Labour groups wary of TPP deal

Signed by 12 countries, including Canada, the United States and Japan, the agreement will affect nearly one-half of the global economy.

Whereas business groups such as the Canadian Federation of Independent Business (CFIB) have warmed to details of the deal as they emerged in recent weeks, labour groups caution that certain industries — namely automotive — could experience backlash.

The TPP deal will put 20,000 jobs at risk in the auto and auto parts industry, according to Unifor.

"Once we learned what was in the deal, it confirmed most of our fears about where the TPP was heading," said Jim Stanford, Unifor’s chief economist.

Of particular concern for the union is the elimination of the 6.1 per cent tariff on vehicles over a five-year period, which will put added pressure on domestic manufacturers.

As well, under the TPP rules, vehicles can be imported to Canada tariff-free if 45 per cent of the vehicle was sourced from a TPP country, as opposed to the current requirement of 62.5 per cent.

"We’re not going to start selling cars in Japan, so it will mean more imports and less production here. It also means Japanese companies have less incentive to produce anything in Canada," Stanford said.

He cited as one example the uncertain future of Toyota’s manufacturing plant in Cambridge, Ont., which, as it currently stands, will have no major production plans beyond 2018, after which the Corolla will be made in Mexico.

"What is going to be produced (in Cambridge) instead, we don’t know — and the TPP makes it less likely that anything will be produced," he said.

"Twenty-thousand is just the number of direct jobs we anticipate at risk in the auto industry — it doesn’t count the spinoff jobs in the auto communities and it doesn’t count jobs at risk in other industries."

Further muddling the matter is that the makeup requirements for cars could see outside nations sourcing the parts — for instance, a non-TPP country that supplies a TPP country with auto parts.

"Never mind vehicle imports from Japan, we now have a situation where even auto makers in North America will begin sourcing more and more of their parts, potentially counting for over half the value of the vehicle from outside of the TPP," explained Stanford.

"That will mean eventually the out migration of a significant part of our auto supply chain. It’s a huge back door for free access to Canada by countries that aren’t in the TPP."

To buffer the potential for backlash, Ottawa has earmarked funds both for the automotive and agricultural industries.

One billion dollars will be allocated over 10 years for the auto industry and a $4.3-billion subsidy will be provided for agriculture starting in 2018, as part of the Harper government's income guarantee and quota value guarantee plans, according to the federal government.

Other industries will benefit from opening up access to TPP countries, the government added.

"Greater direct investment in the Asia-Pacific region by Canadian businesses will enhance their competitiveness," it said in a statement.

"The TPP’s investment rules will provide stability and encourage Canadian businesses to invest in TPP markets, sharing their expertise in the country’s key sectors, such as asset management and oil and gas.

"Canadian investors in areas such as energy, mining, manufacturing, financial services and professional services will enjoy transparent and predictable access to TPP markets."

Most business groups have looked upon the trade agreement favourably, including the CFIB. President Dan Kelly welcomed the fact the government is making moves to buffer any potential backlash.

"There were great fears going into the TPP discussions and I think coming out of it, most seem to be of the view that the government has limited the potential negative impact and provided compensation for whatever negative impact is experienced by those groups," Kelly said, citing dairy and supply management employers.

Once the terms of the deal are in full swing, the TPP will give Canada a slight edge over the United States because of our exclusive membership in the Canada-European Union Trade Agreement, he said.

That could attract investors and appeal to those wishing to do business with a country that has lucrative trade agreements in Europe and the Pacific region, Kelly said.

One industry that stands to gain from the deal is beef, with the Canadian Cattlemen’s Association estimating beef exports to Japan could nearly double or triple, to $300 million.

"Canada’s beef producers have long needed to have equal access to these important markets in order to compete with Australian and U.S. beef," said the association’s president Dave Solverson from Calgary.

"Now, through this agreement, Canada will receive the same preferential access to these markets as its competitors, levelling the playing field for Canadian beef producers once and for all."