Does Canada Have the Economic Leverage to Push Through the “Progressive Trade Agenda” with Crucial Potential Trading Partners?

Prime Minister Justin Trudeau has made his way to Singapore last week on a mission to bring Canada to important potential trading partners in Asia. A roadshow to highlight Canada’s ample appetite to facilitate trade with priority regions across the world stage.

Although trade diversification has been of great importance during the Harper administration, it has taken a more central stage within Canadian foreign policy since the turbulent and rather eventful renegotiation of NAFTA this past year. Canada has benefited from the previous NAFTA agreement but at a cost: the cost of relying on the United States of America with approximately 80% of all Canadian exports going to our neighbour to the south (Statistics Canada 2018). The renegotiation of NAFTA was a wake up call for Canada to diversify trade and the Trudeau administration is not wasting any time, lobbying for membership across regional trade agreements in Asia and conducting free trade agreement negotiations with China.

During his pitch in Singapore, Trudeau outlined the benefits of signing a free trade agreements and doing business with Canada but there remains a strong barrier to moving forward; the current administration’s “Progressive Trade Agenda” which focuses on including provisions on labour, the environment, transparency and gender equality amongst others. The administration would like to cover both economic and social policy in trade agreements rather than purely focusing on economic growth. This holistic approach, in theory, is progressive in the literal sense and re-enforces Canada’s role as a leader on human rights and social justice issues. That being said, I firmly believe that such an agenda will have adverse effects to Canada’s trade diversification objective and might also dampen relations with key emerging markets in Asia, such as China and India, that may fall behind on particular social issues that are ought to be covered in Canada’s Progressive Trade Agenda.

I would like to raise two questions: should we not be more realistic on what to expect from our potential trading partners? Should we not separate social policy from economic policy in order to remove any barriers with potential strategic partners and diversify away from the United States?

While it makes me proud to see Canada upholding and promoting our values across boarders, it does not seem realistic to expect potential trading partners in areas of the world that are not as progressive on particular social issues to meet our standards. Some of the countries that have struck Canada’s trade interest have begun to take measures to develop their social policies, but there remains a long way to go. It would be more feasible to help these nations progress gradually towards an acceptable level of social issues rather than set out a prescribed mandate.

The NAFTA renegotiation has sparked the need to expedite our diversification process. While it is crucial to uphold Canadian and universal social values, Canada also needs to think about its economy and opportunities for Canadian industries and individuals alike. Crucial potential trading partners, such as China, have indicated a clear interest in negotiating a trade deal with Canada but have been vocal in their distaste for the Progressive Trade Agenda. China has made it very clear that they are not interested in moving forward with a free trade agreement that includes non-trade issues, directly referring to the Trudeau administration’s Progressive Trade Agenda. It is evident that China’s interest in signing a free trade agreement has been derailed by Canada’s progressive pursuit of critical social issues.

China is the world’s largest exporter by value and has established a diversified portfolio of trading partners with its top 10 destinations for its exports making up approximately 60% (UN Comtrade 2018), whereas approximately 80% of Canada’s exports go to one country, the United State of America (Statistics Canada 2018). It is clear that China has a more diversified economy and one can conclude that Canada has much more to gain in signing a free trade agreement with the economic powerhouse. While Canada is renowned as a trading nation and leader in social justice, we unfortunately do not have enough economic leverage to persuade crucial emerging markets to commit to our Progressive Trade Agenda or dictate social issues as a perquisite to trade.

The Progressive Trade Agenda has counterintuitively become a barrier to sealing free trade agreements. For the sake of the Canadian economy and to avoid any dependencies on one trading partner, I urge the Trudeau administration to continue upholding and promoting our values across borders by using a different medium than that of trade. Let us focus on pure trade issues in our trade agreements and negotiations in order to secure economic opportunities for Canada while using other means to promote social justice internationally.

 

Ahmad Issa is an MA in International Affairs candidate at the Norman Paterson School of International Affairs and previously completed his Masters in International Business at the Grenoble Graduate School of Business in France. Ahmad has spent the last 6 years working regional roles as Business Development Lead for multinational firms covering the Middle East and The Republic of the Sudan. You can connect with Ahmad at  hmad.Issa3@carleton.ca

Image courtesy of Wikimedia

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