According to an article in The Financial Post, Canadian beef exports are set to receive a huge boost in Japan under the new TPP. Canadian Beef exporters have dealt with much adversity in the past decade and their growth in foreign markets have suffered. Particularly, the Canadian mad cow disease and BSE scares have significantly stunted the market’s expansion. Exporters are hopeful that under the new TPP beef exports could double and may even triple. Japan is set to reduce its tariffs on beef from 38.5% to nine percent over the next 15 years. This huge reduction in tariffs along with Canada’s renewed emphasis on expanding its foreign beef market could spell success that the industry has never before seen. In what ways can Canada distance itself from its previous bouts with mad cow disease? What effect will Canada’s entrance into the Japanese beef market have on U.S. exports? Will Japan be receptive to Canadian beef?
An article in CBCNews (November 10, 2015) titled “Lawrence MacAulay likely to support Trans-Pacific Partnership deal” (http://www.cbc.ca/news/politics/tpp-trans-pacific-partnership-macaulay-1.3312670) describes the current status of the TPP agreement and the support that Canada provides to it. MacAulay considers fair a $4.3 billion compensation package offered by the previous government to dairy, poultry and egg farmers who will face more import competition after the TPP deal. Currently a tough debate is taking place in the US Congress to define the next steps. The members of the agreement have stated that renegotiating is not an option. Canada has requested authorization for tariffs on more than $3.1 billion per year of U.S exports. Will the U.S Congress approve the TPP? At what cost will the 12 members be willing to renegotiate the deal after the U.S Congress position is defined?
Canada and Mexico are looking for a compromise on auto-sector rules in TPP as they try to bridge the gap with Japan. Seeking these changes would boost their domestic content requirement for the most sophisticated of car parts. The TPP deal would eclipse the North American free-trade agreement in importance and reduce the level of domestically made auto parts in vehicles sold in Canada but also boost the access granted to Japan.
Canada and Mexico were very disappointed in the Maui meeting where Japan and US struck a deal to lower domestic content. In Atlanta, the Japanese agreed to raise it to 35% from 30 of the parts to be made locally under TPP. The United States and Japan are the biggest players in the TPP.
Sources familiar with the TPP talks say Ottawa has secured the removal of tariffs of as high as 5 per cent that other TPP countries currently apply to Canadian aerospace goods, such as engine aircraft parts shipped to Australia or aircraft seats sold to New Zealand. Canada has also obtained a commitment by other TPP countries to strike tariffs, again as much as 5 per cent of which is slapped onto Canadian manufactured goods such as medical, surgical or laboratory machinery.
Canada is at the center of two major obstacles that have delayed the final agreement including dairy and most importantly autos. An agreement will almost certainly expose the Canadian auto-parts sector, which employs 80,000 people, to far more foreign competition and erode the preferential position that the industry enjoys under NAFTA.
It will also open up Canada’s dairy industry, currently protected by high tariffs, to significantly more foreign imports. Canadian beef, pork and canola producers are big winners in the final TPP deal because the agreement as drafted has significantly lower barriers to selling products in Japan.
Read more: http://www.theglobeandmail.com/news/politics/trade-minister-ed-fast-at-atlanta-meetings-pushing-for-trans-pacific-partnership-deal/article26597742/
An article in Business Canada (October 5, 2015) titled “Trans-Pacific Partnership Could Devastate Industry, Brampton Auto-Worker Warns” (http://www.huffingtonpost.ca/2015/10/05/trans-pacific-partnership-could-devastate-industry-brampton-auto-worker-warns_n_8248252.html) describes the impact of the TPP on the Canadian Auto industry. The deal could phase out the 6.1% tariff on imported vehicles after reducing the percentage of North American content needed in order to remain the cars duty free. The agreement supports that the Canada’s automotive sector is an export-based industry that will be boosted through the access in global markets. Ontario is concerned that the agreement will expose the auto concessions to a stiffer global competition, potentially impacting the jobs and livelihoods of the Canadians. By how much will the Canadian unemployment rate increase after the implementation of this decision?
The recent trade deal reached between 12 Pacific countries, including the U.S. and Japan, was described as the ‘largest regional trade accord’ in history, in an article by the New York Times. The agreement is hailed as an important first step after two years of intense negotiations. The deal is set to open new markets, protect workers, and preserve the environment. While these 12 countries have an agreed upon deal in place, the next step will be for the agreement to make its way through each participant’s respective legal system. How might the current deal change as it is vetted through the respective country’s political processes? What are some benefits to the new TPP? What are some of the downsides to the new TPP?
Canadian NDP politicians are calling out the new TPP trade deal which hit the Hamilton’s steel industry. Steelworkers and pensioners are awaiting the judge’s decision on whether U.S. Steel Canada can server from its parent company and get some pensioner health benefits and local property taxes.
Andrea Horwath said that Stephen Harper has created more uncertainty about steel production in the city. She adds that he sold out steelworkers by bending auto sector parts of the deal. According to some reports, 6.1% levy on auto imports will be phased out over the next 5 years. Cars would be allowed into Canada without tariffs as long as they have 45 per cent content from the TPP, lower than the 62.5 per cent threshold under the North America Free Trade Agreement.
If elected, he said he would put money in the Automotive Innovation Fund with $250 million over the next 5 years but is set to expire in 2017-18. Under the fund, a company could receive grants that would not have to be repaid if it establishes a new assembly line or research and development which would create jobs.
Stephen Harper said that this deal is very significant for the automobile sector while Horwarth is against Harper saying he is abandoning the sector. Meanwhile Canada awaits on the judge’s decision on the CCAA (Companies Creditor’s Arrangement Act) to cut loose the financial responsibilities of Canadian operation. The steelmaker is also asking to stop paying health benefits to roughly 20,000 pensioners and about $6 million per year in city taxes. So how will Canada tackle this situation?
According to the article, http://www.bbc.com/news/business-34444799, the Trans-Pacific Partnership (TPP), the biggest trade deal in decades, was struck on Monday after five years of bitter and tense negotiations. The TPP cuts trade tariffs and sets common standards in trade for 12 Pacific Rim countries and covers about 40% of the world economy. However, although negotiations have been finalized, the deal is yet to be ratified by law makers in all 12 countries.
For President Obama, the TPP trade deal is a major victory. He stated: “This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products.” In opposition, however, US Senator and US Democratic presidential candidate hopeful Bernie Sanders argues that Wall Street and big business have “won again,” stating that the TPP deal will cost US jobs and hurt consumers.
Additionally, China was not involved in the TPP agreement, however the Obama administration is hoping that it will be forced to accept the majority of the standards outlined by the TPP. He was quoted: “When more than 95% of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”
Furthermore, the final round of TPP negotiations were delayed over how long pharmaceutical companies should be permitted to maintain a monopoly on their drugs. The US wanted twelve years of protection, while Australia and New Zealand argued for five. A compromise was reached, however the definitive protection period has yet to be confirmed.
Finally, the auto industry as well as the agriculture industry were also areas of intense negotiations. In regards to the auto industry, countries agonized over how much of a vehicle must be manufactured within a TPP country in order to qualify for duty-free status. Agriculture was another sticking point, as countries such as New Zealand wanted more access to markets in Canada, Mexico, Japan, and the US; Canada wanted to keep access to its dairy and poultry markets strictly limited, however.