New TPP trade deal offers huge long-term gain
Freer trade under the TPP will lower tariffs barriers, open up new markets, and provide new customers to Canadian producers - by Roslyn Kunin
Vancouver - Many words have been shared on the Trans-Pacific Partnership (TPP) agreement, a lot of them negative. This may be, as the French say, a lot of noise for an omelet. First, the TPP agreement is far from certain. It has to be ratified by the legislatures of 12 countries, many of which have political leaders who aren't necessarily onside.
Second, the document is still subject to legal review. Imagine what a cadre of lawyers can do with a technical document of more than 1,000 pages. Third, even if the TPP clears those hurdles, its provisions will be implemented gradually. The United States will take 30 years to implement the freer trade provisions on its truck sector.
Finally, none of us really know what we are talking about since the agreement has not yet been released.
The loudest of opponents predict large job losses in the auto sector and the death of the family farm. All this, according to the pessimists, will be of no benefit as we already have trade agreements with most of the TPP countries and the ones we are adding make up only about three per cent of our exports.
The reason we sell so little to the additional countries is that they have high barriers, such as tariffs in the 40 per cent range, on Canadian goods. Freer trade under TPP terms will lower these barriers, open up these markets, and provide new customers to Canadian producers.
Some jobs will be lost in sectors like automobile production. But how many is hard to predict. To the extent that it reacts to freer trade by becoming more competitive and productive, the automotive sector might even grow. As low-skilled labour becomes a smaller component in manufacturing, we in Canada will be in a better position with our more technologically-adept workers.
It amazes me that there is so much concern about those with lower incomes and how they are hurt by the high cost of housing. Yet, no one seems to care about how the high cost of basic foods like eggs, milk and poultry affect all of us, especially those with lower incomes. We pay way above world level prices for much of our food.
Farming at a family level has not been a major component of Canadian agriculture for some time. Food production, especially dairy, is dominated by large corporations such as Saputo. They benefit from the monopoly (supply management) that protectionism has given them.
But let us turn to some good news. The real advantage of freer trade is that it helps consumers - and that is all of us. Businesses also gain from free trade and greater access to more markets. Every business needs customers and the new countries on the Pacific that the TPP agreement will open up for us, such as Vietnam and Malaysia, have growing populations with rising incomes looking for the kinds of products that B.C., and all of Canada, have to offer.
As income rises, demand for meat, seafood, fruit, eggs and dairy products goes up. Canada's agricultural sector should not be complaining about the TPP agreement. They should be celebrating huge new market opportunities enhanced by our reputation for food of variety and high quality.
For B.C., forestry and mining are more important than agri-food. The TPP agreement, by reducing tariffs and other restrictions on wood and mineral products, will offer B.C.'s resource sector better access to large developed markets like Japan and rapidly growing markets in Asia's developing countries.
The TPP agreement is far from a fait accompli, but it will be a good thing for all consumers and many producers in B.C. and Canada. Those who gain are numerous and widespread. Many of the benefits will take a long time to become visible as prices drop and new opportunities open up.
Let us not be distracted by the few who may have to adjust to some short-term pain in exchange for all of our long term gains.
Troy Media B.C.'s Business columnist Roslyn Kunin is a consulting economist and speaker. Source Troy Media