The value, and values, of a Pacific trade pact

[mick silver]

Nearly a decade in the making, the 12-nation Trans-Pacific Partnership agreement will shape up-to-date rules for 40 percent of the world economy. Its benefits are mainly in tying the US, Japan, and others to set the highest values for global commerce.http://l.yimg.com/a/i/us/nws/p/csm_logo_115.jpg (http://www.csmonitor.com/) By the Monitor's Editorial Board 1 hour ago













The math doesn’t do it justice. Yes, a tentative trade pact agreed on Monday and known as the Trans-Pacific Partnership (TPP) would bind 12 nations into the largest economic bloc, covering 40 percent of the world’s economy. It would eliminate 18,000 tariffs. It might boost incomes by 0.5 to 1 percent for the countries involved. For sure, prices on imported products and services would be lower and exports higher.
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But the nonnumerical benefits of the TPP, if approved by the US Congress and the other nations’ legislatures, lie in driving the huge Asia-Pacific market – and thus the world – to update and adopt rules of commerce that would be more fitting to 21st-century economies.
Trade rules, like the golden rule, reflect a way for each country to seek a common good. The qualities of trade are as important as its quantities. Values are as critical as value.
This agreement would set modern rules for the free flow of digital information across borders, create better incentives for innovation through the enhanced protection of patents and copyrights, improve working conditions, and curb wildlife trading. Countries with government-run enterprises, such as in Vietnam and Malaysia, would need to show more bureaucratic transparency and less nationalistic favoritism.
Most of all, securing this pact would create an interdependency in a region that needs more cooperation on issues such as climate change and peaceful settlement of territorial disputes. It would also more closely bind the United States to Asia, where American forces have largely kept the peace for decades.
Perhaps these intangibles help explain why the TPP talks took nearly a decade to get this far. Even President Obama was at first wary until he saw an agreement as a way to revitalize the post-World War II international economic order and prevent state-run economies, such as China, from imposing a mercantile approach to trade that would mainly harness free markets for authoritarian rule.
The pact comes as Asia-Pacific leaders are due to meet in November, and perhaps in time for Congress to decide quickly on approving it in an up-or-down vote before the politics of the presidential race get into high gear by next summer.
China, which is not party to the pact but is Asia’s largest economy, can still join it. The pact is structured to easily let in new members. China is already helping set Asia’s agenda, such as a new Beijing-led infrastructure bank. The values in TPP are consistent with those of China’s economic reformers.
But back to the math. This pact could revive the growth of global trade, which has fallen from 6 percent to about 3 percent since 2010. Without new rules of the road to reflect modern values, that number may not pick up. TPP is the Tesla of trade, redefining wholly new ways to speed up the intangible benefits from commerce.
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[mick silver]

Canada to pay out $4.3-billion to farmers in wake of TPP deal Add to ... (http://www.theglobeandmail.com/news/politics/tpp-trade-deal-reached/article26648472/#) BARRIE McKENNA (http://www.theglobeandmail.com/authors/barrie-mckenna)
OTTAWA — The Globe and Mail
Published Monday, Oct. 05, 2015 7:59AM EDT
Last updated Monday, Oct. 05, 2015 5:43PM EDT




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Canada is joining a massive Pacific Rim free-trade zone, but has sacrificed some long-held protections for the country’s dairy, poultry and auto industries to gain entry.
Read also:
– What is TPP? Understanding the new Pacific trade deal (http://www.theglobeandmail.com/report-on-business/international-business/what-is-tpp-understanding-the-new-pacific-tradedeal/article26648948/).
– TPP deal could be a boon for Harper, Mulcair – for entirely different reasons (http://www.theglobeandmail.com/news/politics/tpp-deal-could-be-a-boon-for-harper-mulcair-for-entirely-different-reasons/article26648455/).

CP Video Oct. 05 2015, 2:14 PM EDT Video: Harper says farmers will be protected from impact of TPP

– Tories did lousy job explaining TPP to Canadians (http://www.theglobeandmail.com/report-on-business/tories-did-lousy-job-explaining-tpp-to-canadians/article26648438/).
Negotiators for the 12 members of the Trans-Pacific Partnership struck a tentative deal in Atlanta early Monday morning that will eliminate most tariffs in a region spanning roughly 40 per cent of the global economy.
But that will come at a hefty price for some sectors, and for taxpayers.
Ottawa said Monday it will spend $4.3-billion over 15 years to compensate dairy, chicken and egg farmers, who are ceding what Canadian officials called “limited access” to their now highly protected markets under the TPP deal and the earlier free trade deal with Europe. The subsidies will “keep producers whole,” according to a government press release.
The deal, originally slated to be announced Friday, was delayed several times over the weekend as countries haggled over last-minute details on autos and patent protection for drugs and agricultural products.
Canadian officials said a text of the tentative agreement would likely be released in the next few days. The final legal text is expected to take longer to complete.
“Ten years from now, I predict, with 100-per-cent certainty, that if people are looking back, and we got in it, they will say ‘It’s a great thing,’” Stephen Harper told reporters (http://www.theglobeandmail.com/news/politics/harper-calls-tpp-a-good-deal-for-canada/article26653292/) in Ottawa. “And if we haven’t, they will say ‘It was a terrible error.’”
Canada will give other TPP countries duty-free access to 3.25 per cent of its dairy market and 2.1 per cent of its poultry market. The new imports are expected to come mainly from the U.S., Australia and New Zealand.
Typical dairy farmers, who are heavily concentrated in Quebec and Ontario, stand to pocket $165,000 under the bailout package. Farmers in the so-called supply managed sectors – dairy, chicken and eggs – are currently not subsidized in Canada. But consumers typically pay prices that are higher than they are in much of the world.
Ottawa also announced that it will toughen up border controls to ensure that foreign countries don’t try to get around the massive tariff wall that protects Canada’s supply-managed farm products. Officials insist that the “pillars” of the regime will remain in place even after the TPP goes into effect.
In addition to the concessions in agriculture, the TPP will also reduce some of the protection now provided to the Canadian auto industry. Canada’s 6.1-per-cent tariff on imported vehicles will be phased out over five years. And domestic-content requirements for autos will be slashed from the 60 per cent now required under the North American free-trade agreement.
Vehicles and certain high-value auto parts will be protected by a 45-per-cent domestic content requirement. All other parts will only need to contain 40-per-cent domestic content.
Small auto-parts makers have warned that the change could put at risk thousands of jobs in Ontario, as auto makers use more parts imported from other TPP countries, including Japan, Malaysia and Vietnam.
“We don’t anticipate that there will be job losses [from the TPP deal],” Trade Minister Ed Fast told reporters in Atlanta, though he acknowledged some sectors will have to adapt.
Federal officials said Canada has also secured special “snap-back” protections on cars that will last for six years after tariffs are eliminated. This will allow Canada to re-impose duties if Japanese auto makers are failing to comply with the new content rules.
The most obvious export winners are beef, barley, pork, fish and canola exporters, who are getting better access to the huge but highly protected Japanese market, as well as to fast-growing Vietnam and Malaysia. All three countries have agreed to substantially cut their tariffs on most agricultural products over 10 to 15 years.
The tentative agreement must still be ratified by legislatures in TPP countries.
NDP Leader Thomas Mulcair, who spent most of Sunday panning the deal, confirmed on Monday that a government led by his party would not be bound by the terms of the TPP.
Passage is also uncertain in the U.S. Congress, which has limited time to ratify the deal as the clock ticks down to next fall’s U.S. election.
Canada had strong defensive reasons for wanting into the TPP. If it didn’t join, the U.S., Mexico, Australia and other countries would have secured privileged access to the massive Japanese market in particular.
Canadian officials said exporters will enjoy significant tariff reductions, not just in Japan, but also in fast-growing Vietnam and Malaysia for a wide range of commodities as well as consumer and industrial goods.
The TPP member countries are Canada, the U.S., Mexico, Japan, Australia, New Zealand, Vietnam, Malaysia, Peru, Chile, Singapore and Brunei.
The North American Free Trade Agreement between Canada, the United States and Mexico mandates that vehicles have a local content of 62.5 per cent. It has been credited with driving a boom in auto-related investment in Mexico.
The TPP would give Japan’s automakers, led by Toyota Motor Corp., a freer hand to buy parts from Asia for vehicles sold in the United States but sets long phase-out periods for U.S. tariffs on Japanese cars and light trucks.
The TPP deal also sets minimum standards on issues ranging from workers’ rights to environmental protection. It also sets up dispute settlement guidelines between governments and foreign investors separate from national courts.
With files from Steven Chase and Gloria Galloway
Follow BARRIE McKENNA on Twitter: @barriemckenna (https://twitter.com/@barriemckenna)