Michael Geist holds the Canada Research Chair in Internet and e-commerce law at the University of Ottawa law faculty.
Donald Trump’s surprise presidential election victory promises to result in an overhaul of U.S. trade policy, including the immediate end of support for the Trans-Pacific Partnership, the controversial trade pact involving 12 Pacific countries, including Canada, the United States and Japan. While U.S. President Barack Obama held out hope that the TPP could be salvaged during the “lame-duck session” of Congress that occurs immediately after the election, his administration was quickly forced to concede that the deal has become politically toxic and stands no chance of passage. Since U.S. ratification is required for it to take effect, it’s effectively dead.
The Canadian government’s view of the TPP was always difficult to discern. It was negotiated by the previous Conservative government, but Prime Minister Justin Trudeau and International Trade Minister Chrystia Freeland have been noncommittal, focusing instead on public consultations that are still scheduled to run until early 2017.
Their ambivalence was not a function of trade skepticism – the Liberals emerged as enthusiastic backers of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union – but rather stems from the recognition that Canadian interests in the TPP were largely defensive in nature. With agreements already in place with many TPP countries, the agreement offered at best limited benefits for Canada’s economy.
Without a TPP, much of the attention has shifted to developing a Plan B. Those discussions typically involve identifying with whom to negotiate. The list is headed by the possible renegotiation of the North American free-trade agreement, implementing CETA and shifting toward bilateral agreements with leading economies in Asia. Canada reached a deal with South Korea in 2014 and has engaged in talks with Japan, India and China about similar agreements.
Yet, the how of negotiation may be more important than the who. The public backlash against trade deals points to a process that leaves many feeling excluded and to terms that are presented publicly for the first time as final. The real opportunity for Ottawa is not just to explore new trade partners but to challenge some of the long-standing assumptions about such deals in order to foster greater public confidence in the outcome.
First, the government should ensure that the same emphasis on transparency and public consultation that is emblematic of domestic policy development is mirrored in the trade file. The lack of transparency associated with the TPP – talks took place entirely behind closed doors with little public consultation or review of proposed provisions – fostered a culture of mistrust that made it a hard sell around the world.
Much of the TPP secrecy can be traced to Washington, which insists on absolute confidentiality of negotiations for its trade partners, even as it provides advanced access of the text to hundreds of its own business and trade associations. As Canada moves toward bilateral trade talks, there is the chance to develop a more open and transparent approach that includes active consultations and more open access to draft text and terms.
The new generation of bilateral trade deals should take a page out of older accords that focused primarily on tariff reduction. Much of the TPP focused on economic regulation, such as intellectual property enforcement, health regulation and environmental standards. Trade agreements are a poor place to negotiate these issues, which have traditionally fallen within the purview of international organizations that develop consensus-based treaties with broad stakeholder participation.
Canada has often done its best work within that multilateral environment. By contrast, Canadian influence was often sidelined in the TPP talks, which were dominated by U.S. and Japanese demands. While modern trade deals often include sections on economic regulation, requiring countries to meet global standards but shying away from dictating how to meet those standards provides an avenue to ensure an equal playing field consistent with international laws.
Much like CETA, TPP criticism has also focused on its investor-state dispute settlement (ISDS) rules, which are rightly viewed as providing companies with the power to challenge valid decisions from domestic courts. Canadian bilateral agreements should consider dropping ISDS altogether, recognizing that an effective court system provides businesses with the assurances needed to invest.
Mr. Trudeau’s government inherited a trade policy marked by secrecy, encroachment onto domestic regulation and little ambition to see Canadian policies reflected in the final texts. The TPP’s demise offers the chance for real change by pursuing trade agreements that offer economic gains and remain true to the commitment for an open and transparent government.
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