Pacific Trade Talks Extend Invites to Canada, Mexico

A proposed Pacific trade region may capture an additional $3 trillion in economic output after Canada and Mexico were invited to take part in talks with nine other nations.

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 yesterday 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 negotiations would cover trading among economies with an estimated $20.5 trillion in output, up from $17.6 trillion among the nine partners, according to the Canadian statement.

Canada, the primary U.S. trading partner, hasn’t made any concessions as part of the agreement, though it will have to accept progress the negotiating nations have already made, Harper told reporters yesterday in Los Cabos.

“We’re obviously not going to try and undo what’s been done but these negotiations in our judgment are at fairly preliminary phases right now,” he said.

‘Unique Opportunity’

Inviting Canada to join “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. The Pacific agreement is a top trade priority for U.S. President Barack Obama’s administration.

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.

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 yesterday. 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. 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.

Fast Track

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.

Trade in merchandise among Canada, Mexico and the U.S. reached $1 trillion in 2011 for the first time, 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 yesterday in a statement.

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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