On Oct. 5, 2015, a tentative deal was reached between 12 separate nations, including Canada regarding the Trans-Pacific Partnership (TPP). Negotiations concluded after five days of debate on the contents of the new trade bloc agreement. While early reports released by various news sources have expressed varying opinions on the existence of the TPP, with both proponents and detractors coming out of the woodwork in equal number, a common sentiment exists within the average Canadian: nobody’s quite sure what the TPP is. It’s important to break down the basics of the TPP to find out what this new trade agreement means for Canadians. The Trans-Pacific Partnership is, for now, the largest trade agreement of its kind and includes 12 different nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The goal of the TPP is to expand the economic bonds between these nations and foster trade, while boosting growth in each country. The countries involved in the TPP control 40 per cent of the world’s GDP, so the nature of the deal is important to not only the countries involved, but the international economic community.
The meat and potatoes
The main points of the TPP include the removal of tariffs and taxes on a wide range of products, though each product has a phase-out period depending on the product in question. These removals should theoretically lead to more foreign products finding their way into domestic marketplaces. The reduction of taxes and tariffs affects every nation involved in the TPP, with some countries economically benefitting more than others. The TPP also has measures to protect the digital economy, while patents on pharmaceuticals will last longer in many countries than they are currently allowed.
The nuts and bolts for Canada
The two sectors of the Canadian economy that will be impacted the most if the TPP is implemented are the agricultural sector and the automotive industry. Canadian dairy farmers will be impacted by the additional 3.25 per cent share of imports to be allowed in the Canadian domestic market. The domestic market has maintained a quota of 90 per cent domestic vehicles until now. Canadian farmers will be compensated to deal with any loss that may be incurred through the TPP. The automotive industry will see an influx of foreign auto parts – a boon for consumers, but a blow to autoworkers. Vehicles will be allowed to be imported without tariffs, provided that 45 per cent of the vehicle is made up of parts from Canada, a decrease from the 62.5 per cent provision that was implemented under the North American Free Trade Agreement (NAFTA). While the influx of foreign goods will cause increased competition in the Canadian domestic market, the export of Canadian goods, particularly agricultural goods and equipment to countries such as Japan, provides Canada with the opportunity to become a greater global economic player than it has been in the past.
The Conservative government has been adamant in the implementation of the Trans-Pacific Partnership, while the Liberal and NDP parties have stated their intention to look into the TPP before any final decision is passed. While the Trans-Pacific Partnership has been passed, each member country must still implement and pass the TPP in their countries.