1. Take the China trade talks seriously

The Chinese market is the second largest in the world, and the country’s growing middle class ensures that firms with market access could strike gold. China watchers were therefore delighted when International Trade Minister Chrystia Freeland announced she would hold meetings with Chinese officials to explore a free trade agreement (FTA) between our two countries.

This is a great opportunity, but we have to keep our eye on the ball—talks will take a long time and the Chinese are known to be tough negotiators. Furthermore, with the world at Beijing’s doorstep looking for business, other markets are competing for China’s attention. We need to constantly show Beijing that we mean business on trade.

Canada can do that by devoting serious attention from senior leaders. Minister Freeland needs to be actively engaged in the process. That means regular meetings in Ottawa, and regular trips to China. Frequent high-level meetings in Ottawa will help us flush out our negotiating position and ensure we are adequately prepared for intense discussions.

Regular visits to China will show Beijing that we are serious about trade with the world’s second-biggest economy. It will demonstrate that an FTA is at the top of our bilateral agenda, and that it should be at the top of theirs as well.

That being said, there is only one person in Canada who can give the real symbolic credibility that the free trade talks need—Prime Minister Justin Trudeau.

The prime minister will need to “own” the China trade talks in the same way that Brian Mulroney took ownership of NAFTA.

The PM will need to meet regularly with ministers and public servants, passionately communicate the potential of such a deal to Canadians, and keep in touch with Chinese leaders on the subject.

Prime ministerial ownership will provide real benefits to the talks. It will speed them up by giving them CEO-style leadership that will demand accountability from ministers and public servants, while bringing in a broader strategic view that only the head of the Cabinet can provide. But prime ministerial ownership will also be highly symbolic—Beijing will notice and take Canada seriously in the negotiations.

2. Advocate for the TPP

A large part of the Canadian trade discussion since the Great Recession has been about diversification away from the U.S. market. The Trans-Pacific Partnership (TPP), the mega-trade agreement between Canada and eleven other Pacific Rim countries, was an integral part of that strategy – but it now faces an uncertain future.

The agreement’s two major economies, the U.S. and Japan, are at odds over its implementation. Despite domestic opposition, Japanese Prime Minister Shinzo Abe is still pushing for the trade deal.

With the election of Donald Trump, the American position on the TPP is uncertain. Though President-Elect Trump has stated his opposition, TPP leaders still hope he will change his mind.

Though Canada’s federal government has not confirmed whether it will implement the TPP, Minister Freeland did sign it last year, indicating the government is not wholly opposed to the FTA. Canada can still join Abe and other TPP leaders in putting pressure on the Trump Administration to back the deal.

With Donald Trump already reversing some of his campaign pledges—such as the Muslim immigration ban and the undocumented immigrant mass deportation force—there is a chance he could change his position and support the TPP (though he would likely have to seek modifications in order to save face with his base). It is by no means certain, or even likely, but it is distinctly possible that the TPP could still be a reality in 2017. Canadian leaders should push for it.

3. Re-start trade talks with Japan

As mentioned above, the TPP could still be implemented, but it is very far from certain. The Canadian government should resolve to defend our interests in the event that the TPP is not implemented. And that means going after the big gem among the TPP signatories: Japan. Canada already has a free trade agreement with the U.S., so the prize for Canadian businesses in the TPP is access to the Japanese market, the third-largest in the world.

If the TPP falls through, Canadian leaders, including the prime minister, need to utilize all that Canada has gained from the TPP negotiations, and apply these assets to immediate free trade talks with Japan.

These assets—contacts between officials, goodwill from negotiations, knowledge of the Japanese market gained through the talks, corporate contacts, etc.—are only good for so long. Officials retire or get shuffled, and agenda items get moved down the priority list as time moves on. The Canadian government needs to utilize its public service and business contacts in Japan now.

While any bilateral FTA talks will clearly be different in substance than the multilateral TPP talks (in which Japan was admittedly more focused on the U.S. than Canada), the foundations are there and the connections are too. Talks have stalled in recent years, but the potential demise of the TPP could provide a boost to bilateral efforts.

Canadian leaders should take advantage of this window of opportunity in 2017 and begin negotiations for a bilateral FTA that gives Canadian businesses access to the large and developed Japanese market.

If the government makes these three resolutions, it can deliver market access for Canadian businesses and growth for the Canadian economy.

The post 3 New Year’s resolutions for Canada on Asian trade appeared first on Trade Ready.

When U.S. President Barack Obama welcomed Canadian Prime Minister Justin Trudeau to Washington with a much-publicized state dinner, the two expressed a warm, collaborative relationship.

After trading friendly jabs about hockey and the weather, the two got down to business and discussed, among several issues, how to streamline trade and border crossings between the two nations.

For many, this signalled a warming trend in trade relations between the Canada and the U.S., which had been cooling over contentious issues such as the rejected Keystone XL Pipeline project.

Canada is no longer the top market for American trade

As allies and neighbours along the world’s longest shared border, Canada and the United States have become inextricably linked over the course of a relationship that spans more than two centuries. Politically, culturally and economically, the two countries remain tied to one another.

For decades, Canada and the U.S. have enjoyed the largest trade relationship in the world. Two-way trade more than tripled in the years since the Canada-U.S. Free Trade Agreement was implemented in 1989.

NAFTA superseded the agreement in 1994, taking trade between the two nations to greater heights, amounting to an impressive $2.4 billion per day in 2014, and supporting almost 9 million U.S. jobs.

Unfortunately for Canada, trade with the U.S. seems to be on the decline. Trade between the two countries totaled an estimated $662.7 billion in 2015, down from US$760 billion in goods and services in 2014.

In November 2015, China surpassed Canada for the first time as the biggest trading partner to the U.S., bumping Canada down to second place.

And China isn’t the only country vying for first place and expanding trade with America. Mexico is steadily gaining ground in trade with their NAFTA neighbour, trading more with the U.S. than Canada did in September 2015.

Impact of blundering energy sector being felt

A major contributor to the recent drop in trade with the U.S. is the floundering energy sector. The U.S. is by far the biggest customer for Canada’s exports in natural gas, oil and hydropower.

In 2010, almost 100% of Canada’s energy exports went to the country’s southern neighbour, a huge chunk of total Canadian exports into the U.S.

This dynamic is in a transitional period due to America’s expansion in their own tight oil and shale gas production, and a forecasted decrease in oil and natural gas consumption in the coming years.

The decision to block the proposed Keystone XL pipeline may also prove to have negative effects on the two nations’ trade in oil going forward.

Still no resolution in the most contentious trade dispute

Another sticking point in Canada’s trade relationship with the U.S. has been the ongoing softwood lumber dispute.  The dispute is one of the lengthiest disagreements the two countries have faced in modern history.

About 80% of the global lumber industry is made up of trade in wood from conifers, or softwood. Disagreements over the softwood lumber trade between the two states began in the 1980s and have not since been satisfactorily resolved.

In the latest agreement, implemented in 2006, the U.S. agreed to drop anti-dumping tariffs as long as lumber prices remained at an acceptable level. This agreement was set to expire in 2012, but was then extended for another two years.

Neither country is happy with the outcome, and ongoing issues remain as the deal faces renewal.

Many Canadian industry representatives are calling for another extension of the 2006 deal, while those representing the industry in the U.S. are calling for major changes.

Negotiations between the two countries on this deal are likely to be slow and arduous due to the history of contention on the issue.

After meeting in Washington in early March, Prime Minister Trudeau and President Obama committed to explore all options in order to solve the trade dispute.

Chrystia Freeland, Canada’s International Trade Minister, said:

What we have committed to is to make significant, meaningful progress towards a deal — to have the structure, the key elements there 100 days from now.

U.S. softwood lumber production is on the rise, with more Canadian-owned sawmills located in the U.S. than in Canada due to lower labour costs, higher timber availability, and higher demand.

Low loonie is luring some U.S. business to Canada

The Canadian dollar began a dramatic plunge in January 2016 that brought the currency to its lowest level since 2003, bottoming out at 70 Canadian cents to the U.S. dollar.

The drop in value, though detrimental to consumers purchasing imported products, has also been touted as an opportunity for Canadian businesses doing business with the U.S., from commodities exporters to the tourist industry.

Canadians can benefit from the attractively low loonie by leveraging increased trade and foreign investment from the U.S., and thereby increase their export revenue.

Canadians can also expect more U.S. visitors during the upcoming tourism season, as the country provides a destination that is much more affordable while the loonie is low.

Trans Pacific Partnership agreement may be a non-issue

It’s no secret that the Obama administration is keen to pass and implement the TPP. Canada has gone as far as to sign on to the deal, but has committed to consulting with Canadians and considering all economic impacts before ratifying.

At their most recent meeting in Washington in March, Trudeau and Obama released the following joint statement on the agreement:

“The United States and Canada share the goal of enhancing shared prosperity, creating jobs, protecting workers and the environment, and promoting sustainable economic development.”

Recognizing that the Trans-Pacific Partnership, which links together countries that represent nearly 40 percent of global GDP, would advance these objectives, Canada and the United States are working to complete their respective domestic processes.

However, the Canadian government has been careful in proceeding and committing 100% to the deal due to a significant anti-TPP sentiment in the country.

If the TPP is not ratified before the end of Obama’s term in November, it’s hard to know what the future of the agreement would be, and how trade relations between the two countries would proceed, given that the U.S. presidential candidates are unanimously rejecting the deal.

Fortunately, many have speculated that the trade relationship would not change drastically with or without the signing of the TPP, as previous agreements, notably NAFTA, would still be in effect either way.

What do you think the future has in store for the US-Canada trade relationship?

The post Can improving U.S.-Canada relations save their weakening trade relationship? appeared first on Trade Ready.

CETA, or the Comprehensive Economic and Trade Agreement, is a free trade deal between Canada and the European Union. Negotiations began in 2009 and were concluded in August 2014.

The agreement has come back into headline news since the World Economic Forum in Davos in January, and the release of major updates to the agreement’s controversial ISDS section in February, 2016.

The deal is now in the ratification process and must be approved by the Council of the European Union and the European Parliament before going into effect. There is some debate over whether each of the EU’s 28 member states must also approve CETA to enact the agreement.

If the agreement comes into effect, as early as 2016, it will eliminate 98% of the tariffs between the EU and Canada.

1. CETA is a “Gold Standard Deal”

The Canadian government is touting CETA as a top-notch agreement that will have profound positive effects on the Canadian economy and trade industry, calling it the country’s biggest trade initiative to date.

Prime Minister Justin Trudeau reiterated this sentiment to the CBC during his appearance at the World Economic Forum in Davos, Switzerland on January 22, 2016.

This is an important opportunity both for Canada and Europe and I’m looking forward to getting it signed.

Canadian Minister of International Trade Chrystia Freeland also recently promoted the agreement, stating “This is really a gold-plated trade deal,” and adding that CETA’s ratification will give Canada access to a market of 500 million people.

Virtually eliminating trade barriers between Canada and the EU will make Canadian products and services more competitive in the remunerative EU market, benefitting the nation’s businesses and their workers.

A joint study conducted by Canada and the EU prior to launching negotiations found that CETA could boost bilateral trade by 20% and increase Canada’s GDP by $12 billion per year.

2. Copyright provisions match Canadian laws

Copyright extension and ISP liability are controversial issues in Canada, and there has been extensive criticism of the way that other agreements, most notably the TPP, have established stricter standards than established Canadian law.

Though there were concerns both in the EU and Canada that CETA would also enact stricter policies, including criminal liability measures similar to the much protested ACTA agreement, the negotiations ultimately yielded provisions that more closely match Canada’s existing laws and the WIPO treaties.

In the end, CETA is reflective of Canadian standards in the protection of technology, rights management information, and internet service providers

3. ISDS modified to reflect governments’ right to regulate

Like most modern international trade agreements, CETA includes provisions for Investor State Dispute Settlement (ISDS).

These are also often controversial sections as they allow corporations to sue states, with no reciprocity on the part of the states.

The CETA text states,

Section 4 of the agreement (pages 158 – 161) provides Investment Protection to foreign investors, and guarantees a ‘fair and equitable treatment and full protection and security.’

Under CETA’s ISDS, foreign corporations have the right to sue nation states if they have suffered financial losses due to a violation of the Non Discriminatory Treatment provision, or a violation of guaranteed investment protection.

On February 29, 2016, Cecilia Malmstrom, European Commissioner for Trade, and Chrystia Freeland released a joint statement announcing that an agreement was reached to replace the “ad hoc” arbitral tribunals outlined in CETA, with a permanent tribunal whose members will be appointed in advance and will bound by strict ethics regulations.

Stronger language was added to emphasize governments’ right to regulate. An appeals system will also be put into place to ensure the proper rules of law were followed in the case of awards.

4. CETA is a big deal for agriculture

The EU is the world’s biggest importer of agricultural products, importing around $114 billion of agri-food products in 2014.

With the enactment of CETA, approximately 94% of EU agricultural tariffs will be eliminated for Canadian exporters, giving them an advantage over competitors in countries that do not have a free trade agreement with the EU. After seven years, the rate of duty-free agricultural imports will rise to 95%. Canadian agricultural exports will have preferential access to the EU market..

This will undoubtedly increase trade in agricultural items, creating new Canadian jobs and higher wages for producers, exporters, and companies in the industry.

For example, EU tariffs will be eliminated on:

• Wheat
• Fresh, frozen and processed fruits and vegetables
• Canola oil
• Oats, barley and rye
• Maple syrup
• Processed pulses
• Beef, pork and bison

5. The deal is a boon for investors

The agreement will be good news for those interested in FDI,as it will make it easier for Canadians to invest in the EU and vice-versa.

The agreement will open the gates to EU government procurement projects for Canadian suppliers, which, at $3.3 trillion annually, is the largest procurement market in the world.

This market presents unprecedented opportunities for Canadian exporters in products and services.

Increased investment creates jobs, supports innovation in technology development, and gives Canada a vital part in global value chains.

CETA is expected to complete the ratification process and become enacted by 2017.

Will you be taking advantage of new export opportunities made available when CETA is enacted? Do you think the FTA is a “gold standard” deal for Canada?

The post 5 things you need to know about CETA appeared first on Trade Ready.