MORRISBURG – The Trans-Pacific Partnership is a far-reaching trade deal that will benefit many sectors within the business community. It has the potential of greatly increasing the amount of goods and services exported from Canada, so long as Canadian companies work to take advantage of the deal and all parties involved do not play shell game tactics to skirt the agreement. However the landmark agreement is no win for Canadian consumers, nor taxpayers.
The theory behind free trade agreements when it relates to the consumer, is that imported goods with lower or no tariffs will provide competition to Canadian-made goods, thus lowering prices. In addition, with Canadian companies able to enter more markets, it would provide more jobs to produce exportable products. Those workers would have more disposable income and therefore would be able to purchase more goods at home. The reality is that Canadian consumers already purchase a great deal of products that are imported from other countries such as China. The foreign competition factor in most retail is already there, so there will be no price drop for goods purchased at your local retailer or big box store.
Proponents of the TPP state that increased foreign competition in protected sectors of Canada’s food production will help lower prices. Unfortunately that will not be the case. According to Ian Lee, a professor with the Sprott School of Management at Carleton University, the TPP deal will open three percent of the protected supply-managed dairy industry to the outside. A previous European Free-Trade agreement opened up 10 percent of the market to foreign products. A combined total of 13 percent in imports in the dairy industry still leaves a virtual monopoly of 87 percent for Canada’s dairy producers.
The 13 percent opening of the market is not enough to drop the price of milk, cheese and other dairy products in the grocery stores. Producers like Saputo or Kraft Foods will see a slight benefit to their bottom line, not something that will be passed on to consumers. This also applies to Canada’s protected poultry industry in the same way.
Changes to the automobile industry under TPP will see the allowed amount of foreign content increase, benefiting manufactures. That also will not change the price to purchase a vehicle anytime soon, even with some tariffs and duties being removed from imports. Again no end benefit to the Canadian consumer.
As the agriculture and automotive industries both have to adapt to the changes under TPP, there will be some realignment of the workforce which will translate into job losses. To mitigate that, the federal Conservatives have pledged three-to-four billion dollars in aid spread over 15 years to agriculture, and one billion to the automotive industry. That is four-to-five billion in new spending by the government to offset losses to producers. Who gets to pay for that? Taxpayers.
Not only do Canadians receive no relief from higher prices in the stores, there is higher government spending to help support certain niche sectors of the economy that are unable or unwilling to change with the times. Under a broader, more open type of free-trade system, protected monopolies become even more costly to the end-user of the goods provided. The supply-management model of production is incompatible with free-trade, as are state-subsidized industries like automotive production. To see that in action, look no further to grain farmers. Grain production is not controlled by a supply-management, quota-based system. Grain farmers applauded the TPP overwhelmingly because of the opportunity to sell in foreign markets. Why? They grow a great product, and can be competitive at home and abroad. Can the same be said for Dairy, Poultry and Automotive production in Canada. We will not know due to government protection and intervention within those sectors.
The TPP deal in theory has the potential to do great things for Canadian business. Diversifying the pool of nations Canadian companies and producers can export to, if properly cultivated, can lead to increased exports and more jobs for Canadians. The benefit to Canadians rests solely on this portion of the deal, as the increased access to the Canadian market for imports will do nothing for the consumer. Hopefully the increased trade will mean increased government revenue, as someone will have to foot the bill for the promised subsidies, and there is in the end only one taxpayer.