A Quick Thought About The TPP

I was not planning to write about the Trans Pacific Partnership deal gleefully announced by Mr. Harper yesterday, trade and economics not being my strong suits. However, looking at the overall details of what it entails prompts me to make an observation.

First, a few of the details:

Beef and Pork

Under the deal, Canada could double or triple its annual beef exports to Japan to nearly $300 million, according to the Canadian Cattlemen’s Association. The beef industry would see a phase out in tariffs to those countries from 39 per cent to 9 per cent over 15 years. The deal also secures Canada’s ability to export more pork to Japan, where producers sell roughly $1 billion worth of the meat annually.

Fish and Seafood

The deal means far greater access for Canadian producers to other Pacific Rim markets. Canadian seafood — from frozen fish to fresh crab and lobster —is currently slapped with tariffs of up to 15 per cent in Japan and Malaysia, 34 per cent in Vietnam and 5 per cent in New Zealand. The tariffs on fish and seafood to those countries would be gone within a decade. Japan imports a number of premium seafood products from Canada such as crab, shrimp, lobster, herring roe, sea urchins, salmon and halibut.

Forestry/wood products
About $1 billion in Canadian forest products were subject to tariffs last year. Exports to countries like Japan, Vietnam and Malaysia will gradually be reduced, thereby increasing access for these products.

Metals and Mining

Iron and steel products would benefit from Japan eliminating tariffs of up to 6.3 per cent within 10 years, Vietnam wiping out tariffs of up to 40 per cent within 10 years, Malaysia doing away with tariffs of up to 25 per cent within a decade, and Australia cutting tariffs of up to 5 per cent within four years.

I trust that you can see the pattern here. The gains under this deal for Canada reside almost exclusively in what are called primary industries. What is a primary industry?

An industry involved in the extraction and collection of natural resources, such as copper and timber, as well as by activities such as farming and fishing. A company in a primary industry can also be involved in turning natural resources into products.

Primary industry tends to make up a larger portion of the economy of developing countries than they do for developed countries.

It seems to me that the deal Canada is entering into is merely a continuation of the Harper retrograde vision of Canada as the traditional hewer of wood and drawer of water, a vision he based the bulk of our economic hopes on in his relentless promotion of the Alberta tarsands.

Value-added jobs will take a real hit under the TPP:

Automobiles and Auto Parts

An auto will need to contain just 45 per cent TPP content to qualify for free trade. And for auto parts, the figure is 40 per cent. that’s down from 62.5 per cent and 60 per cent respectively under the North American Free Trade Agreement, which this will replace. Japan already offers duty-free access to passenger vehicles and auto parts. Canada agreed to phase out its 6.1 per cent tariff on imported vehicles over five years. Malaysia and Vietnam, which have tariffs of 35 per cent and 74 per cent respectively, agree to phase them out over 12 years.

According to Unifor president Jerry Dias, that betrayal concession will cost upwards of 20,000 auto industry jobs.

And what do we get in return? Long-term elimination of tariffs that may allow for more sales of industrial pumps, medical equipment, and harvesters and mowers.

As well, there is the opening up of Canada's dairy market, in exchange for which Harper is promising billions of our tax dollars to farmers who will suffer losses.

I'll leave it to others with more wisdom to decide if all of this sounds like it will produce a net benefit for Canada.