With all of the attention given to the American circus election, many Canadians are under the impression that this election could have massive consequences for us. While it’s certainly a story that’s equal parts interesting and terrifying, what really has implications in this election for Canada is the recently signed Trans Pacific Partnership (TPP) trade deal.
Despite any campaign talk of building a wall on the Canada-U.S. border, the strong relationship between Canada and the U.S. is something that is going to be very hard for any president to change. We’re the world’s largest trading partners, with a U.S. $1.4 trillion trade and investment relationship, something that won’t be changing in the near future.
What will have a strong impact on Canada is the TPP trade deal. This trade deal involves 12 countries bordering on the Pacific Ocean who, upon ratifying the deal, agree to either remove or strongly limit their tariffs on a large amount of goods and services. This would create a free trade area that encompasses 40 per cent of the world’s economic activity.
Free trade is an important issue and it’s a good thing that we’re getting another free trade deal with such a large section of the world, especially such a broad range of countries. Free trade may cost some jobs but it can create a situation that will more efficiently allocate the resources of the countries involved, since each will fill the markets that no one else can.
Canada signed the TPP on Feb. 4, but it still has to ratify it by a vote in Parliament, that should pass since it’s a liberal majority house. Not all Canadians are supporters of the partnership and dairy farmers protested in downtown Ottawa last fall, worried about what impacts the deal will have for them as tariffs on dairy products from other countries will fall.
There have also been concerns about the backroom nature of some of the negotiations and whether the public’s best interest is really being protected. That’s a valid concern and the public should have had a better idea of what was being negotiated. However giving Canadian business better access to these markets allows them to increase sales, make more money and then hire more Canadian workers.
It’s too early to really tell what the impact of the TPP will be, since many of the tariff reductions in other countries are taking place gradually over the next several years, and in some cases even decades.
Essentially this deal would create a larger version of the North American Free Trade Agreement (NAFTA), with more countries involved in different marketplaces. When it was proposed, NAFTA, was met with considerable pushback and protest, yet has proved to bring greater economic integration and prosperity for the countries involved. Since NAFTA’s passing in 1993 Canada has 4.7 million new jobs according to the Council on Foreign Relations. There are many, mostly in the U.S. who blame NAFTA for the loss of low skilled jobs, although that appears to have been a speeding up of a preexisting trend, not the creation of a new one.
In an increasing globalized age where the need for trade is increasing, it makes the most sense to keep it as free and accessible as possible.