Minister Urges Canadian Senate to Pass Pacific Trade Deal Quickly

(Bloomberg) -- Senators should quickly approve legislation to enter a Pacific trade agreement because Canada will win an advantage from being in the first group of nations to ratify it, Trade Diversification Minister Jim Carr said.

Four of the six nations needed to start the CPTPP have already signed on. When it goes into effect, Canada will have unique trade ties to North America, Europe and Asia, representing two-thirds of the world’s output, Carr said.

“It would be very helpful, senators, for Canada to be part of this initial group, and we know that the date is fast approaching,” the minister said Thursday to the Senate’s trade committee in Ottawa. “Early November is a target we shouldn’t miss.”

Canada agreed in principle earlier this year to join the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP. Bill C-79 to ratify the agreement now needs the approval of the Senate after passing the House of Commons. The deal goes into effect 60 days after six countries have completed ratification procedures, according to a government backgrounder. That gives those six first-crack.

Competing Talks

The push to ratify is entwined with other trade talks, with U.S. President Donald Trump looming large. The U.S. quit the deal but has since notified Congress of intent to launch trade talks with Japan, the largest economy in the CPTPP pact. What impact those talks could have on key sectors like autos -- or on outstanding U.S. tariffs on steel and aluminum -- remains unclear. Canada, meanwhile, is trying to partly wean itself off relying on U.S. trade, and sees the CPTPP deal as a key part of that.

Senators didn’t indicate in the hearing when they might approve the legislation, but earlier in the week signaled a rush. “It is crucial to the public interest that Canada ratify the CPTPP as soon as possible,” said Senator Sabi Marwah, the bill’s sponsor. “We want to know now that we are going to beat the other three or four who are trying to get in in front of us,” added Larry Smith, who leads the Conservatives in the Senate.

The CPTPP passed with the support of Prime Minister Justin Trudeau’s Liberals and the opposition Conservatives in the House of Commons. Lawmakers with ties to those two parties are also in the majority in the Senate.

Dairy Controversy

The deal, however, is not without controversy in Canada. Dairy farmers have complained that it gives up access to Canada’s protected market -- as does the U.S.-Mexico-Canada Agreement, which hasn’t yet been signed but will still need to come before lawmakers.

Representatives of the Canadian auto and auto parts sectors have also said the deal will be bad for Canada. “We should make sure we know what we are passing and take our time to do the job,” Senator Percy Downe said.

Carr assured committee members that dairy farmers will receive full and fair compensation.

Japan, Mexico, Singapore and Australia have ratified or cleared the way to ratify soon. New Zealand, Chile and Vietnam are also on track to do so shortly, Bruce Christie, Canada’s CPTPP lead negotiator, told lawmakers last month. “We would fully expect at this point that we will have six countries complete the ratification process by the end of the year, if not sooner,” Christie said.

Carr said a clause in USMCA known as 32.10 doesn’t stop Canada from pursuing further ties with China. The clause obligates all three nations to notify each other if they start full trade talks with a non-market economy. “I don’t believe that this constrains Canada as it moves to deepen trade relationships in Asia and around the world,” he said.

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