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Trudeau replaces Trump as biggest obstacle to Pacific Trade Pact

[OTTAWA] Donald Trump is old news: Justin Trudeau is now seen as the biggest obstacle to sealing a groundbreaking Pacific trade agreement.

Canada's prime minister has been criticised by Australian and Japanese media since failing to show for a Nov 10 summit in Vietnam with the other 10 leaders of countries still involved in the Trans-Pacific Partnership. While Japan in particular wants a quick deal on the pact that Mr Trump abandoned earlier this year, Canada says more talks are needed on contentious points.

Canada saw the framework agreement announced in the city of Danang as a sort of pathway for further talks and not a tentative deal, according to a Canadian government official, who asked not to be identified.

Mr Trudeau's government sees Japan and Australia pressuring Canada in a bid to prevent smaller economies like Vietnam, Malaysia and Brunei from pushing for more changes, the official said.

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The bickering threatens to further delay a deal in the works for about a decade that was originally seen as a guarantee of US engagement with Asia and a buffer against China's rising clout.

After Mr Trump's exit, Japan has led a push to complete the deal, agreeing with the other members to suspend 20 sections of the pact partly on the hope that the US will rejoin one day.

Japan wants an agreement as soon as possible, and may look to move ahead without Canada if necessary, the Sankei newspaper reported this week, citing an unidentified negotiator.

In an interview with Bloomberg last week, economy minister Toshimitsu Motegi urged the remaining members to sign up before some of them face elections next year.

FRENCH SPEAKERS

Canada is looking to strengthen a cultural exemption in the agreement that will allow Mr Trudeau's government to, in part, support language rights of the French-speaking population, a key part of his voter base. The move suggests the Trudeau government wants the freedom to subsidise and incentivise French-language and other programming, particularly digital and online Canadian content, without fear of a trade challenge.

Mr Trudeau inherited the TPP from predecessor Stephen Harper and has always stopped short of full-throated support for the pact. He's signaled Canada won't be rushed into a TPP deal, and his government is almost entirely preoccupied by ongoing Nafta talks with the US and Mexico.

The Canadian government official said there's a fear that allowing the current TPP wording on cultural exemptions will complicate Nafta talks further - particularly as Mr Trump threatens to withdraw, as he did with the TPP.

The Sankei article indicated that other countries including Japan wouldn't support changing the cultural exemption - a point that deputy chief cabinet secretary Kotaro Nogami disputed on Tuesday.

'GOBSMACKED'

"The proposal has not been rejected at this point," Mr Nogami said.

"We agreed at Danang that the 11 countries should put the TPP into effect, and we are not discussing signing it without one particular country."

Australian trade minister Steve Ciobo earlier this month called Mr Trudeau's non-appearance at the Vietnam TPP summit a "disappointing development".

That may have cost Canada a chance at being included in the East Asia Summit, an 18-nation group that covers economic and security affairs in the region, the Australian Financial Review reported on Nov 16.

"Sure, if you were worried about Nafta and other domestic issues, flag it during the process," the report quoted a senior official as saying. It added that "delegations and leaders were gobsmacked at their behaviour".

BLOOMBERG

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