Canada To Focus Pacific Trade On Japan And China

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Canada is expanding its options for new pacific trade deals by turning its focus to Asian countries after the collapse of the Trans-Pacific Partnership (TPP).

While it is clear that many Asian countries are very eager to deepen their ties with Canada, International Trade Minister Francois-Philippe Champagne pointed out the specific Asian countries where Canada could pursue trade-agreement opportunities:

“We want to send a message that Canada is open to trade, obviously with China, with India, with Japan. I’ve had meetings with our counterparts so we’re going to be considering our options.”

Pacific Trade

The TPP, was promoted by former U.S. President Barack Obama as a necessary move to ward off China’s economic growth and set clear rules for the Pacific region before China creates a regional-trade zone of its own. The TPP fell apart when Donald J. Trump withdrew Washington from the agreement. He fulfilled his campaign promise by signing an executive order on the 23rd of January this year.

Christia Freeland, Foreign Affairs Minister of Canada stated that the TPP “cannot happen” without the United States, striking a different tone for Japan and Australia that continue pushing to revive the TPP despite Washington’s withdrawal.

Freeland told the reporters in Calgary, last January, “This agreement was so constructed that it can only enter into force with the United States as a ratifying country. So, the TPP as a deal cannot happen without the United States being party to it.”

TPP trade deal

The TPP’s trade deal in goods would have accounted for 40 percent of the global economy and will benefit the Asian and Western hemisphere countries, including Canada. However, now that it is back to the drawing board. That is because TPP can only be ratified if six countries totaling 85 percent of the deal’s combined Gross Domestic Product (GDP) approve the deal. Only the U.S. and Japan had the sole power to do so because of their economies’ size – Canada is in need to search for a new “coalition of the willing” to forge trade links in Asia.

In February, Prime Minister Justin Trudeau spoke by phone with Japan counterpart, Prime Minister Shinzo Abe. He suggested the possibility of pursuing a separate deal between the two countries.

Trudeau’s office released a statement saying “The leaders discussed the importance of deepening trade links between Canada and Japan and developing the untapped potential in the bilateral relationship.”

Furthermore, according to Champagne, “a Japan-Canada bilateral deal would just one piece of the larger trading puzzle of how Canada engages with Asia.”

It is quite significant, as Japan, which is still hoping to persuade Trump to change his mind, has steadfastly refused to restart bilateral trade talks with Canada for years.

On the other hand, PM Trudeau is mulling a possible trade trip to China early December. However, it was reported that Canada isn’t much ready to launch formal free trade talks with China.

“We are in the process of reviewing that and at this time, there has been no decision taken on possible next steps, “ said Joseph Pickerell, spokesperson for Champagne.

Canada and China

Canada and China had been exploring the idea of a free trade agreement. That started more than a year ago, when they held three rounds of exploratory talks (one in Ottawa and two in Beijing), during their back-to-back visits in Canada and China.

In January this year, Champagne was at the World Economic Forum in Davos where Chinese President Xi Jinping delivered a speech enthusiastically praising his country as a champion of free trade.

“It was a positive signal, “ Champagne said.

Japan and China are two of the greatest economic players in the East Asia region and in the world – ranking as 3rd and 2nd, respectively, in the list of countries by projected GDP. Thus, making them potential trade partners for countries like Canada. These two countries’ economic relationships have been stable despite political tensions (i.e., World War conflicts, the controversial Nanjing Massacre, and the recent disputes over the Diaoyu Islands). But that is a different story.

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