November 9, 2017
The Right Honourable Justin Trudeau, P.C., M.P.
Prime Minister of Canada
80 Wellington Street
Ottawa, ON K1A 0A3
Re: Trans-Pacific Partnership
Dear Prime Minister Trudeau,
I have been following reports suggesting that Canadian officials are pursuing ratification of the Trans-Pacific Partnership (TPP) trade agreement. Recent reports suggest that a deal between Canada and the 10 remaining TPP partner countries could be announced as early as Friday. This is deeply concerning.
Our union has submitted to the federal government its view, on multiple occasions, that the TPP agreement is fundamentally-flawed. Across a number of important areas, including in auto, telecommunications, cultural policy, labour rights, supply management, and intellectual property rules, the TPP leaves Canadians worse off. This should come as no surprise since the current text was negotiated with limited input from Canada; a result of Canada’s late entry into talks under the direction of former Prime Minister Stephen Harper.
The potential pitfalls for Canada as a result of this deal are clear. On the auto sector, specifically, the consequences of signing the TPP are severe. The rapid five-year phase out of Canadian auto tariffs threatens to accelerate the virtual one-way flow of trade in cars and parts to Canada from Japan. Market access for Canadian auto products has been historically and unfairly restricted in Japan, and for reasons that extend beyond border tariffs, including various non-tariff barriers – areas that Japan has so far refused to negotiate on. As a result, Canada has faced both rising trade imbalances with Japan, and non-reciprocal market access.
To put this into clearer perspective, for every single finished vehicle shipped to Japan, 600 more are sent back to Canada. In terms of total trade value, Canada’s shipped just $30 million in automotive goods (cars and parts) to Japan, while Japan returned more than $5.5 billion.
It also makes absolutely no sense for Canada to agree to TPP rules (struck between Japan and the United States) that weaken the regional content qualifications for tariff-free movement of cars and parts between TPP nations. These rules would essentially grant preferential tariff treatment to cars and parts, even if more than half originates from outside the TPP trading bloc. This is especially concerning at a time when those same regional content rules may end up changing (in fact, strengthened) in a revised NAFTA – eliminating a key incentive for Japanese auto manufacturers to make future production investments in Canada.
Aside from auto, I am particularly concerned that Canada might proceed with a TPP that contains an Investor-State Dispute Settlement mechanism, an extraordinary and extraneous investment protection that has come to symbolize the inherent unfairness in trade agreements – agreements that have prioritized the rights of investors over all other stakeholders.
I am somewhat encouraged by your comments this week that Canada “will not be rushed” into signing a TPP deal. It is also encouraging to hear government officials signaling a desire to see trade treaties advance progressive goals. It’s vitally important that the government continues to identify what this means in practical terms, moving forward. Ultimately, Canada needs to establish itself a new framework through which to engage in international trade.
But there are deep-seated concerns with the TPP that make the agreement both indefensible and unsupportable. Abandoning the TPP, and resetting our trade policy priorities, is not only an appropriate measure but it is the best measure for Canada at this time. I agree that the federal government should feel no pressure to re-engage in talks to solidify a deal that it had minimal input on.
Please feel free to contact my office should you wish to discuss this matter further.
CC: François-Philippe Champagne, Minister of International Trade