Thursday, November 29, 2012

Clark pessimistic about TPP talks


Veteran trade analyst Peter Clark is pessimistic about the Trans-Pacific Partnership trade negotiations that Canada joined earlier this year.

He says the United States has taken negotiating positions that are so difficult for the others that these negotiations are in danger of collapsing just as the Doha Round of World Trade Negotiations collapsed last year.

The U.S. needs to become more flexible to win support from the others, Clark says.

As for Canada, he sees little in the negotiations to benefit Canadians, other than to “get inside the tent” of the partnership so it’s not excluded from some markets for some products and services.

He says Canada has been losing manufacturing jobs and that’s a key concern in these negotiations. 

But the U.S. has kept a key provision out of the negotiations – disciplines on state and municipal subsidies and purchasing of supplies and services.

For example, Clark says Memphis, Tennessee, took Electrolux company jobs out of L’Assomption, Quebec, by paying $188 million of the $190 million to build a new factory there.

Caterpillar moved jobs out of Goderich, Ont., because it received subsidies to relocate in the U.S.

The bargaining chip the U.S. offers to get what it wants is access to its markets, Clark said.

That is a powerful incentive for some of the countries at the table, but not for others who already have individual free-trade agreements.

Canadian dairy farmers might be cheering if New Zealand, which is hosting the talks next week, exercises its threat to walk out unless Canada and the U.S. open their dairy markets.

On the other hand, there are complaints about how Australia and New Zealand are using sanitary and phytosanitary regulations to block food imports. Gaining better SPS disciplines would be a major gain for Canadian farmers, making the TPP better than the World Trade Organization's existing rules, he said.

The U.S. wants better access to Pacific markets for rice, but it offers rice producers huge subsidies and they have plenty of water. Pacific-nation farmers want protection for rice.

They would like to gain access to the U.S. sugar market, but U.S. sugar producers, who operate behind relatively high tariffs, don't want to budge.

Clark says the U.S. motives arise out of another set of Pacific trade negotiations from which the U.S. is excluded – the Regional Comprehensive Economic Partnership whose main participants are China, India, Japan and Korea.

Clark says the TPP negotiations could become far more valuable to Canada if Japan is allowed to join. Canada has opened direct trade negotiations with Japan.

Clark says the TPP negotiations right now are “little more than a gift to Washington,” but one that will be resisted by the other nations which explains why he says the talks may go nowhere.

Failure of the TPP negotiations would please Canadian dairy and poultry farmers, just as failure of the Doha Round of World Trade negotiations comforted their anxieties that they would have to reduce the prices they can charge Canadians and suffer significant losses of their profit margins and quota values.