trade could present itself as an opportunity for Canada.
“To offset the loss of TPP, Canada should swiftly accelerate negotiations of a comprehensive trade agreement with China, which is not a party to TPP and, at the same time, negotiate bilaterally elements already agreed in TPP with promising partners such as Japan, Vietnam, and Malaysia.” Translation: let’s be smart about this, and build our own trade pacts that will put Canadians first.
Stuart Trew believes that the Liberal government could seize on this new global order to completely upend who gains and loses from trade deals. “NAFTA has become the poster child for the success of globalization, but in fact it has altered the corporate structure of North American in favour of big business.” Trew argues that NAFTA brought in corporate amalgamation and consolidation on a massive scale. “It’s one of the reasons there’s been a sharp growth in income inequality in both the U.S. and Canada.”
“These agreements are often locked in a very pro-corporate vision, which is why, for example, the U.S. has not made any significant gains on things like banning toxic chemical waste,” says Trew.
So really, all this fuss about the demise of the TPP and the possible renegotiation of NAFTA means that to some extent, Canada gets to stop playing catch-up with the United States when it comes to building trade alliance, and chart its own course that may very well defy the conventions of neoliberalism. “People think in terms of their own lived experience,” says Trew.
“Am I secure? Are my kids going to be secure? This is an important period for progressives to field their own alternatives or risk watching the field shift event more significantly in the interests of big business.”
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