On October 5, 2015, after years of negotiations, 12 countries, including Canada, signed a memorandum of understanding to create the largest free-trade zone in the world. That said, we need to clearly understand the potential benefits of the Trans-Pacific Partnership (TPP) for Canada’s economy and explore the business opportunities it holds for Canada’s provinces and territories.
Asia-Pacific is an immense region that covers almost half the planet and includes all Pacific Rim countries. The 12 countries that concluded negotiations on the TPP, including Australia, Japan, New Zealand, the United States, Mexico and Vietnam, make up a market of close to 800 million consumers and account for 40% of the world’s GDP. Signing an agreement with those countries will give Canada the chance to strengthen its traditional partnerships in the Americas, while tapping into a huge market and gaining a stronger foothold in a region that has become increasingly integrated into the world economy.
Generally speaking, the main goal of any free trade agreement is to enhance trade and investment among partner countries, in addition to fostering innovation and job creation. The best example is the North American Free Trade Agreement (NAFTA), in effect since 1994. Over the past 20 years, NAFTA has given Canada, the United States and Mexico free access to a market of 500 million consumers—about one quarter of the world’s economy—and generated substantial benefits for the people of all three member countries.
The agreement Canada entered into with other countries in the Asia-Pacific region will give Canadian businesses easier access to the large Asian market, helping them better integrate into global value chains. Increased trade, particularly in high-tech industries, will also help Canada attract more foreign direct investment and foreign businesses interested in expanding overseas.
In short, Canada—and Greater Montréal—need to enter new markets to be competitive and attract investment. If the Canada and European Union Comprehensive Economic and Trade Agreement and the TPP are ratified, Canada will have trade agreements that guarantee access to close to two thirds of the world’s economy, positioning the country as a major investment and export hub.