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Dec 30, 2015

Separating Myth from Fact in the TPP Debate

The TPP is getting a lot of media coverage as the new government tries to decide whether this ground-breaking trade agreement is in Canada’s best interest. The Canadian Chamber of Commerce believes that it is, but any agreement of this scope has its critics and opponents. What are their concerns? Are they valid? Rather than make you comb through thousands of pages of text with the help of a lawyer, we tackle a few of the biggest myths right here.

Tell us if you find any others and we’ll add them to the list.

#1 The intellectual property rules in the TPP will cost Canada billions of dollars

False. Some say the TPP will raise drug prices in Canada and make innovators pay more royalties and licensing fees to foreign companies. But our current laws protecting patents, copyright, and trademarks are strong enough to meet the TPP’s requirements, often by a high margin. The only notable exception is on length of copyright for authors, which Canada will now extend from 50 to 70 years. Instead, the TPP is about ensuring that other countries extend similar protections to Canadian creators and innovators that we already do to theirs.

#2 Foreign investors will be able to sue Canada for environmental and health regulations

Not if they’re done properly. In fact, the TPP reaffirms the right of governments to take measures to protect the environment, health, public safety and other important policy objectives. What it says is that governments need to treat foreign investors in a fair and equitable manner. So if a regulation or law applies to foreign but not domestic companies, destroys the value of a legitimate investment, or is introduced without proper consultation, then the affected company may be able to seek compensation through international arbitration. Canada already has agreements like this with the U.S., China and dozens of other countries.

#3 The TPP will hurt Canada’s auto industry

It doesn’t help. Canada will eliminate a 6.1% import tax levied on vehicles from Japan over five years and make it easier for companies to source parts and inputs from outside North America. This could undermine the business case for investing in Canada, a case that has already become weaker because of tax incentives and lower labour and energy costs in the Southern U.S. and Mexico. On the other hand, not joining the TPP would sever the industry from regional supply chains, and do little to address the underlying problems. The more important question is about the policies and programs we need to help Canadian companies and workers capitalize on proven successes in areas like luxury models and new automotive technologies.

#4 Canadians can’t compete with countries like Vietnam and Malaysia that have lower labour and environmental standards

We don’t have to. Companies make investment and production decisions based on how much a given dollar spent produces in output. Workers in some countries may have much lower wages, but still be more expensive when you factor in the fact that they are less productive. As long as Canada focuses on things like skills, infrastructure, and new technologies, our workforce will remain competitive. Adding to that, the TPP is the first trade agreement Canada has ever signed with fullyenforceable rules requiring countries to protect worker rights and the environment. If a country is found to not be respecting these commitments, Canada and others can put sanctions on their exports. Civil society groups like the World Wildlife Fund have praised this aspect of the agreement.

#5 - The TPP will bring a flood of foreign workers to Canada No. It is true that the TPP allows companies to bring to Canada certain business people, professionals, technicians and tradespeople without having to complete a formal labour market impact assessment. However, they must have a prearranged contract with the company and can only work for a limited duration. Moreover, they must meet all local certification and training requirements. It is up to our professional associations and other certifying bodies to determine which credentials are deemed equivalent. Canada has secured similar access to other TPP markets, which are very important for Canadian companies operating overseas in the engineering, mining, oil and gas and financial services industries.

 

If you have any further questions, please contact Cam Vidler, cvidler@chamber.ca 1-800-661-2930, x230.