OTTAWA – Canada is searching for a new “coalition of the willing” to forge trade links in Asia following President Donald Trump’s decision to kill the Trans-Pacific Partnership, says the new Liberal trade minister.
Trump followed through on his promise to pull the U.S. out of the 12-country Pacific Rim pact in the days after his inauguration last month, a decision that has effectively killed the TPP.
The sweeping trade deal in goods would have accounted for 40 per cent of the global economy and included several Asian and Western Hemisphere countries, Canada among them.
But now it is back to the drawing board because the TPP can only be ratified if six countries, totalling 85 per cent of the deal’s combined GDP, approve the deal.
Only the U.S. and Japan had the sole power to veto the TPP because of the size of their economies.
Japanese Prime Minister Shinzo Abe had been hoping to persuade Trump to change his mind, but that now appears futile.
Prime Minister Justin Trudeau spoke by phone with Abe on Wednesday and their conversation suggested the possibility of pursing a separate deal between the two countries.
“The leaders discussed the importance of deepening trade links between Canada and Japan and developing the untapped potential in the bilateral relationship,” Trudeau’s office said.
That’s significant, because Japan has steadfastly refused for years to restart bilateral free trade talks with Canada, saying the TPP would serve the same purpose as a country-to-country agreement.
After meeting Trump earlier this month in Washington, Abe affirmed the need for a “free and fair common set of rules” on trade, and said a bilateral trade agreement between the U.S. and Japan might be possible.
A Japan-Canada bilateral deal would just one piece of the larger trading puzzle of how Canada engages with Asia, said International Trade Minister Francois-Philippe Champagne, who took office last month.
Champagne said in a recent interview that he will explore “whether there is the possibility to pursue something on the multilateral level with the coalition of the willing or bilaterally.”
The work on that begins in three weeks when Champagne travels to Chile for talks with the 11 remaining TPP countries, as well as two significant countries not in the pact — China and South Korea.
Canada’s focus is on carving out free trade deals with Japan, China and India, said Champagne.
Chile’s trade minister convened next month’s meeting, known as the High Level Dialogue on the Asia-pacific region, after Trump served notice to withdraw from the TPP.
Champagne laid the groundwork for the Chilean meeting this week in Australia, where he held talks with that country as well as neighbouring New Zealand.
He said was “trying to initiate the brainstorming of what’s next.”
Australian Prime Minister Malcolm Turnbull told the Australia-Canada Economic Leadership Forum — which was also attended by former prime minister Stephen Harper — that talks with the remaining TPP signatories would try to “use the work that has been done to capture the TPP’s enormous economic and strategic benefits.”
Turnbull said Canada and Australia “will speak with one voice on the imperative of defending free trade and open markets around the world, because we know this is the road to prosperity.”
Numerous analysts have said the U.S. decision to abandon the TPP has opened the door for China to become the leading rule maker for trade in Asia.
Champagne was at the World Economic Forum in Davos last month when Chinese President Xi Jinping delivered a major speech extolling his country as a champion of free trade and a campaigner against protectionism.
“It was a positive signal,” said Champagne, given that “people might be questioning whether we still need these multilateral trade agreements and the institutions.”