In an effort to establish new trade agreements with Asia, the U.S. has announced its intention to enter in to a trade pact named the Indo-Pacific Economic Framework. Canada was not included, but experts say there’s no need to fret over the forgotten invitation.
Carlo Dade, director of the trade and investment centre with the Canada West Foundation, provides in depth insight into the recent announcement calling it quite literally a “nothing burger” — meaning it is nothing more than “whiff of air between two press releases.” This, not in a dismissive or condescending way, rather objectively outlining the absolute preliminary stage of what is being called a trade pact.
“It is an agreement, to hold consultations, to have discussions, about holding talks on four areas, only two of which deal with trade, and not on the table, are tariff cuts. Not on the table is the exchange of market access will give you access to the U.S. market in exchange for lowering your tariffs on U.S. exports to your country. None of that’s on the table,” explains Dade.
The Indo-Pacific Economic Framework is a counter-punch to pulling out of the Trans Pacific agreement by the Biden administration to demonstrate that the U.S. is, back in Asia. They have garnered the support and participation of 12 countries in Asia for the agreement, but again, there is nothing actually on the table and Dade says that unrest from the Business Council of Canada, the Canadian Chamber of Commerce is premature and misplaced.
Dade also outlines that these organizations are forgetting that Canada already has an agreement in place that, in many aspects, far surpasses these motions for agreements to have talks: Canada is in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), something the Americans are not a part of.
“We have what the Americans want and what the Americans cannot have. Because of the dysfunction in (U.S.) Congress, we have a real trade agreement with real market access provisions with real tariff cuts. And instead of focusing on that, we’re concerned about some nothing burger the Americans have cooked up,” says Dade.
Another facet to this is market access and trade agreements with China, both from a Canadian and American standpoint.
Currently, there is talk of China submitting an application to join the CPTPP, which would likely bode well for Canada but isn’t a clear-cut process either due to provisions the Americans structured during the renegotiation of the North American Free Trade Agreement (NAFTA, now USMCA/CUSMA). The U.S. essentially put in a statement declaring the other countries, being Canada and Mexico, were not allowed to negotiate trade deals with China.
“The Americans did something [with the China deal] almost totally unprecedented since the days of gun ships sailing up the Yangtze to enforce treaties. So we’re not going to get that. So the question is, what is the next best alternative? I think the TPP is our best alternative,” he says.
Dade says, in his opinion the CPTPP would be a good way for Canada to establish a free-trade relationship with China as it is not in a position to negotiate a similar deal to what the Americans did.
At the end of the day, both the Indo-Pacific Economic Framework put forth by the U.S. or the inclusion of China in the CPTPP are speculative points right now. Many more details and official documents need to come forward before anything is set in stone in either direction.
Listen to the full breakdown of the Indo-Pacific Economic Framework with Carlo Dade, below.