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Why the Trans-Pacific Partnership is a Good Deal for Atlantic Canada

September 25, 2015

By Finn Poschmann
President and CEO 
APEC | Atlantic Provinces Economic Council

This weekend, Atlanta is hosting an aggressive push by trade negotiators, joined next week by trade ministers from 12 countries around the Pacific Rim, all working on a groundbreaking trade deal.

The Georgia location might be a telling one: This is a really, really big deal on the Atlantic side.

The negotiators are aiming to finalize the Trans-Pacific Partnership, a free-trade agreement that holds the possibility of a massive trade corridor that encompasses all three countries in North America, two in South America, and seven – including Japan, Australia and New Zealand – on the west side of the Pacific. China and India eventually are likely to join, and Canada already has a deal with South Korea.

What Canada also has, which most others do not, is a free-trade deal with Europe, in the Comprehensive Economic and Trade Agreement. That deal is on the path to ratification, and will succeed. The United States hopes for a similar deal with Europe – and European diplomats saw in us a proving ground for a U.S. deal – but, after 10 rounds of negotiation, the most recent in July, they do not have an agreement to consider ratifying.

The Canadian opportunity is spectacular. The potential for a quick drop in domestic tariff and non-tariff barriers will lower costs for imported goods and services. Our consumers, our manufacturers and their employees get a straight-ahead win, because it costs them less to buy the things they need to go about what they do best. We get those benefits just from lowering our own barriers.

As our trade partners lower their barriers, the story gets better. New markets and opportunities appear for us as delivery becomes cost-effective and competitive, and we get smarter. Even as global commodity, and pointedly, energy commodity prices have turned against some of our sweet spots, exchange-rate shifts work in our favour. With two truly massive trade deals in sight, Canada’s unique position comes into play.

International trade, the lifeblood of growth and opportunity, is like running water or electricity: It follows the path of least resistance. Trade is a logistics story, supply-chain management or, in trendy talk, it’s all about global value chains. And the Canadian advantage, or more precisely the Atlantic advantage, begins to take shape.

There are many routes for goods to travel to and from Europe, Asia, the United States and the rest of the Americas. For the moment, much of our shipping trade with Asia comes through the Suez Canal and, as with European manufactured exports, the first natural stop geographically is our Eastern ports. The U.S. Eastern ports come next. The prospect of enhanced trade with Southeast Asia and the rest of the Pacific, and the completed expansion of the Panama Canal, opens up much more. If the Suez route did not make it clear that we are competing for trade flows with the U.S. Eastern seaboard, the Panama route does. Post-Panamax capacity, which we have, matters.

In turn, the implication is that Canada’s Eastern ports do not so much compete with each other as they do with New York, Baltimore and Savannah, Ga. Competitive success on those fronts depends less on coastal proximity, which we have, or even price or time, and more on the ability to deliver consistent end-to-end service. Which brings us back home. Regulatory and legislative barriers make it difficult for Canadian companies to do business with each other, and that slows us on the international competition front. Overlapping and inconsistent provincial regulations serve as chains around our ankles, not supply chains, a tax on everything we do. Worse, political trends toward increasing federal and provincial personal income taxes would inhibit our ability to attract and keep the professional skills, Canadian and international, that make our systems work. After 15 years of edging our business income taxes downward, a reversal is threatened, already present in some provinces.

The legislative and regulatory barriers will be chipped away, one by one. Others will fall by way of the economics of shifting trade patterns and the need to respond to them. Yet others will get a hard shove on legal grounds, owing to the global trade agreements we are on track to ratify, and that takes politics out of the game. The chipping is easy to describe, harder to do. Yet European and Pacific trade deals will, without fail, prove a catalyst.

This commentary first appeared in the Globe and Mail, September 25, 2015

Publication Files

September 25, 2015

Why the Trans-Pacific Partnership is a Good Deal for Atlantic Canada



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