Canada signs revised TPP with sights set on new deal in South America

Canada's minister of international trade marked an important step forward in Canada's trading relationship with one bloc of countries today, while looking to start a new deal with another.

François-Philippe Champagne signed the Comprehensive and Progressive Trans-Pacific Partnership, the reborn Trans Pacific-Partnership, while in Chile on Thursday.

On Friday, Champagne's team will pivot to the next free trade opportunity: the Mercosur bloc of nations.

"We're proud ... to show the world that progressive trade is the way forward, that fair, balanced, and principled trade is the way forward, and that putting citizens first is the way forward for the world when it comes to trade," said Champagne from Santiago.

The next step will be for Canada and the other 10 countries to ratify the deal.

The CPTPP was forged after the U.S. withdrew from an initial 12-nation deal in early 2017. The 11 remaining nations finalized a revised pact in January, which included controversial updates to the deal's labour, culture and environment chapters.

The new deal will reduce tariffs in countries that together amount to more than 13 per cent of the global economy, a total of about $10 trillion.

Even without the United States, the deal will cover markets reaching nearly 500 million people, making it one of the globe's three largest trade agreements, according to Chilean and Canadian trade statistics.

The revised deal eliminates some requirements in the original TPP demanded by U.S. negotiators, including rules to ramp up intellectual property protection of pharmaceuticals.

Heraldo Munoz, Chile's minister of foreign affairs, said the agreement was a strong signal "against protectionist pressures, in favor of a world open to trade, without unilateral sanctions and without the threat of trade wars."

Mercosur includes huge markets in Brazil, Argentina

The next stop for Canada's delegation will be Paraguay, where it will launch free trade talks with the Mercosur bloc.

Mercosur was formed in 1991 by Argentina, Brazil, Paraguay and Uruguay. It is the largest trading bloc in this hemisphere after NAFTA — and it's growing, with Bolivia in the process of joining. Venezuela is also a member but is currently suspended because of the collapse of democratic institutions in that country.

Brazil is the giant of the bloc, with a population of more than 200 million and a gross domestic product 25 per cent bigger than Canada's. Argentina is home to 44 million people; it has the highest per capita income in Latin America and a large middle class.

Champagne's spokesperson said the negotiations could begin in earnest in the next 10 days.

Agricultural commodities and other resource industries, including lumber, are expected to figure significantly in the talks. But some of the negotiations may be tense, given past disputes between Canada and Brazil over beef and the aerospace industry.

Canada already has a string of free trade deals with non-Mercosur Latin nations. Mexico, Colombia, Peru and Chile together form the other big Latin American trade bloc, the Pacific Alliance. Canada has free trade with all four members.

Champagne's spokesman, Joseph Pickerill, told The Canadian Press that progress on both deals is a sign that Canada's efforts have paid off when it comes to diversifying its international trade portfolio in the face of growing uncertainty with its top trading partner, the United States.

U.S. President Donald Trump has heightened tension around the North American Free Trade Agreement. Trump has threatened to levy hefty tariffs on steel and aluminum, but his administration has left an escape route for Canada and Mexico provided NAFTA renegotiations are successful.

Peter Navarro, Trump's trade and manufacturing adviser, says the U.S. president's planned tariffs for steel and aluminum imports would not immediately apply to Canada and Mexico as NAFTA talks continue.