Canada’s Approach to the TPP, the CPTPP and CPTPP Expansion: From Disinterested Observer to Ardent Supporter

Abstract

Canada has undergone a remarkable metamorphosis in its relationship to the Trans-Pacific Partnership (TPP) and its offshoot, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP (comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). Initially a disinterested and disengaged observer of the developing TPP process back in 2006–09, by 2011–12 Canada underwent a conversion to become a determined, almost desperate suitor seeking to gain entry to the TPP club. It finally succeeded, but a change of government in 2015 led to a re-evaluation of the decision to accede to the TPP, under pressure from anti-globalization forces. Effectively, Canada sat on its hands for over a year until the U.S. had determined its final position. Then, after the TPP’s impending collapse, when the United States under then president Donald Trump announced its withdrawal, Canada changed tack once again and decided to work with Japan and others to rescue the agreement. However, during the negotiations to adapt the original TPP into the TPP-11 agreement (which became known as the CPTPP), Canada earned a reputation as a difficult and demanding partner, pushing its “progressive trade agenda” and slowing down the process. Indeed, Canada is often seen as trying to impose very progressive values on a region with little receptivity for such views. The cultural-exemption and auto-trade issues were of principal concern to Canada. Through its policy positions and negotiation style, Canada under the Trudeau government almost scuttled the CPTPP process and risked finding itself locked out once again. Quick action was taken to stem the damage and Canada became not only a signatory, but one of the first six countries to ratify the CPTPP, bringing it into force on December 30, 2018. Today, Canada has fully embraced the CPTPP, situating it as an important leg in its developing Indo-Pacific strategy, and is open to considering expansion to new members who are able and willing to meet the CPTPP’s high standards. 

Deborah Elms, in her essay “The Origins and Evolutions of TPP Trade Negotiations”
(Elms, 2016, 29-49), sketches out the history of how the TPP came into being, starting with the “P4 agreement” (between Singapore, Chile, New Zealand and Brunei) in June 2005. That agreement, technically called the Trans-Pacific Strategic Economic Partnership, came into effect “with very little attention” (Elms, 2016, 30) and was incomplete. It did not cover investment or financial services, which were to be left for later negotiation. When the parties finally got around to discussing the two missing chapters in February 2008, the United States joined the discussions. In September 2008, a couple of months prior to the Asia-Pacific Economic Cooperation (APEC) summit to be held in Lima, Peru in November, the U.S. announced that it would seek to join the agreement in its entirety. This set the stage for announcements at that meeting of other countries joining the talks, namely Australia, Peru and Vietnam. Now there were eight.

What about Canada? At the Lima summit, attended by then prime minister Stephen Harper and then international trade minister Stockwell Day, Canada expressed no interest in getting on board, much to the frustration of accompanying officials (Stephens, Conversation). Elms states (2016, 40) that Canada had expressed interest in joining earlier but had been rebuffed over concerns regarding the supply management system that it maintains for dairy, poultry and eggs. Dairy is a particular concern for both the United States and New Zealand. However, senior Canadian officials closely involved with APEC and trade policy at the time told the author that Canada had been invited to join the P4 agreement in the early days, by New Zealand, but had refused (Sloan; Plunkett). The assessment was that Canada had little to gain, as it already had an agreement with Chile, at the time was negotiating one with Singapore (which was never completed) and had little to gain from an agreement with New Zealand, given the political need to defend the dairy industry.

There are various explanations for Canada’s lack of interest in 2008–09. Part of the reasoning was domestic. The Conservative government of Stephen Harper was in a minority situation and would remain so until Harper won his first majority in 2011 (after two minority governments in which he was prime minister). Despite the Conservatives’ support for trade liberalization, it was a hot-button issue and anti-globalization sentiments were vocal, in Canada and in other countries. The Harper government was dealing with the 2008 financial crisis and was focused very much on the U.S. market and NAFTA. The initial coolness toward the P4 continued to apply, and from the perspective of trade negotiating resources, Canada was already fully engaged in negotiations with South Korea and the EU. There was concern that if Canada entered the TPP negotiations, it would have to make additional market concessions beyond those already conceded in NAFTA, but with little likelihood of getting additional concessions from the U.S. Yet, in the end, it was probably NAFTA that changed the position of Harper vis-à-vis the TPP.

Both Canada and Mexico had preferential access to the U.S. market through NAFTA.
There was growing concern in both countries that the TPP could be a back door to the U.S. market, undermining the value of NAFTA concessions. Autos were a particular concern. Canada and Mexico concluded therefore that they needed to be at the negotiating table.
In essence, Canada decided to try to enter the TPP tent for defensive reasons, although the possibility of Japan eventually joining was an additional factor, given Canada’s longstanding desire to improve its access to the Japanese market and the limited prospect that a bilateral agreement would be concluded in the foreseeable future (Ciuriak 2018).

That realization kicked off a series of meetings with officials from TPP-negotiating states, since admittance of new negotiating partners required a unanimous decision of the existing members. But, as in many things, the United States played an outsized role. The U.S. initially was not helpful, especially at the officials level. It is not fully clear why, but anecdotally

the author was told by U.S. trade officials that the addition of Canada would “complicate” matters. Canada’s unhelpful position on trade in dairy products was certainly a factor. Canada pushed its advocacy to the political level and Canadian participation in the TPP was a major topic of discussion between Harper and then president Barack Obama at

the 2011 Honolulu APEC summit. At that meeting, Obama “welcomed” Harper’s expression of interest in seeking to join the TPP talks and initiating consultations toward that goal (White House 2011).