OTTAWA – In the midst of the federal government’s Trans-Pacific Partnership (TPP) consultations, a new study from the Canadian Centre for Policy Alternatives (CCPA) sheds further doubt on claims the deal will generate significant trade benefits for Canada.
[CCPA| May 31, 2016 |Policy Alternatives]
The study finds that the removal of tariffs in the TPP would likely exacerbate Canada’s growing trade deficit with the region, as more of the products Canada imports (7.2%) from TPP countries would become tariff free than the products that Canada exports (3.2%) to these countries.
“It is a vast overstatement to say the TPP grants Canada new access to Pacific Rim countries when 97% of Canadian exports already enter the TPP economies tariff free,” says John Jacobs, a trade and investment researcher (Carleton University) and author of The Impact of the TPP Tariff Removal on Canadian Trade.
Key findings include:
- Canada–TPP trade is unbalanced: 90% of Canada’s top 25 exports are primary commodities (copper, seeds, pork, coal and lumber) while 93% of Canada’s top 25 imports are more sophisticated manufactured goods (auto, auto parts, transmissions, telephones and printing machines).
- The TPP could damage Canada’s high-tech industries: Japan’s imports of high-tech products would face reduced Canadian tariffs whereas Canadian exporters would not receive corresponding benefits, since Japan currently does not apply tariffs on imports of advanced goods.
- The TPP would substantially erode the ability to actively support the development of strategic sectors, potentially undermining the Trudeau government’s commitment to diversify the Canadian economy.
- Indirect impacts of lowering tariffs could result in Canadian exports to the U.S., which currently face no tariffs via NAFTA, becoming less competitive relative to tariff-reduced imports to the U.S. from lower-production-cost TPP countries.
“The most lasting impact of the TPP, if it is ratified, may well be to heighten Canada’s dependence on raw or semi-processed resource exports, and contribute to the relative decline in manufacturing exports and jobs,” Jacobs noted.