The price for joining the TPP would be changing many parts of NAFTA. Some important Canadian policies could be changed or destroyed. Among these are elimination of foreign ownership limits and restriction. In this game, the focus is on the countries seeking access. Washington knows how to play this game. Washington will set the table stakes and the price of admission.

Washington is not much interested in actually allowing Canada to be at the negotiating table. There are more than 600 U.S. industry advisors who have access to the negotiating text and help to shape strategy. These texts are secret from anyone not connected to the nine TPP governments.

It is mindboggling that the U.S. would expect three sovereign countries all three among its largest trading partners, to simply sign on and buy a pig in a poke — a deal which it has negotiated with second and third tier trading partners some of them with a smaller population than Toronto.

Dont expect reciprocity in demands for preconditions and guarantees the game will not be played that way. There will be no accommodations or flexibility unless the U.S. sees the geese with the golden eggs is wandering off to another barnyard or barnyards in Asia.

Canada has a lot of support in the response to the Federal Register request for stakeholder comments. Thanks Dupont, G.M., Textron, Chevron, John Hancock Manulife, United Technology and many others.

Some of the support I would characterize as the spider inviting the fly into its parlour. These stakeholders do not object to Canada being at the table but they are very clear in setting out what they expect USTR to achieve from Canada in the TPP.

There are important submissions, which support Canadas inclusion because this will make it easier for U.S. exporters to meet TPP rules of origin. NAFTA integration does have its benefits. It is important to demonstrate that some of the 8 million jobs dependent on trade with Canada could be at risk.

The American Association of Exporters and Importers (AAEI) makes a persuasive case for better drawback rules and cumulative rules of origin. This organization represents the American interests who are at the forefront of President Obamas job creation campaign.

Rules of origin is the 800 pound gorilla in these negotiations as it is the Comprehensive Economic and Trade Agreement (CETA) with Europe. Rules of origin are crucially important. Inability to meet rules of origin requirements will deprive exporters of new market access opportunities at preferential rates. Enlightened interests in Canada and the U.S. will understand that substantial transformation or tariff shift rules is the best option for trade maximization. Those resisting change and market opening will seek rules based on minimum percentage qualifying content.

Many stakeholders want greater flexibility and to be able to cumulate originating content among the various TPP member economies. The PVC Pipe Association claimed Canada needed to be inside the TPP to ensure they could meet origin requirements. So did Textron, General Electric, United Technologies and others. These companies have built effective supply lines and have rationalized production to maximize trade. They are Canadas strongest allies. Ignoring them will hurt U.S. exports more than rejecting the retrograde demands of the dark side objectors.

We are not surprised that some U.S. stakeholders oppose Canadas participation. They are the usual suspects. Some have urged that Canada accept pre-conditions and make important concessions they seek in order be invited inside the tent. And many supporters of Canadian participation have set end goals, which will be the price of their support for the eventual deal.

I have read all of the submissions because we need to understand what the other side wants. Canadians have been invited to comment to the Government by February 14. Canadians will be commenting without being able to see the negotiating texts. We will need all the information we can get.

When only one player is writing the rules it is neither fair nor a good faith approach to negotiation. Indeed, in my experience it is not a negotiation. Canada witnessed these extortive processes when China and Russia acceded to the WTO. Now we are on the receiving end.

Who are the bad guys? What do they want? Here is a brief sampling.

The U.S. Coalition for International Business wants to make it easier to bring investor state disputes by expanding the grounds for bringing them to include fair and equitable treatment and frustration of attaining reasonable expectations. This would lead to different arbitration results by expanding the scope of international law.

No one likes investor-state dispute settlement, except aggrieved investors who, it should be noted, have seldom succeeded in their claims under NAFTA. Whatever happened to Chapter 11 of NAFTA it is not going away. Why would including Canada, Mexico and Japan change how investor safe arbitration will work under TPP?

The National Pork Producers Council has launched a phony war over differences in risk management programs between Canada and the U.S.. Domestic support programs and risk management insurance are not issues subject to negotiation in the TPP. Well-funded U.S. domestic farm support, will be increasingly focused on risk management insurance, including gross margin insurance. Similar programs to those complained of by NPPC are available to U.S. pork producers.

U.S. pork producers understand the importance of being first into a market at preferential rates. Japan is a very important market for both Canadian and U.S pork. It seems the U.S. will use any allegation and red herring to frustrate its Canadian competitors.

This situation underlines why Canada must seek a separate free trade agreement with Japan. Canada will bring less baggage to negotiations with Japan. There is significant advantage to Canadian exporters, farmers and ranchers to be ahead of the TPP curve with Japan.

The Association of Electrical and Medical Imaging Manufacturers wants free and unimpeded access to provincial procurement and medical services. USTR has suggested that the U.S. will not try to change medical insurance in Japan. But bringing medical services into the TPP will jeopardize the future of Japans Medicare.

The International Humane Society wants Canada to abandon the seal hunt before getting a seat at the table. Actions to block products of the seal hunt are under dispute settlement in the WTO. Is the Humane Society demanding that the exemption for Alaska sealers under the U.S. Marine Mammal Protection Act be eliminated?

Most state organizations who responded to the Federal Register notice offered unconditional support. A surprising objector is the State of Maine. The Citizen Trade Policy Commission (CTCP) of the State of Maine based its opposition on a very faulty information base. The CTPC does not have a deep understanding of the issues and also opposes participation by Japan and Mexico. How is including Canada not consistent with the purpose and design of the TPPA, an international trade agreement among the Pacific Rim countries? This was a CTPC concern. It is not clear how TPP, with NAFTA in place, could, as the CTPC suggests, reduce transparency and diminish sovereignty over business and create insurmountable regulation and procurement.

We fail to see how including Canada would impact on Maines health care and medical services. We would be too busy defending our own from the Barbarians at the gate like the Association of Electrical and Medical Imaging Manufacturers who are seeking inclusion of precisely what Maine is concerned about.

Industry Minister Christian Paradis may change foreign ownership rules on telecommunications (or at least announce another review) which may soothe, at least partially, some of the savage beasts from south of the border. But there are demands for immediate elimination of restrictions on new telecom investments also as a precondition of Canadas participation

Demands to increase dairy imports ignore that the U.S. also has high tariff rate quotas (TRQs) on dairy products. Nor do they mention that there are legislative proposals in Congress to change U.S. dairy policy to give it a strong supply management element. U.S. dairy processors and exporters love their system because the farm gate price of milk has not exceeded and indeed has been below — the full cost of production for at least the last 15 years.

The reality is that U.S. dairy farmers subsidize dairy processors to make them competitive in foreign markets and increase their profits. The farmers income is topped up from the public trough to the tune of billions of dollars a year. No wonder, then, that American Dairy Farmers want to keep trade with New Zealands dairy marketing State Owned Enterprise (SOE) in disguise, Fonterra, outside the TPP. U.S. dairy farmers estimate that giving Fontera free access to the U.S. dairy market would cost them $20 billion over ten years. They will have none of this.

There will be serious potential implications for Canadian liquor boards and other federal and provincial crown corporations. The goal is to ensure that they operate on a strictly commercial basis.

Notwithstanding much of the foregoing, Canada should not discount the importance of a TPP including Japan. It will replace and upgrade NAFTA for the Pacific Rim. And not all upgrades or changes to NAFTA would be bad for Canada.

Harmonization of regulations is high on the agenda of some stakeholders for example, the cosmetics industry, which had extensive concerns about product testing. (Do we still use animals for cosmetics testing?)

What does this mean? It means that Canada and all other TPP members will be expected to harmonize their standards on U.S. rules. This is known as regulatory coherence — a major TPP objective — and Canada (and all other TPP members) will be expected to accept U.S. standards because our brothers below the border honestly believe that their systems and regulations are the best in the world.

How do we get more balance into the process and make it a real give and take? Washington wants nothing to do with this. It is their game and they will set the rules and the price for entry. But this does not preclude asking for what we want.

For example, Canada could ask for:

• inclusion of maritime transport in the Services Chapter. Currently, the Jones Act limits coastal shipping to U.S. built vessels (commonly known as U.S. bottoms);
• a ban on locational subsidies by U.S. states to attract investment;
• rescission of all Buy American laws and lower thresholds or elimination of procurement set asides for small businesses, minority-owned, aboriginal-owned and women-owned businesses;
• opening up U.S. nutrition program procurement supply to other TPP members;
• application of OECD disciplines to all Ex-Im financing;
• amending the NAFTA Chapter to guarantee Canadas right to build energy transmission facilities and pipelines throughout the USA, subject only to normal environmental assessments;
• U.S. sponsorship and support of Canadian membership in the so called Uranium Enrichment Club;
• all sub-national jurisdictions in the U.S. to be subject to the national treatment and other obligations of the TPP.

There are other issues which could be included on a Canadian shopping list. What are the chances of securing these U.S. non-negotiables? Very little, but raising the demands and publicizing them with other TPP participants might help to achieve balance.

Of course, this is why the U.S. did not want Canada at the table. We know where the skeletons are buried. And we have used attacks on the soft belly of U.S. regulation to fend off unreasonable and unrealistic demands.

The key message from the process should be that everyone has delicate issues and U.S. industry would be in an awkward position if NAFTA integration is ignored.

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