No deal: Countries leave Hawaii without 12 nation trade agreement

By , on August 2, 2015


Prime Minister Stephen Harper (Facebook photo)
Prime Minister Stephen Harper (Facebook photo)

Prime Minister Stephen Harper was prepared to make a triumphant announcement Friday night about Canada joining the largest free-trade zone in history, and use that as a launchpad into an anticipated weekend election call.

But the planned event in Parliament’s Centre Block never happened.

That’s because a few thousand kilometres away, negotiators couldn’t close the deal. Ministers from 12 countries left Hawaii without a Trans-Pacific Partnership treaty, and without a date set for their next meeting.

Now the Conservative government finds itself in a rare position: instead of campaigning on a free-trade deal, it might have to negotiate one in the midst of a national election.

International Trade Minister Ed Fast was asked about the impending Canadian vote and whether his government would be able to participate in the next round of talks.

“When our partners reconvene, and we trust that will be very soon, Canada will continue to be at the table as a constructive partner — with a sincere desire to complete these negotiations.” Fast told a Maui news conference Friday.

“Canada came to Maui ready to conclude a TPP. We were active, constructive players at the table.”

The countries had arrived in Hawaii last week amid expectations they might close out a free-trade agreement covering 40 per cent of the world’s economy.

They got closer — but couldn’t cross the finish line.

“We have made significant progress,” said Michael Froman, the head of the U.S. delegation.

Agriculture is one of the final sticking points _ which participants describe as a normal phenomenon in trade negotiations, given the political sensitivity around farming and food.

In recent months, other countries have singled out Canada for having taken a hard line on allowing foreign competition into its tightly controlled dairy sector.

But one trade expert at the meetings said a 12-party negotiation is too complex to be boiled down to one issue and one country. Canadian dairy is just one piece of a bigger puzzle, Alan Wolff said.

“It’s highly interdependent,” said Wolff, a former U.S. negotiator who now leads the American National Foreign Trade Council, a commercial association.

“The question is, who moves? Canada has to take in some more dairy… Japan has to take in some more dairy. The U.S. has to take in some more sugar.”

At the same time the U.S. has a counter-demand — that other countries increase protections for cutting-edge pharmaceuticals against copycat versions. It wants countries to adopt its 12-year exclusivity period for new biologics products; Canada offers eight years and some countries offer virtually no protection.

So the stakes of this deal would extend beyond grocery stores, farms, research labs and pharmacies — where prices could rise or plunge, depending on the product.

They could also be felt at ballot boxes around the world.

Canada is the first TPP country facing a general election — but others have looming political deadlines.

In the U.S., with presidential primaries beginning in five months, Hillary Clinton is facing pressure from her Democratic party’s left to oppose the TPP and has avoided comment so far. Peru has an election next year. So does Japan, where a drop in recent polls has left Prime Minister Shinzo Abe politically vulnerable.

Big free-trade deals have collapsed before, under the weight of delay and added political pressure. It happened to global talks at the World Trade Organization, and to the proposed Free Trade Area of the Americas.

“That’s the risk (with delays),” said Wolff, who negotiated U.S. access to the Japanese market in the 1970s, helped draft early U.S. fast-track trade legislation, and worked on the landmark GATT treaty.

Dairy has long been politically sensitive in Canada. At least one Canadian negotiator of the original free-trade agreement with the U.S. said he wished they’d dumped supply management in the 1980s, but it was too politically difficult.

Any major opening of that sector could produce tension between parts of the country with dairy farms — especially in rural Quebec and Ontario — against big population centres, where consumers might like more options at the grocery store, and enjoy the idea of competition lowering prices for cheese and yogurt.

Canada’s political parties all insist they’ll continue supporting limits on dairy imports.

However, the Harper government agreed to open the market slightly with the recent Canada-Europe free-trade deal, and had apparently made another overture this week. But New Zealand’s representative in Hawaii described a Canadian agriculture offer as so insignificant as to be unworthy of discussion.

Harper has said Canada can’t be left out of this agreement.

If it’s going to happen anytime in the next two and a half months, however, he’ll have to negotiate it from the campaign trail.