Freeland Admits: U.S. Withdrawal Effectively Kills TPP Trade Deal

by: Obert Madondo |  | Published March 10, 2017, by The Canadian Progressive

Photo credit: Cool Revolution / Flickr (CC BY-NC-ND 2.0)

Soon after assuming office in January, U.S. President Donald Trump, signed an executive order pulling the United States out of the Trans Pacific Partnership (TPP) trade deal. This week, Canadian Foreign Affairs Minister Chrystia Freeland admitted that America’s withdrawal effectively kills the TPP.

Responding to a question from Liberal Sen. Joseph Day during a Senate appearance on Tuesday, Freeland said: “There can be no TPP without U.S. ratification.”

Canada and 11 other countries signed the deal in New Zealand in Feb. 2016, after years of secretive negotiations, creating the world’s largest economic trade agreement. The deal encompassed more than 40 per cent of the world’s GDP. I comprised these 12 countries: Canada, the United States, Australia, Chile, Brunei, Japan, Peru, Mexico, Vietnam, Singapore, Malaysia, and New Zealand.

Below is part of the exchange between Sen. Day and Freeland.

Sen. Day:

Minister, the question about how to advance trade in the Asia- Pacific is even more pressing now in the wake of the withdrawal of the United States from the Trans-Pacific Partnership. Some countries — Japan, for example — have pushed ahead to ratify the TPP, even without the United States, and are urging other countries to do the same.

There are also countries — Australia, for example — suggesting that TPP could be expanded and opened up to include China. There are also discussions of moving instead to a different regional trade deal involving China, such as the Regional Comprehensive Economic Partnership, or RCEP. Negotiations are ongoing between China and a number of Asia-Pacific countries but not, to my knowledge, Canada.

Minister, can you tell us what Canada’s plans are for Asia- Pacific economic relations? We could pursue a bilateral trade, Canada and China, we could try to salvage the Trans-Pacific Partnership or we could attempt to join the Regional Comprehensive Economic Partnership. Which one of these options will Canada pursue?

Freeland:

I do want to preface my answer by saying while I retain responsibility for the Canada-U.S. economic relationship, I am no longer trade minister, and we now have the extremely competent François-Philippe Champagne whose is more bilingual than I am. I hope you will invite him here.

And Mr. Champagne also speaks perfect Italian, so you can quiz him in Italian. I am sure he will have some great answers. Having said that, I love trade issues, so I will offer a few thoughts…

On the TPP, it’s important for people to understand that that agreement had a very is specific architecture. The architecture of the TPP is such that it can only come into force if it is ratified by a minimum of six countries equal to a minimum of 85 per cent of the economic activity covered by the TPP countries. In practice, what that means is the TPP can only come into force if it is ratified by both the U.S. and Japan. So there can be no TPP without U.S. ratification.

It is absolutely the case that some sort of other combination of TPP interested countries could happen. Chile is convening a meeting of TPP countries next week, and Canada will be there. China has been invited and the U.S. has been invited also, so different combinations are being discussed.

But I do want to caution honourable senators from thinking that it would be as simple as just taking the United States out. These agreements are very delicately balanced deals, and everyone makes different concessions based on the concessions they’re getting. If the U.S., with its huge market, is taken out of that picture, then a new calculus would apply to everyone. So reconstituting the TPP11 would be a complicated thing to do.

Canada negotiated the TPP under former prime minister Stephen Harper.  After winning the 2015 federal elections, the Liberals became as enthusiastic backers of the deal as the Conservatives.

TPP critics such as Osgoode Hall Law School professor Gus van Harten have argued that the “TPP would give special protections to foreign investors at significant public cost, without compelling evidence of a public benefit.” He’s even argued that the deal is “incompatible with the rule of law.”

As Industry Week reported in January, shortly before Trump’s inauguration, François-Philippe Champagne, the newly International Trade Minister, said “Canada would consider all its options with fellow TPP states, including whether a new deal can be salvaged without U.S. participation.”

RELATED: Michael Geist: As Trump Pulls the U.S. Out of the TPP, Canada Should Follow Suit

Michael Geist, the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, has argued that the deal “does little to advance Canadian law and policy.”  He recently suggested that “Canada should follow the U.S. lead and abandon the agreement.”

“As I chronicled extensively last year, there are significant problems with the TPP,” Geist blogged earlier this year. “The U.S. withdrawal offers the chance to hit the reset button by pursuing a renewed Canadian trade agenda featuring greater transparency, public participation, and preservation of the national interest.”

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Obert Madondo is an Ottawa-based progressive blogger, and the founder and editor of The Canadian Progressive. Follow him on Twitter: @Obiemad

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Obert Madondo

Publisher and editor
Obert Madondo is an Ottawa-based independent journalist and progressive political blogger. He's the publisher and editor of The Canadian Progressive.