Monday, 14 November 2011

Now It Begins

I've written a lot about supply management (there's a search box at the bottom of the page). It's given egg, poultry and dairy farmers considerable stability. Prices are slightly higher than the U.S., but taxpayers/consumers only pay once, unlike what happens in the U.S. and Europe where government support is required. Dairy exporters like New Zealand and the EEC would love to crack open the import controls necessary to make supply management work, and want to use negotiations for a new trade deal to accomplish this. This is from a business publication:

"The Trans-Pacific Strategic Economic Partnership Agreement, or TPP, began as a four-country Pacific free trade agreement that came into force in 2006. Initially it encompassed only New Zealand, Chile, Brunei and Singapore. However, those countries want to expand to more markets. Canada could have joined years ago, but has so far remained on the sidelines while its major competitors jump on board."

The hang-up for Canada joining these talks: Canada's defense of supply management. Over the weekend that changed.

Canada to strike new U.S. and Asia-Pacific region free trade deal: Harper
Nov. 13, 2011 •

By Jason Fekete

HONOLULU — Prime Minister Stephen Harper announced Sunday Canada will apply to join a new free trade agreement with the United States and the Asia-Pacific region, and suggested that Canada’s farm supply management systems could be on the table for negotiation.

Mr. Harper also said Canada will look further into selling its oil and gas to Asian countries due to U.S. delays in approving the Keystone XL pipeline.

Mr. Harper, who met U.S. President Barack Obama over lunch on the fringes of the Asia-Pacific Economic Cooperation summit in Honolulu, said Canada will formally ask to join the emerging Trans-Pacific Partnership trade group of nine Asia-Pacific countries.

A handful of countries in the TPP negotiations — including possibly New Zealand and the United States — have been resisting Canada’s entry into the group because of the Canadian supply management system that protects fewer than 20,000 dairy and poultry farmers behind a tariff wall and hands them production quotas.

The Conservative government has repeatedly said it will strongly defend Canada’s supply management system and that it wasn’t yet in the country’s interest to join the trade group — something reaffirmed Saturday by International Trade Minister Ed Fast.

But Sunday, Mr. Harper stressed his government now wants into the TPP, currently being negotiated among the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. He said he was informed that Mr. Obama has asked for Canada to join the trade agreement.

The Prime Minister said Canada can “easily meet” the broad strokes of the agreement unveiled Saturday by Mr. Obama, even if it means throwing into the mix a supply management system that forces Canadians to pay higher prices for products like milk, cheese, chicken and eggs.

“It has been told to me that President Obama, in fact, was very strong indicating that he would like to see Canada join the Trans-Pacific Partnership. We are indicating today our formal intention, we’re expressing formally our willingness to join the Trans-Pacific Partnership,” Mr. Harper said.

“We will make an application and I am optimistic we will participate in the future,” he added. “Whenever we enter negotiations, as we’ve done in the past with other countries, as we’re doing right now with Europe, we always say that all matters are on the table. But of course Canada will seek to defend and promote our specific interests in every single sector of the economy.”

Japan announced Friday it was entering negotiations into the TPP and appears willing to dismantle some of its tariff walls for rice and grain farmers.

The prime minister met Mr. Obama later amid a growing number of cross-border irritants, including the Keystone XL, Buy American provisions, the Beyond the Border initiative and new $5.50 travel surcharge to the United States.

Mr. Harper said he’s disappointed with the Obama administration’s decision to delay a ruling on the TransCanada Corp.’s Keystone XL pipeline and consider rerouting it, but believes the project will proceed because it’s critical for both the Canadian and American economies.

“We are disappointed. Nonetheless, I remain optimistic that the project will eventually go ahead because it makes eminent sense, and I would also point out, I think it’s important to note that there has been extremely negative reaction to this decision in the United States because this pipeline and this project is obviously what’s in the best interests of not just the Canadian economy but also the American economy,” Harper said.

“I do think as well though — and I think this is important to say — this does underscore the necessity of Canada making sure that we’re able to access Asian markets for our energy products and that will be an important priority of this government going forward and I indicated that (Saturday) to President Hu of China.”

The Obama administration announced Thursday it is delaying a final ruling on Keystone XL oil sands pipeline until after the November 2012 presidential election while the government looks to reroute it. The $7-billion Keystone XL would carry up to 830,000 barrels of oil per day from northern Alberta to refineries on the Gulf Coast of Texas.

The U.S. State Department said it’s ordering a new review of the project aimed at rerouting Keystone XL around sensitive ecosystems along its proposed path through Nebraska.

Canada’s ticket to selling its petroleum to Asia is Enbridge Inc.’s $5.5-billion Northern Gateway pipeline, which would ship oil sands bitumen from northern Alberta to a marine facility in Kitimat, B.C., where oil would be unloaded onto tankers for export.

The broader goal of the TPP is to create a tariff-free region and members view it as a critical multilateral agreement, especially with the ongoing troubles from the Doha Round of World Trade Organization negotiations.

Mr. Obama said Saturday he’s “confident” the TPP members can complete the free-trade agreement, hopefully within a year, and have it serve as a model for future pacts.

Mr. Harper, meanwhile, downplayed perceived strains in the Canada-U.S. relationship — be it on Keystone, Beyond the Border or Buy American — blaming domestic American politics for the decisions.

“Remember, not all these things are final decisions. I think Canadians would be wrong to interpret any of these decisions as against Canada,” Harper said. “This is simply the political season in the United States and decisions are being made for domestic political reasons that often have little or nothing to do with what other countries may think.”

He said negotiations on Beyond the Border — a bilateral trade and security agreement designed to better co-ordinate intelligence sharing and streamline cross-border trade — are going well and that he’s optimistic “a very strong program” will come out of it, with an “announcement in the very near future.”

A working group conducted public consultations on the measures and has completed a 30-point action plan. The Harper government originally said the plan would be ready by the end of summer, but details still haven’t been unveiled.

Other cross-border issues include the new $5.50 surcharge on Canadians and Mexicans travelling by air or boat to the United States — a move Harper has attacked as a bad policy designed to bail the U.S. out of a huge debt on the backs of Canadians and other visitors.

There has also been some tension between Canada and the U.S. in recent weeks after the White House included new Buy American provisions in Obama’s $447-billion job creation bill that could prevent Canadian companies from bidding on billions of dollars of infrastructure contracts.

The Harper government’s push into Asia-Pacific faces some stiff competition, though, from the United States.

Obama said Sunday, at the beginning of a day of talks with the 21 APEC member economies, that Asia-Pacific is “absolutely critical” to America’s economic growth and meeting his goal of eventually doubling U.S. exports.

“We consider it a top priority because we’re not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful,” Obama said.

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