TPP Trade Deal a Big Winner Alberta, and Canada

wheatOn October 4th, twelve countries – including Canada – came to a final agreement on the historic Trans-Pacific Partnership (TPP) trade deal. This agreement is of huge consequence for Alberta’s economy and consumers, and is overwhelmingly positive for our province.

This agreement will give Canadian exporters hugely expanded access to the markets of Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, representing a 800 million people and a gross domestic product (GDP) of $28.5 trillion. This will build upon the trade agreements that Canada already has in place with 51 different countries.

Alberta alone already exports nearly $98 billion a year to TPP countries with current trade barriers in place. With Canada’s signature on this agreement, almost all remaining tariff trade barriers will be eliminated, allowing that figure to grow considerably.

The agreement will allow duty-free access to this massive market place for the vast majority of our industrial goods, minerals, forestry products, and agri-food products, including wheat, beef, pork, and barley. Many of the products on this list are key pillars of our economy right here in Strathmore-Brooks.

Any place named Wheatland County is sure to benefit from increased wheat exports. In Japan, feed wheat will now be duty and quota-free. Food wheat tariffs will be reduced by 45% and we will have access to 53,000 tonnes of export space.

Canada is one of the largest agricultural producers and exporters in the world. With almost half of Canada’s total agricultural production being exported, the potential for growth in the sector lies in its ability to expand into markets abroad.

Japan has long blocked our beef exports into that market. With this agreement, tariffs on Canadian beef into that country will drop from 38.5% on chilled or frozen beef to 9%. Tariffs of up to 50% on processed beef will be eliminated outright.

Similar numbers apply for other countries and countless products.

The benefit to Alberta’s export-driven economy will be profoundly positive.

Alberta’s consumers will also benefit substantially. In trade deals, politicians often pretend that allowing imports into our own market is somehow a net loss; that allowing more competition in our market is somehow bad for consumers. In fact, the biggest winners from free trade are the consumers who now have more choice and competition for their business.

A concession in the TPP is the “compensation” that taxpayers will pay out to industries that will now be open to more competition. This includes $1 billion to the auto industry where we will now be allowed to purchase some non-North American vehicles at a cheaper price, and where the costs of inputs to North American vehicles could also come down.

Add to this $4.3 billion in “compensation” to the dairy industry, where import quotas will only be opened by 3.25%. This is because dairy is a heavily regulated industry in Canada, with strict quotas on supply, and the government has deemed it necessary to smooth this transition.

The TPP will secure new market access opportunities for Canadian dairy, poultry and egg exports. Dairy, poultry and egg producers and processors will benefit over time from increased duty-free access to the United States and all other TPP countries. This will include complete tariff elimination on some specialty cheeses, including several artisanal cheeses, entering the United States. More importantly, if these payments are the price of Canada securing access to a $28.5 trillion market to export to, then it is well worth the cost.

The TPP has been negotiated for seven years, and timing of the conclusion of negotiations were out of our federal government’s control, as it involved 11 other countries. Since we are currently in the middle of a federal election, Canada has not yet officially implemented the deal. Our participation in this trade agreement appears to be contingent on the results of the October 19th federal election. Of the federal parties, the Conservatives support it, the NDP are strongly opposed, and the Liberals are currently refusing to make any comment on it.

It is irresponsible for parties to threaten to tear up such an economically important agreement just because it was negotiated by another party. Beyond the economic consequences, the diplomatic fallout would be considerable.

But that’s all federal politics, and both the NDP and Liberals don’t exactly have a long tradition of representing Alberta’s best interests. What about Alberta’s own government?

Virtually every sector of Alberta’s economy stands to gain from the TPP, yet our own NDP government has remained silent on it. Alberta’s government is playing politics by refusing to support a deal in our own best interests, ostensibly to avoid embarrassing Thomas Mulcair. Just as Alberta’s government has refused to table a budget until after the federal election is over, Alberta’s interests are continuing to take a back seat to the federal NDP’s political interests.

Alberta’s economy is hurting badly. Allowing our non-oil sectors to export their products to a larger world market is just the kind of thing that can get us back on track and diversify our economy. Alberta’s government should recognize this and do what’s best for Alberta.

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