Canada Wins Invite to Multi-Nation Pacific-Trade Talks

Canada, the largest U.S. trading partner, was invited to join nine nations negotiating a Pacific- region trade agreement, a day after Mexico received a similar offer.

The Trans-Pacific Partnership deal “will enhance trade in the Asia-Pacific region and will provide greater economic opportunity for Canadians and Canadian businesses,” Prime Minister Stephen Harper said today in a statement issued at the Group of 20 summit in the Mexican resort city of Los Cabos. Canada will enter the talks “at the earliest opportunity,” the government said in the statement.

A final deal that includes Canada and Mexico would create the U.S.’s largest trade accord, linking its North American Free Trade Agreement partners with eight Pacific-region nations. The expanded negotiations would cover trading among economies with an estimated $20.5 trillion in output, according to the Canadian statement.

“Inviting Canada to join the TPP negotiations presents a unique opportunity for the United States to build upon this already dynamic trading relationship,” U.S. Trade Representative Ron Kirk said in a statement.

Adding the two nations to the Pacific deal would create the largest export market for the U.S., according to the agency. The current parties in the talks represent the fourth-largest goods and services market for U.S. exporters, according to an agency fact sheet.

‘Benefit Greatly’

The addition of Mexico and Canada means U.S. businesses “stand to benefit greatly from strong North American representation in the talks,” the National Foreign Trade Council, a Washington-based business group, said in a statement.

For now, the U.S. along with participating nations Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam haven’t taken action on Japan’s interest in joining. Ford Motor Co. (F), General Motors Co. (GM) and Chrysler LLC oppose Japan’s participation, saying the nation’s auto market needs to be more open to international competition.

The Pacific agreement will embrace traditional issues including agriculture and intellectual property, as well investment and protections for businesses that compete against state-owned enterprises, according to the U.S. Trade Representative’s office.

‘Sticking Points’

Those issues also may be “sticking points” as the talks progress, Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, said at a conference in Washington today. Because topics such as protecting copyrights and patents and challenging state-owned companies have evolved since Nafta took effect in 1994, the Pacific accord “will be a way of upgrading the Nafta without having to renegotiate it in North America,” he said.

New entrants to the talks “must not lower the ambition of the Trans-Pacific Partnership or delay its conclusion,” Representative Kevin Brady, a Texas Republican and chairman of the House Ways & Means Committee trade panel, who spoke earlier at the conference, said today. By setting high standards, the agreement may give its participants leverage when dealing with countries including India and China and encourage them to abide by similar rules, he said.

Brady called on Congress to grant the White House so-called fast-track authority to negotiate agreements subject to an up- or-down vote by lawmakers. If the Pacific accord “is to be completed quickly, we have to be prepared to consider it in Congress when that time comes,” he said.

Supply Networks

Adding Mexico and Canada would benefit manufacturing supply networks already in place in North America, Eric Farnsworth, vice president of the Council of the Americas in Washington, said yesterday in an interview after Mexico’s invitation was announced. The New York-based organization promotes open markets in the Western hemisphere.

Trade in merchandise among Canada, Mexico and the U.S. reached $1 trillion in 2011 for the first time, U.S. President Barack Obama said at an April 2 press conference. Total U.S. trade in goods with Canada reached $596.2 billion, resulting in a $34.5 billion U.S. trade deficit with its northern neighbor, according to the U.S. Census Bureau. Goods trade with Mexico, the second largest market for U.S. exporters, was $461.2 billion.

“Companies and workers in our three countries literally make things together, with supply chains that cross our borders and make North America more competitive on the global stage,” Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce, a Washington-based industry group, said today in a statement.

Canada Concessions

Canada’s invitation probably followed a decision to give up some positions, said Wayne Easter, a lawmaker for the opposition Liberal party in Canada who speaks on trade issues, said in a statement.

“Canada was undoubtedly forced to make concessions as a condition of being accepted into the trading partnership,” Easter said. “We are asking the Conservative government to be transparent and provide all details of this trade negotiation.”

The Obama administration must notify Congress of its intent to include any additional countries in the talks, followed by a 90-day consultation period with Congress.

The next round of Pacific-accord negotiations is scheduled for July 2-10 in San Diego.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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