The Final Push: Canada and the Trans-Pacific Partnership (TPP) Trade Deal

In this guest post, authors Arne Ruckert, Ronald Labonté and Ashley Schram outline what’s at stake for Canada in the Trans-Pacific Partnership Trade Deal. This is an update of a piece originally posted at the Centre for International Policy’s Blog (updated 28/9/2015). Arne Ruckert is a Senior Research Associate in the Faculty of Medicine and a part-time Professor in the School of Political Studies at the University of Ottawa. Ronald Labonté is Canada Research Chair in Globalization & Health Equity, and Professor, School of Epidemiology, Public Health and Preventive Medicine at the University of Ottawa. Ashley Schram is a PhD candidate in Population Health at the University of Ottawa studying the health impacts of international trade and investment agreements. 

The Trans-Pacific Partnership is nearing the end game of negotiations, creating a market of 800 million people with a combined economic clout of US$28-trillion annually. After the US Congress granted fast-track authority to President Obama, a final agreement amongst the 12 Pacific-rim countries involved in the trade deal is now within reach. Reportedly ‘98% done’ trade ministers are meeting in Atlanta in early October to see if they can clinch an agreement. So what’s at stake for Canada?

Agricultural market access remains a sticking point for some of the TPP’s prospective members. Media coverage of the TPP in Canada has been dominated by Canadian supply management in dairy and poultry, which limits market access in these products for other countries. Canada is under pressure in the press and from some TPP countries to dismantle supply management if it wants to remain part of the final negotiations. Yet Canada has participated in past free trade deals without dismantling supply management, with Canada’s Minister of International Trade Ed Fast stating that “supply management has never prevented us from concluding trade agreements, and we have confidence that we will be able to do that with the TPP as well” (cited in Lu, 2015).

There are good (health and broader public policy) reasons for why Canada would want to continue with supply management, including guaranteeing a safe and stable stock of dairy and poultry products at affordable cost. A reasonable compromise for Canada would be maintaining its supply management but making some concessions in terms of increasing market access for other TPP countries in these products. However, latest reports indicate that Canada could provide sufficient market access to American dairy producers that it could tip the supply-management system into a fast (or slow) track to its end. The triangulated deal would have New Zealand dairy gain greater access to the US, the US gain greater access to Canada and Canada (perhaps) gain greater market access across the TPP for its beef exports. Health concerns or food security issues do not appear prominent in any of these compromises, and Canada’s dairy farmers are not amused. Similarly, rules of origin for the auto sector to which two TPP countries have already agreed (the US and Japan) could cost a large number of already rather beleaguered Canadian autoworkers.

There are other areas of the TPP overlooked in most media discussions that have potentially much stronger and lasting impacts. Foremost is Investor-State–Dispute Settlement (ISDS) provisions, which will grant multinational corporations the right to sue TPP governments over public policy decisions perceived as damaging to their investments and business operations (Hilary, 2014; Ruckert, Schram, Labonté, 2015). Canada is already the most sued developed country in the world because of NAFTA’s ISDS process, and the TPP will significantly increase the number of foreign investors eligible to sue (Sinclair and Trews, 2015). Strong civil society and academic critiques of ISDS have recently led to greater caution about how they should be included within new trade treaties. The Transatlantic Trade and Investment Partnership (TTIP) under negotiation between the US and the EU also contains an ISDS chapter, with concerns about its provisions voiced on both sides of the ocean. Rather than reject ISDS outright, European parliamentarians in July passed a compromise amendment which calls for replacing the ISDS system “with a new system…subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where…the jurisdiction of courts of the EU and of the member states is respected, and where private interests cannot undermine public policy objectives.” (Bridges Weekly, 2015: 4). The EU amendment appears to address many of the critics’ concerns with ISDS, and the Canadian government should push for the TPP to adopt a similar position. Investor protection would be strengthened, but so would government’s ability to pursue new public policy objectives without fear of an investor challenge.

The TPP also proposes to extend intellectual property rights (IPRs) with implications for drug costs, whether paid for publicly or privately (Hirono et al, 2015; Sinclair, 2013). This is of particular relevance for Canada, which already has the second highest drug prices in the world (Sinclair and Trew, 2015). A recent leak of the TPP IPR chapter shows that the major outstanding disagreements over IPR relate to “patent linkage” and expanded protection of biologics (Grunwald, 2015). Patent linkage prevents the registration and authorization of generic medicines until after the expiry of patents, considerably delaying generic market entry (Canadian Generic Pharmaceutical Association, 2012). Although Canada already has a patent linkage system in place, the TPP is the first time this system would be written into trade treaty obligations, interfering with future cost-saving reforms (Sinclair and Trew, 2015) and weakening the vibrant Canadian generic pharmaceuticals industry which is responsible for the production of two out of every three prescription drugs in Canada. A recent analysis of the draft intellectual property chapter of the TPP suggests that the US has been advocating for patent linkage to extend to biologics, along with a request for longer periods for data exclusivity. It also notes that many TPP member states have been opposed to extended IPRs (Grunwald, 2015), which would provide Canadian negotiators with a platform from which to  limit any extension of IPRs in pharmaceuticals beyond those already present in the World Trade Organizations TRIPS agreement.

Finally, TPP provisions for regulatory coherence and transparency have received relatively little mention. As with all recent free trade agreements, the TPP is only marginally about trade, and more about harmonizing regulations (financial, health, and safety standards, etc.) (Sinclair and Trew, 2015). The leaked regulatory coherence chapter outlines various expectations, including the obligation to encourage the use of regulatory impact assessments (RIAs) as practiced in the United States. The proposed regulatory model contains numerous pro-market factors that governments should consider when making domestic regulations. The obligations outlined in the regulatory coherence chapter are explicitly linked those in the transparency chapter (Kelsey, 2015). The transparency chapter (which has not been leaked) is expected to confer rights to affected commercial interests to participate in regulatory processes. The two chapters together will essentially impose: high-level behind the border disciplines on governments through market-centric norms; an ideologically driven commitment to light-touch regulations (whose detrimental effects are best seen in the global financial crisis of 2008); and a structured role for private and especially corporate interests to shape domestic regulations and policy-processes (Kelsey, 2015). Some TPP countries, especially those with developing country status, have raised concerns about these two chapters. Canada should align with these concerns and support their resolution within any final agreement.

Canada should be courageous enough to stand up to the United States (the main force behind these negotiations) and to form coalitions with TPP member countries that have similar concerns about these remaining TPP issues. It has precious little time left to do so. Ultimately, there is no point in signing on to a free trade agreement that represents very little economic benefit to the Canadian economy (and quite possibly economic loss), but which has major political and social implications, including the potential to hamper Canadian sovereignty and to undermine its regulatory autonomy.

References:

Bridges Weekly (2015). TPP Countries Gear Up for High Stakes Ministerial Meeting. Retrieved from: http://www.ictsd.org/sites/default/files/review/bridgesweekly19-25.pdf

Canadian Generic Pharmaceutical Association (2012). Position on the Trans-Pacific Partnerships (TPP) Negotiations, Retrieved from: http://www.canadiangenerics.ca/en/advocacy/tradenegotiationi.asp

Gruwnald, M. (2015). Leaked: What’s in Obama’s Trade Deal? Retrieved from: http://www.politico.com/agenda/story/2015/06/tpp-deal-leaked-pharma-000126

Hilary, J (2014). The Transatlantic Trade and Investment Partnership and UK healthcare. BMJ 2014; 349: g6552.

Hirono, K. et al (2015). A Health Impact Assessment of the Proposed Trans-Pacific Partnership Agreement. Retrieved from: http://hiaconnect.edu.au/research-and-publications/tpphia/

Kelsey, J. (2015). How the Trans-Pacific Partnership Agreement Poses a Threat to National Sovereignty over Domestic Decision Making. Retrieved from: http://www.itsourfuture.org.nz/wp-content/uploads/2014/03/Regulatory-Coherence-paper.pdf

Lu, Seres (2015) Trade Minister Reassures Supply-managed Sectors ahead of TPP Talks, Retrieved from: http://www.theglobeandmail.com/report-on-business/trade-minister-reassures-supply-managed-sectors-ahead-of-tpp-talks/article25405222/

Ruckert, A., Schram, A. and Labonté, R. (2015). The Transpacific Partnership Agreement: Trading Away our Health? Canadian Journal of Public Health, accepted and forthcoming.

Sinclair, S. (2013, May). Opening remarks on Canada and the Trans-Pacific Partnership (TPP). Speech     presented at the House of Commons Standing Committee on International Trade, Ottawa Ontario. Retrieved from: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/06/CanadaandtheTransPacificPartnership.pdf

Sinclair, S and Trew, S. (2015). The TPP and Canada. Fact Sheet, May 2015, Retrieved From: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2015/05/TPPandCanada.pdf

 

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