Chuck Jolley Q&A: Five Minutes with Canadian Meat Council’s Ron Davidson and the New TPP

Ron Davidson has a special vantage point of the new Trans Pacific Partnership. As the senior vice-president of international trade and public affairs for the Canadian Meat Council, he’s witnessed firsthand the insanely complicated process of negotiating trade agreements between multiple countries

by Chuck Jolley – Drovers

Originally designed to create the world’s largest trading bloc, the TPP brought a dozen nations together to hammer out an agreement that was championed by the Obama administration.

The economic advantages of TPP were significant, as were its unspoken political advantages. Erecting a trade barrier against an expansionist and increasingly militaristic China, even if it might have been done as diplomatic sleight-of-hand, was always part of the American agenda.

But the best-built apple carts occasionally get upset. One of incoming President Donald Trump’s first acts was to yank the U.S. from the TPP, an agreement he described during his presidential campaign as “another disaster done and pushed by special interests who want to rape our country, just a continuing rape of our country.”

But those dozen TPP nations controlled a huge percentage of world trade and the agreement gave an important edge to U.S. agriculture. The American pull-out potentially handed much of that advantage to its Canadian brothers. Although U.S. ag’s economic might was at the heart of the TPP, the sizable market opportunity represented by the remaining countries offered very broad financial benefits that Ottawa readily understood.

But what does it really mean in dollars and cents for Canadian agricultural? Speaking for the Canadian Meat Council, Davidson said they wanted to move forward quickly to take advantage of a potentially much more important opportunity.

“Participation will increase Canada’s foothold in Asia, a region that is expected to contain two-thirds of the world’s middle class by 2030.”

 

Q. Ron, you said “We are hopeful that perhaps in November, during the next meeting of the Asia Pacific Economic Cooperation Group, that there will be a decision by the Trans-Pacific Partnership (TPP-11) ministers to move forward.” Knowing the recalcitrance of U.S. President Trump on the TPP, it’s a safe bet that the 11 will go it alone. It would mean a lot of new opportunities for you. Would you talk about them?

A. In 2016, Canadian meat exports to the other ten remaining countries of the TPP totaled $ 1.7 billion (Canadian $) or 28% of Canada’s total meat exports. It is estimated that implementation of the current provisions could result in a $500 million increase in trade.

Q. There are some carefully negotiated TPP clauses that were said to be “of particular interest to the US” that will be reviewed and possibly deleted so the remaining 11 participating countries could move forward. You’ve asked your government to move quickly on this. Why?

A. Japan has implemented a free trade agreement with Australia. Canadian meat exports to Japan are being impacted negatively by lower Japanese import tariffs enjoyed by Australian exporters and by Australia’s exclusion from the even higher import tariffs applicable under Japan’s meat import safeguard measures.

Japan and the European Union have announced they are nearing the conclusion of free trade negotiations.

Each year that passes further increases the disadvantage in terms of market access between countries that have a free trade agreement with Japan and those, including Canada, that have not negotiated and implemented a free agreement.

Q. “Quickly” is a nebulous term. Would you define it according to your wishes? And are those wishes realistic when you consider the other 10 nations?

A. The terms of the TPP market access provisions have already been negotiated. Some TPP countries, including Japan, have obtained legislative approval of the TPP text. The agreement could be implemented as soon as all member countries complete their respective legislative approval processes and an entry into force date has been determined.

Q. With the enormous American agricultural output off the table, Canada could realize some significant growth in Asian markets. Where do you see the greatest opportunities?

A. The Trans-Pacific Partnership includes significant trade liberalizing provisions for the meat sector.

the provisional terms of market access for meat entering Japan are particularly noteworthy, of interest also to the Canadian meat sector is participation in the agreement by Malaysia, Singapore and Vietnam. It’s anticipated that additional countries which are important to Canadian meat exporters may adhere to the agreement in the future.

Q. Talk to me about the shape of the new TPP. How big will it be? What will be its effect on Canadian agriculture?

A. The remaining TPP member countries are commercially significant for Canadian exporters and investors. Total merchandise trade among these countries reached $404 billion (U.S. $) in 2015. Together, the 11 countries, including Canada, represent 494 million people, with a combined Gross Domestic Product of $10.2 trillion (U.S. $), or 13.6% of global GDP. As Asia’s rapid growth transforms the global economy, it is essential to solidify commercial engagement in the region if Canada is to remain globally competitive.

Participation in the TPP-11 is strongly supported by all members of the Canadian Agri-Food Trade Alliance (CAFTA), a coalition of national and regional organizations that represent farmers, producers, processors and exporters. Collectively, the CAFTA member organizations account for 90% of Canada’s agriculture and agri-food exports.

The TPP is envisioned by CAFTA as a comprehensive and high-standard free trade agreement which addresses existing and emerging trade issues in ways that meet 21st-century objectives. Participation will increase Canada’s foothold in Asia, a region that is expected to contain two-thirds of the world’s middle class by 2030.

Q. One of the unspoken aims of the TPP, especially from the American point-of-view, was to hinder growing Chinese influence over nations in the Pacific basin. China is a huge marketplace for agricultural products, though. With the new TPP going forward without U.S. participation, do you see that country becoming a welcomed ‘partner,’ either officially or unofficially?

A. China is a lead participant in the negotiation of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).

Several countries ((Malaysia, Singapore, Vietnam) are participants in both the TPP and the RCEP. As the TPP is broader in scope than the RCEP, it is possible that the two multi-country agreements will coexist and, collectively, determine the future framework of trade and investment rules and flows in the Pacific Region.

Reprinted with permission from Drovers