At the APEC leaders’ summit that took place in Honolulu two weeks ago, Prime Minister Stephen Harper announced that Asia would become the federal government’s new trade priority. As a result, he indicated, Canada would formally ask to join the negotiations for a Trans-Pacific Partnership (TPP), which includes Pacific Rim countries such as Australia, Chile, Malaysia, Peru, Singapore and the United States. This was hailed as a new vision or strategy for Canadian trade relations, as if the federal government had just discovered the Asia-Pacific.
Indeed, it is true that Asia is where the action—in terms of economic growth—is to be found these days. Economies such as China are certainly important export markets for our natural resources. Europe is about to re-enter recession, as a result of its debt crisis; and the United States will likely continue stagnating economically for another year and a half until the next president and his (Michelle Bachman having little or no chance to win) team are fully operational. It is unsurprising, then, for everyone’s eyes to be turned to Asia. Given that Europe and the U.S. represent about 90% of our international trade, doing more business with our Asian partners in order to maintain, if not increase, our own economic growth looks like the obvious strategy to pursue.
Focusing on trade with Asia is nothing new for the Harper government. First, it has energetically supported the Asia-Pacific Gateway and Corridor Initiative. Second, it is currently negotiating free trade agreements with India and Korea, as well as exploring the possibility of such a deal with Japan. Joining the TPP negotiations would just be a logical extension of these potential free trade agreements, now that the federal government may be prepared to sacrifice agricultural supply management mechanisms. (Canada was apparently asked to join the TPP negotiations from the beginning, but refused to do so for reasons that still remain unclear.)
There might, however, be more than meets the eye when it comes to Canada joining the TPP. Looking at the list of TPP partners, Canada already has free trade agreements with Chile, Peru and the United States; this leaves Australia, Brunei Darussalam, Malaysia, New Zealand, Singapore and Vietnam. Those countries are hardly Canada’s largest trading partners; altogether they represent 1% of Canada’s exports. Moreover, if, as the prime minister indicated at the APEC summit, the goal is to sell more of our natural resources – especially our energy products – to the Asia-Pacific region, those are not really the countries that represent significant markets for our goods (except maybe for Malaysia and Vietnam).
So although the news that the federal government has finally decided to join the TPP bandwagon should be welcome, the excitement and novelty that the media has associated with it should be tempered. Canada is already working on deepening its relations with the Asia-Pacific, and the TPP is just another way to do so. At the same time, we should not forget that in spite of the current economic difficulties that Europe and the United States are experiencing, they should not be neglected as trading and investment partners. Canada’s economy remains very much dependent on what happens in these economies. Thankfully, the Harper government seems to understand this reality as it continues to look for ways to reinforce our economic relationships through initiatives such the Canada-EU Comprehensive Economic and Trade Agreement and the Canada-US Border Action Plan.