TPP puts Japan within easier reach: exporters

October 13, 2015

By: Business Vancouver

BC companies that want to be big in Japan are expecting the Trans-Pacific Partnership (TPP) to provide a boost.

“It would be difficult for us to see how Canada could not have signed this because otherwise our competitors would have had an advantage,” said Christina Burridge, executive director at the BC Seafood Alliance. “Japan is the biggest seafood market in the world.”

Reducing tariffs will help North Vancouver-based Arc’teryx compete in Japan, where the company has developed a market for its high-end technical clothing. The company manufactures high-quality garments in its Burnaby factory and produces less expensive clothes in Asia.

When the tariffs start to be lowered, the company will be able to compete either by lowering the price of its products or by investing more in marketing, said Lance Richardson, vice-president of operations for Acr’teryx.

Negotiations on the trade pact wrapped up October 5, but the deal will still need to be ratified by each of the 12 nations involved: Canada, the United States, Mexico, Peru, Chile, New Zealand, Australia, Malaysia, Brunei, Vietnam, Singapore and Japan.

With the announcement coming just two weeks before the October 19 federal election, the Conservative government has attempted to mitigate potential job losses with $1 billion in transition funding to the automaking sector over 10 years.

That’s in addition to $4.3 billion the government will pay in compensation payments to Canadian dairy, chicken and egg farmers, who will retain their strictly controlled price and production-setting system, but who will see some of their market share opened to foreign competitors.

The Canadian Press reported in July that Japan had been pushing for Canada to relax restrictions of raw log exports in return for lower tariffs on wood imports. In B.C., log exports have been controlled in an attempt to maintain a steady supply for local sawmills.

But it is the B.C. government’s understanding that although wood product tariffs have been lowered, log export restrictions have not been affected by the trade deal, according to a response to a query from Business in Vancouver to B.C.’s Ministryof International Trade. The full details of the agreement have not yet been released.

The deal will benefit manufacturers of all stripes in B.C., in part because of the way supply chains have become global, said Marcus Ewert-Johns, B.C. vice-president of the Canadian Manufacturers & Exporters industry association.

“If you have a tech company that’s bringing in components from Southeast Asia, they’re going to pay a tariff rate when that product lands in Canada,” he said. “Now they can buy those components cheaper because they won’t have to pay the duties. … It’s going to lower the cost of production.”

Ewert-Johns believes that when the TPP and the Comprehensive Economic and Trade Agreement with the European Union  are ratified, Canada will have a big advantage as “one of the few countries that have signed on to the three largest economic blocks.

“It helps our cause for attracting foreign investment for Canada,” he said. “If you have a business here, you have access to all these markets.”

China is not yet part of the TPP, but it could join the agreement, and that would be another potential market for B.C.’s seafood sector, Burridge said. B.C. currently exports around 80% of its catch.

“Chinese tariffs are in the 30% range, and they are not as transparent as some other Asian countries are as to how the tariffs are applied, so uncertainty is the cost of doing business with China.”

When the United States signed a trade agreement with South Korea three years ahead of Canada, American seafood gained a big competitive advantage, Burridge said. Canada is just starting to catch up following the free trade agreement signed between Canada and South Korea in 2014.

Neither Burridge nor Richardson expects to see any of the predicted benefits immediately, however, as the TPP will take several months – perhaps longer – to ratify.

By: Business Vancouver

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