Thursday, July 30, 2015

NAFTA wrinkle in TPP trade talks


Canada’s benefits from the North American Free Trade Agreement (NAFTA) could be undermined if Canada fails to participate in a new Trans-Pacific Partnership (TPP) deal.

That new wrinkle emerged from reporting at the trade negotiations now underway in Hawaii.

Reporters were briefed that the TPP is likely to contain terms that will be even better than NAFTA for gaining entry to the United States market.

And if Canada isn’t part of the deal, it will lose out to others, including Mexico.

The reporters also said Canadians and Americans met privately during the TPP negotiations with a view to maintaining better terms for trade between the two countries – i.e. better than a TPP deal.

The automotive industry is offered as an example. Canada and Mexico are able to freely trade parts with the United States, but all three maintain tariffs, albeit relatively low ones, against other countries.

The TPP could wipe out that advantage so there would be more intense competition in the car-parts market.

The Globe and Mail also indicated that in the dairy negotiations, Canada is being pressured to keep open its low-tariff and no-tariff category for certain ingredients extracted from milk.

There has been a widespread assumption that the United States and New Zealand in particular were pushing for a reduction in tariffs on cheese, butter and other processed dairy products.

Imports into the less-protected ingredients market have been mounting rapidly in recent years and months, reducing demand for Canadian milk unless the supply-management marketing boards cut prices to remain competitive with the imports.

There has been no detailed reporting about pressure on Canada to reduce barriers to imports of poultry products, also under supply management and protected by high tariffs.

There has been similar pressure in the poultry market, especially a huge increase in imports of “spent fowl”, meaning egg-laying birds at the end of their careers. There is no tariff on them.

In recent years, the Chicken Farmers of Canada marketing agency claims the U.S. has sold more spent fowl to Canadian processing plants than it has available from egg farms.