The Impact of TPP Tariff Removal on Canadian Trade

May 31, 2016


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.

The Impact of the TPP Tariff Removal on Canadian Trade is available on the CCPA website at:https://www.policyalternatives.ca/publications/reports/impact-tpp-tariff-removal-canadian-trade

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