Canada signs on to huge Trans-Pacific trade deal
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Jason Fekete, Ottawa Citizen More from Jason Fekete, Ottawa Citizen
Published on: October 5, 2015 | Last Updated: October 5, 2015 10:00 AM EDT
[ Dairy farmers take part in a protest in downtown Ottawa on Tuesday, September 29, 2015. Dozens of dairy farmers from Ontario and Quebec gathered on Parliament Hill to raise concerns about protecting Canada's supply management system in the Trans Pacific Partnership negotiations. PHOTO ]
Canada has signed on to the Trans-Pacific Partnership trade deal, which creates the largest trading bloc in the world. But the deal will see the federal government spend billions of dollars to support Canadian farmers as part of an accord that will have immediate political implications on the campaign trail.
Trade ministers meeting in Atlanta wrapped up a furious negotiating session early Monday for an agreement that will have enormous economic ramifications – including in sensitive sectors like dairy and autos – and is sparking significant controversy in the home stretch of the election campaign.
Anticipating concerns, Trade Minister Ed Fast, who negotiated for Canada in Atlanta, told a press conference this morning, “Ultimately it will be the new Parliament that will judge the merits of this agreement.”
The Canadian government has agreed to make “limited” concessions on its supply managed dairy and poultry sectors that will allow more duty-free imports of products from TPP countries into Canada, but has kept the pillars of the controversial supply management system intact.
To compensate Canadian dairy and poultry farmers for potential financial losses from the deal, the government is promising to invest $4.3 billion over the next 15 years in new income- and quota guarantees, and other programs to keep dairy and poultry farmers “financially whole.”
The additional duty-free access to Canada’s dairy and poultry market for TPP partners will be granted through quotas phased in over five years, and amounts to 3.25 per cent of Canada’s current dairy production (with the majority of the additional milk and butter being directed to value-added processing), 2.3 per cent for eggs, 2.1 per cent for chicken, two per cent for turkey and 1.5 per cent for broiler hatching eggs.
A typical dairy farmer will receive total federal government compensation of approximately $165,600 over the next 15 years, with an average chicken farmer receiving $84,100 and turkey farmer receiving $88,000. A typical egg farm could expect $71,500 and a hatching egg farm would receive approximately $191,700.
The Canadian government also says that it secured better terms for the rules of origin for vehicles and automotive parts than other TPP partners like Japan and the United States had initially been pushing for.
The TPP deal requires 45 per cent net-cost domestic content rules for cars, 45 per cent of net-cost content for “core parts,” and 40 per cent for other parts.
NAFTA rules up to now have stipulated that cars must have 62.5 per cent North American content for finished vehicles and 60 per cent for auto parts to be sold tariff-free in Canada, the U.S. and Mexico.
Japan had been pushing to allow for the duty-free movement of vehicles and auto parts containing as little as 30 per cent content produced in TPP countries. Canadian auto parts makers, meanwhile, are worried they will lose business to low-cost Asian producers that aren’t part of the trade deal, such as China and Thailand.
The Conservatives have been trumpeting the proposed agreement of 12 Pacific Rim nations as a boon to the Canadian economy and another example of why they are the only party that should be trusted to run the country as voters head to the ballot box in two weeks.
Tom Mulcair’s NDP is promising a New Democrat government wouldn’t be bound by the contents of the “secret agreement,” and is campaigning heavily against expected parts of the deal in hopes of shoring up support in Quebec and Ontario.
Liberal Leader Justin Trudeau has criticized Harper and the Conservatives for being too secretive about the negotiations and failing to tell Canadians what’s at stake with an agreement. He hasn’t gone as far as Mulcair in expressing concerns with the deal or if the next government would be tied to its terms.
The 12-country TPP – which includes Canada, the United States, Japan, Mexico, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam – represents a market of nearly 800 million consumers and almost 40 per cent of the global economy, with a combined GDP of about $28.5 trillion.
The TPP agreement is expected to surpass the North American Free Trade Agreement (NAFTA) in economic importance to Canada and includes two of the world’s three largest economies (the U.S. and Japan).
The agreement must be ratified by parliaments in each country, which could prove a serious challenge and take several years to complete
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