In my last column, I stated that I didn't think the Trans-Pacific Partnership would cost Canada tens of thousands of jobs and I felt that I should expand on that statement.
The partnership has been described as the biggest trade deal ever signed. Indeed, the UK Telegraph ran a story with the title "Why TPP is the most important acronym you've never heard of."
Their opening statement: "The U.S. and Japan have agreed to sign up to the trade-busting Trans-Pacific Partnership."
No mention of Canada or the other nine countries involved in their first sentence. From a non-North American perspective, Japan and the U.S. are still major economic forces. Their collaboration matters.
Collectively, the TPP accounts for about 40 per cent of the world GDP.
The countries involved - the U.S., Japan, Australia, Brunei, Canada, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam straddle the Pacific Rim. They constitute a massive trading block.
It is intended to create a free trade zone with common labour and environmental standards along with measures to protect data and intellectual property for large companies.
According to U.S. President Barack Obama, "This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products. It includes the strongest commitments on labour and the environment of any trade agreement in history, and those commitments are enforceable."
If the PR is to be believed, this agreement will generate growth and prosperity while ensuring the rights of workers in all participating countries. Indeed, estimates have put the net benefits of the deal to be a $285 billion in collective GDP and a $440 billion increase in exports over the next 10 years.
Unfortunately, it is Vietnam and Japan who stand the most to gain in relative and absolute terms, respectively.
Not Canada.
The PR makes TPP appear to be a good thing. This is perhaps why International Trade Minister Chrystia Freeland was in New Zealand last week to add our signature to the deal.
Of course, that doesn't mean the TPP is in place. We have two years to study, analyze, and understand the agreement before it needs to be ratified. But as our prime minister has described Canada as a pro-trade nation, it would certainly appear we have been told which way he is leaning.
Not everyone agrees. Certainly, as I mentioned last week, Tom Mulcair has denounced the agreement, predicting job losses. And in one of those "politics makes for strange bedfellows" moments, he is joined by Jim Balsillie, former co-CEO of Research in Motion or RIM. Balsillie grew RIM into a
$20 billion company and is a self-described rich capitalist.
He was recently interviewed on the CBC. His description of the agreement is "fundamentally, what it does is it locks in Canada's competitive disadvantages in the innovation economy indefinitely..."
To explain that a bit further, he continued "what's happened to the world in the last 40 years is it's really shifted from tangible goods to intangible goods and a small metric of that is the S&P 500. Forty years ago, five-sixths of its value was tangibles. Fast forward to today. Five-sixths of it is intangible."
His contention is prosperity in the 21st century will be gained through ideas and knowledge. It is by having an economic ecosystem built on capitalizing on innovation that countries will prosper. Canada has done a very poor job at innovation.
Or, as he puts it, "We have a very good traditional economy, 19th century resources and some 20th century manufacturing. 2016 is mighty late to be talking about an innovation strategy. We're kind of 40 years late."
Our economic strategy is based on selling a lot more low-margin traditional resource goods and buying a lot of high-margin intellectual property good. Cheques will continue to flow out of Canada as we continue with a trade deficit. Spending more than you make is a recipe for disaster.
It is a race to the bottom.
So, to get back to the opening premise of this column - will the deal cost Canada thousands of jobs? No. But what it will do is further condemn our economy to resource extraction. High-paying, high tech jobs will disappear and place-based positions subject to the vagaries of the international commodities markets will remain. When the oil sector is booming, Alberta, Saskatchewan, and Newfoundland and Labrador will be fine but when it goes bust, the people in those provinces will be left with little to do and Canada will suffer.
Premier Christy Clark is right. We don't really have much choice about signing on to the agreement. We need to ride the tiger. But we should also be investing, heavily, in an innovation based economy and in education.
We are 40 years late to the table, but better to start late than never get into the game.
