ATLANTA—Twelve nations, including Canada, have reached a tentative deal on a massive Pacific Rim trading bloc billed as the largest-ever deal of its kind, with implications for a staggering scope of industries, workers, and for long-term international relations between countries on four continents.
After five days of marathon, around-the-clock negotiations, a deal was announced today to create the Trans-Pacific Partnership, which would cover 40 percent of the world’s economy, for starters.
But participants predicted it would become the building block for future trade deals.
“Today is a historic day; it is a great day for Canada, it is a great day for Canadians,” Prime Minister Stephen Harper beamed during a news conference this morning in Ottawa.
“With this agreement, the largest economic partnership in the history of the world, Canadian exporters will gain nearly tariff-free access to almost 800 million customers in the Asia-Pacific region,” Harper noted.
“The 11 countries with which we will partner have a combined GDP of nearly $30 trillion, including, crucially for us, Japan, the world’s third-largest economy and a vast new market for Canadian enterprise and Canadian goods,” he added.
First, however, the deal requires political approval.
To take effect, the deal must be ratified by the parliaments and law-making authorities of all 12 member countries.
Canada will be the first political testing-ground—the agreement lands smack in the midst of a federal election campaign that will decide who will control the Parliament that determines whether it lives or dies.
The drama reached a high point overnight as a series of delays culminated in an agreement around 5 a.m. on a persistent irritant involving dairy and the future of Canada’s tightly-controlled sector.
The Canadian government appears to have guaranteed the long-term entrenchment of the supply-managed sector, which is detested by free-market economists but backed by every major political party, provincial governments, and the domestic dairy lobby.
Canada agreed to 3.25 percent more foreign imports—a minuscule change compared to what some countries asked for.
That means a bit more international products like butter on grocery shelves now 90-percent dominated by domestic content.
For their loss, the government would compensate Canadian farmers billions of dollars under a series of programs over at least 10 years.
“We will keep our supply-managed farmers whole from any loss of income or quota value stemming from this agreement,” Harper pledged.
“Cabinet has approved a $4.3-billion fund to be paid to farmers and processors over the first 15 years of this agreement.”
It’s a little less clear what impact the deal could have on the auto sector.
The agreement would allow a 17.5 percent greater tariff-free share of cheaper intercontinental parts compared to the standard set out in NAFTA, although the formula apparently is complex and includes a series of exemptions.
“I want to reassure the Canadians who depend on it for their livelihood that we have reached an agreement that will clearly benefit our auto industry here at home,” Harper said.
“This agreement will mean the well-paying jobs in the auto sector that they continue to support thousands of Canadian families for years to come.”
New measures to attract auto investment and protect auto-assembly operations in Canada will be forthcoming shortly, he added.
While he didn’t make any promises specific to workers in any individual sector, the Canadian envoy to the talks appeared to insist there would be no net negative impact on Canadian employment as a whole.
“We certainly don’t anticipate that there will be job losses,” said International Trade minister Ed Fast, who suspended his re-election campaign in B.C. for nearly a week to attend the Atlanta talks.
“Obviously there will be some industries that will adapt.’’
His eminently quotable New Zealand counterpart elaborated on the big picture.
Earlier this week, Tim Groser, apparently referring to the smaller-than-hoped-for concessions in dairy, said that to complete a deal would require every country to take a deep gulp and swallow a few ‘’dead rats.’’
But today he painted the agreement as a historic geopolitical event—and predicted others would join, without naming specific countries.
Hallway chatter at the five-day talks focused on whether this might become the blueprint for a trade deal with China, or maybe even a partnership with other regional blocs like the European Union.
‘’Long after the details of this negotiation on things like tonnes of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved here remains,’’ Groser said.
‘’It is inconceivable that the TPP bus will stop in Atlanta. The TPP bus will move on,’’ he added.
Several countries, including Thailand and Colombia, already have mused about joining TPP, which involves North America, Chile, Peru, Japan, Brunei, Singapore, Vietnam, Malaysia, New Zealand, and Australia.