All Things Considered – February 2013

This could be Canada’s year of the trade deal since an agreement with Europe is expected, another with India is possible and Japan may be in the offing. And while the Trans Pacific Partnership is supposed to wrap up in October, it likely won’t.

Meanwhile, a huge deal that you’ve likely never heard of (and which doesn’t involve Canada or the U.S.) is in the works: Asia is gearing up for negotiations leading to the biggest trade deal on the planet – the Regional Comprehensive Economic Partnership, which comprises 16 countries in the Asia-Pacific region, including China, India, Japan and North Korea.

What is remarkable, aside from the belief of most Asian commentators and observers that the deal will come together fairly smoothly, is that it is being ignored in North America. A Google search carried out in mid-December showed no Canadian or American references to the RCEP.

North American attention is instead focused on the smaller, more controversial TPP because neither the U.S. nor Canada is part of the RCEP negotiations, therefore it serves little purpose to discuss it.

However, recent reports of TPP negotiations are that they do not appear to be going smoothly. Reporting from the recent Trans Pacific Partnership talks in Auckland, New Zealand, international trade expert Peter Clark wrote on iPolitics.ca: “The smell of Doha is in the air.”

Another blow for those cheering for the TPP is the fact that Japanese Prime Minister Yoshihiko Noda, who announced his government’s intention to join the TPP talks, was trounced in a mid-December election. The victorious Liberal Democratic Party promised in its platform to oppose entering the TPP negotiations if abolishing tariffs “without sanctuary” is a
precondition.

The position gives the new Japanese government some wiggle room. It could enter the talks if allowed to protect agriculture and some sensitive cultural issues, but if assurances are not offered, Japan could stay out alongside India, North Korea, Thailand and others.

The 11 countries in the TPP talks are the United States, Australia, New Zealand, Canada, Mexico, Chile, Peru, Singapore, Malaysia, Vietnam and Brunei. What is interesting is that Australia and New Zealand are also a part of the RCEP talks.

The TPP is seen in much of Asia as a U.S.-driven show. Washington seems to want a big comprehensive deal covering goods and services, investment, intellectual property rights, environmental protection, labour, financial services, technical barriers and regulatory issues.

However, there are land mines buried everywhere in this shopping (wish) list.

For example, New Zealand has a national drug-buying program called Pharmac that gives the country heft when negotiating the purchase of pharmaceuticals. New Zealanders love the program, but the U.S. doesn’t and wants to see greater patent protection for its drug companies. The U.S. also wants provisions that allow companies to challenge government laws and sue, but Australia has said point blank it will not sign a deal that allows foreign companies to challenge its laws.

India, which isn’t at the negotiations table, is reportedly uncomfortable with the “WTO-plus approach” adopted by the U.S. at the TPP.

Meanwhile, the RCEP is seen as a strictly economic arrangement aimed at consolidating existing free trade agreements, further lowering customs duties and reducing trade barriers. This comparative simplicity makes it much more attractive than a U.S-driven deal that would seemingly internationalize U.S. laws.

There is also a geopolitical component to all of this. Much of Asia appears concerned with China’s growing power, and the U.S., as seen during the presidential debate on international policy prior to the recent election, is certainly paying attention.

The recently elected Japanese government wants closer political ties with the U.S to act as a counterbalance to China, but it needs good economic and trade relations with China.

Writing from New Delhi, Jyoti Malhotra said that China’s support of the RCEP and the rivalry with the TPP could become “a new flashpoint in South-East Asia.”

Jane Kelsey, a professor of law at the University of Auckland, wrote: “It is increasingly clear that US politicians see the TPP as a vehicle to re-establish America’s ascendancy in the Asia-Pacific region to counter China’s emergence as a superpower.”

Kelsey cites the Taipei Times, where she added that there is a “serious risk” of “a new Cold War, conducted through the proxy vehicle of economic integration agreements.”

If nothing else, all of the above indicates that the TPP is far from the simple, straightforward, clean trade deal mythologized by some in Canada. In fact, it should come with a label that says “Handle With Care.”