Killing the Trans-Pacific Partnership (TPP) a huge favour to Canada (and millions of others)
Trump did the U.S. as well as the rest of the free world a favour in dumping the Trans-Pacific Partnership. The TPP wasn’t about unleashing the power of the private sector to bring prosperity to millions — does anyone really believe Barack Obama staked his reputation on TPP in order to further a capitalist utopia? No, Obama wanted TPP as a legacy issue partly to fetter the free market and partly to establish his “Asian pivot,” a dubious project involving the abandonment of allies elsewhere in order to bring China to heel.
“With TPP, China does not set the rules in that region; we do. You want to show our strength in this new century? Approve this agreement,” Obama urged in his final State of the Union Address last year. He needed TPP for geopolitical reasons, “to advance American leadership in Asia.”
Here, Obama — who called himself America’s first “Pacific President” — was merely echoing his 2015 National Security Strategy that affirmed that trade deals are often motivated more by foreign policy considerations than economic benefits. “Sustaining our leadership depends on shaping an emerging global economic order … we must be strategic in the use of our economic strength to set new rules of the road, strengthen our partnerships, and promote inclusive development.”
Obama’s secretary of Defense, Ashton Carter, was even more blunt in a speech that year on the Asian Pivot, stating that “passing TPP is as important to me as another aircraft carrier.” He believed TPP would “promote a global order that reflects both our interests and our values.”
America’s free trade agreements — going back to its first FTA with Israel in 1985 — have typically been motivated more by geopolitical than economic considerations, whether to bolster an ally’s economy, as was the case with Israel, or to secure co-operation in the fight against terror, as with the Bahrain, Morocco and Oman FTAs. They serve a foreign policy goal of locking countries into the U.S. sphere of interest.
“TPP puts American workers first by establishing the highest labor standards of any trade agreement in history, requiring all countries to meet core, enforceable labor standards as stated in the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work,” the Obama White House announced upon reaching agreement on the TPP’s terms with its 11 Pacific partner countries.
Under TPP, the trade advantages developing countries now offer in the form of lower wages and informal work environments would have been undercut by their need to conform to ILO requirements on minimum wages, hours of work and unionization. “In fact, TPP will result in the largest expansion of fully-enforceable labor rights in history, including renegotiating NAFTA and bringing hundreds of millions of additional people under ILO standards,” the Obama White House boasted.
The deal created openings for more attacks on oilsands and pipeline projects
The economies of developed countries such as Canada, too, would have been undercut by TPP through “the highest environmental standards of any trade agreement in history,” as the White House announced. “The agreement upgrades NAFTA, putting environmental protections at the core of the agreement, and making those obligations fully enforceable through the same type of dispute settlement as other obligations.” This, along with TPP’s high-sounding provisions to “promote sustainable development and inclusive economic growth” creates openings to arbitrarily attack resource projects, as Canada has learned to its sorrow through economically senseless restrictions on oilsands and pipeline developments.
In cancelling TPP, Trump cancelled the TPP’s ability to undermine the free market and the sovereignty of countries representing 40 per cent of the world’s GDP. That’s a blow against the regulatory state and for economic freedom, one no free marketer should lament
Donald Trump does Canada a favour by axing Trans-Pacific Partnership:
Tues., Nov. 22, 2016
The U.S. president-elect did the deed Tuesday when he confirmed, via YouTube video, that one of his first actions on taking office in January will be to begin the process of withdrawing from the deal.
The 12-country TPP is structured in such a way that an American withdrawal, unless reversed by 2018, automatically voids it.
Theoretically, the other parties to the arrangement — Canada, Japan, Mexico, Vietnam, Malaysia, Chile, Peru, Brunei, New Zealand, Singapore and Australia — could override that provision and go ahead minus the U.S. But Japanese Prime Minister Shinzo Abe scotched that idea Tuesday, noting that the pact, as written, would be meaningless without American participation.
Trump’s announcement that he will honour his campaign pledge and axe the TPP is bound to be described as another victory for the dark forces of isolation. In fact, the TPP was never a very good deal for Canada.
A study done for the federal Global Affairs department estimates that, at best, the TPP would have boosted the Canadian economy by slightly more than a tenth of a percentage point — thanks in large part to increased exports to Japan.
But there would have been serious casualties along the way. The government study estimates auto exports to the U.S. would have declined by $3.6 billion.
The deal would have also whittled away at the supply-management system that protects dairy, poultry and egg farmers. It would have increased the cost of leading-edge drugs and, according to tech entrepreneur Jim Balsillie, crippled Canadian innovation.
The Canadian government itself was never that keen on the TPP. Given that Canada already has free trade deals with four TPP countries, former prime minister Stephen Harper was not anxious to join the talks.
In 2008, a spokesperson explained that Harper thought they weren’t worth the trouble.
It was only when Ottawa realized that the TPP might supplant the North American Free Trade Agreement that Canada became alarmed. In 2012, both Canada and Mexico signed onto the negotiations.
Upon assuming government in 2015, Justin Trudeau’s Liberals signalled that they favoured free trade in principle. But officially at least, they remained steadfastly noncommittal about the TPP. In part, that’s because of the difficult domestic politics surrounding the deal. In part, Ottawa was waiting for the outcome of the U.S. presidential election.
While both Trump and Democratic nominee Hillary Clinton said they opposed the TPP, past experience suggested she would change her mind if she won. She didn’t win. He did. Now the TPP is to all intents and purposes dead. May it rest in peace.
The Trudeau government is already pursuing new grails. It is entering talks with China. It wants to resuscitate talks with Japan.
Who knows? It may even apply to join the Chinese-dominated Regional Comprehensive Economic Partnership talks taking place among 16 Asian and Pacific countries.
Perhaps, if the federal government exercises humility and concentrates on trade rather than economic integration, something useful will come from all of this — although it is hard to imagine Canada being more open to Chinese and Japanese imports than it is.
Meanwhile, Ottawa might want to offer Trump a secret word of thanks. By killing a flawed trade and investment deal, he has relieved the Trudeau government of having to make that decision itself.
And he has reminded us again that while economists and experts may worship at the altar of free trade, many voters, including those who elected this crafty demagogue, do not.