Trans Pacific Trade – Hold Your Horses

By | July 10, 2015

Many of us are hopeful that the Trans-Pacific Partnership (TPP) negotiations will wrap up sometime soon and that the deal will require Canada to open up its highly-protected dairy, poultry and eggs sectors – dairy being the most egregiously protected, outmoded Soviet-style regime.

Trade negotiations aren’t a zero-sum game, and if Canada has to compromise and possibly phase out supply-management over time, it will be in return for a forward-looking, comprehensive deal that gives Canadian exporters of goods and services major benefits of preferential access to markets in other TPP countries.

There’s been a lot of hype recently about the pressures on Canada to make concessions on supply-management because the TPP negotiations are moving to their final phase, now that Obama finally has trade negotiating authority from the US Congress.

Some of these comments haven’t looked closely at what that Congressional authority entails and how it will work. Timing in all of this is crucial and the timing is far from cut and dried. It certainly isn’t “fast track”.

If a deal on TPP is achieved at the Ministerial in Hawaii later this month, it will be a political agreement. If achieved, it will be an endorsement by trade ministers of all the key elements and, while not the final treaty text, we’ll know what Canada will have to give up on supply management in return for – we expect – major gains in other areas that make it a good deal for us overall.

That being said, it will be many more weeks before the text is finalized and put in legal form ready for formal signature by all TPP participants. I predict that won’t be until sometime next fall, maybe even late fall.

This raises critical timing issues.

Under fast-track, Obama has to give Congress 90 days’ notice of his intention to sign a TPP agreement. That means that even if the treaty text was fully scrubbed and finalized by September, the 90-day period would take us to December at the earliest.

But that’s only for Obama’s signature. Signature and implementation – followed by ratification – are very different things. A signed treaty like this one will need domestic legislation before it can be ratified and enter into force among all parties.

In Canada, ratification is fairly straightforward. Even when implementing legislation is needed, a majority government can table a bill in the House, get it passed and follow through with formal ratification in fairly short order.

It’s just not that simple in the United States. Once Obama signs the treaty – after the 90 day advance notice period – the US International Trade Commission has to complete an economic assessment of the deal and submit its report to the Congress. It has 105 calendar days to that. Only when that ITC assessment is done can an implementing bill be tabled by the president.

Both houses of Congress then have to consider and pass the TPP bill. That could take months. USTR Michael Froman has indicated previously that Congressional consideration of trade agreements typically take up to five months and even more.

All of this could bring us well into 2016, a period when the US will be fully engaged presidential election politicking — where nothing is predictable.

And there are eleven other TPP participants that will have their own internal treaty implementation processes to go through once the treaty is complete and the final text is available.

None of this doesn’t mean things couldn’t move quicker. But, even with a final TTP agreement, I think it will be many months go by before we get a clear sense of where matters stand in terms of timing.

The regrettable aspect  of this is that, if a TPP trade agreement is held hostage to political fortune for many months, it will give nay-sayers such as the Canadian dairy lobby time to use their deep-pocketed bank account to lobby against the deal.