Senate votes to implement Asia-Pacific trade deal, putting Canada in line to ratify early

Canada has cleared the last legislative hurdle involved in implementing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade deal, paving the way for Canada to be among the first six countries to ratify the pact that will govern trade across 11 member countries.

The legislation passed the Senate Thursday and then, following an unusually quick process, received royal assent — evidence of the multi-partisan support the bill received in Canada's upper house as interest groups urged a speedy passage through Parliament.

Canada is now in the final stages of adopting an agreement that covers a bloc that does more than $425 billion in trade each year.

While Canada already has signed the CPTPP, each country party to the deal must also pass enabling legislation to make changes to tariff rates and other relevant legislation that might be affected by dropping most barriers to trade.

Even after this Senate vote, Prime Minister Justin Trudeau's cabinet will have to make some regulatory tweaks, through orders in council, before Canada formally ratifies the trade deal. Ratification occurs after a notice of ratification has been filed with the CPTPP Depositary in New Zealand.

The agreement comes into force 60 days after six of the 11 signatories have completed this ratification process.

"Canada is committed to maximizing the global markets where Canadians have preferential access so that our exporters and investors can compete and succeed the world over," International Trade Diversification Minister Jim Carr said in a statement after the CPTPP implementation bill received royal assent.

"Canada now has more predictability and certainty in the dynamic Asia-Pacific markets. The CPTPP will help Canadian businesses of all sizes to access these thriving markets, contributing to their economic growth."

Canada joins four other countries that have ratified the deal or are in the final stages of the process: New Zealand, Mexico, Japan and Singapore. Two other countries — Vietnam and Australia — are also nearing ratification.

Observers have said being among the first six countries to adopt the deal could be economically significant for Canada as it would give it "first-mover advantage," allowing it to establish itself in important supply chains early on.

A concrete example of this first-mover advantage can be found in Canadian beef and pork exports to Japan.

If Canada is part of the agreement when it first comes into force, beef and pork exporters will have the first crack at using their preferential market access to displace U.S. exports — which will be more expensive because they'll face a higher tariff.

(U.S. President Donald Trump pulled his country out of the TPP, brokered by President Barack Obama, shortly after he was elected. The other TPP countries subsequently pressed ahead without him, reaching an agreement-in-principle on a moderately revised deal earlier this year.)

Fast work

Thus, farm interests and other trade boosters have been urging the Senate to quickly pass the implementation bill, C-79, and forego extensive committee study as the agreement already has been the subject of much consultation and parliamentary work.

Members of the Senate's foreign affairs and international trade committee largely obliged, completing their study — including a clause-by-clause review of the bill — in just three sittings over the course of a single week. The committee heard from labour, business interests and agri-food lobby groups. The committee's chair, Conservative Saskatchewan Sen. Raynell Andreychuk, said committee members were "efficient with their time."

The bill passed third reading on a voice vote in the chamber Thursday afternoon.

Despite the lobbying efforts, at least one group had been demanding the Senate slow down its review: the Council of Canadians, an organization that has raised red flags about trade agreements.

The council urged the Senate to serve as a bulwark against a deal that passed the Commons quickly, advice the upper house clearly did not heed.

'Reckless' ratification

"The ratification process of the CPTPP has been reckless," Maude Barlow, the honorary chairperson of the Council of Canadians, said in a statement to CBC News Thursday.

"The Trudeau government decided a long time ago to promote the CPTPP as a fait accompli. It ignored the concerns of the large majority of those who participated in the consultations and who expressed many misgivings about the deal, particularly the investor state provisions that will give more corporations the right to challenge Canadian regulations and standards.

"The Senate foreign relations committee similarly ignored the advice of so many Canadians and rubber-stamped the deal with little debate or information sharing. This is a shame because there are serious flaws in this agreement about which many elected leaders know very little."

The benefits of the CPTPP are said to be substantial, as it will give Canadian companies more tariff-free access to the world's largest trading bloc, representing some 495 million consumers. The deal will eliminate up to 95 per cent of tariff lines among the parties.

The chief economist at Global Affairs Canada has said the CPTPP will generate long-term economic gains for Canada in excess of $4.2 billion.

"Canada must diversify its trading relationships," said Brian Kingston, the director of international and fiscal issues at the Business Council of Canada, noting more than 76 per cent of Canada's exports are still destined for the U.S.

"With growing protectionism in the U.S., the need to diversify has never been clearer. Asia is the growth engine of the global economy and Canada must be positioned to take advantage of it. We think the tariff reductions in the CPTPP will significantly boost our exports."

Not everyone is convinced. Businesses in some sectors — including auto parts manufacturing and dairy farming — worry that opening up Canada to more imports from the Asia-Pacific region could challenge the competitiveness of domestic industries.