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Competing US, Canadian strategies in the Indo-Pacific

CCPA | 27 May 2022

Competing US, Canadian strategies in the Indo-Pacific

by Stuart Trew

On Monday, the Biden administration launched its long-awaited Indo-Pacific Economic Framework for Prosperity (IPEF). Well, sort of. It’s more a commitment to begin talking with 13 Indo- and Asia-Pacific nations (Fiji joined today) about possibly negotiating binding rules on regional trade, supply chain stability, clean energy and decarbonization, and tax and anti-corruption policy—the four “pillars” of the plan. In that sense, we know as much about the framework now as we did when it was previewed by the White House earlier this year.

At heart, the IPEF is the Biden administration’s updated “pivot to Asia” following Trump’s abrupt withdrawal, in 2017, from the now 11-country CPTPP. Like then the target is China. U.S. Secretary of State Antony Blinken spoke in Washington on Thursday about the need to shape “the strategic environment around Beijing to advance our vision for an open, inclusive, international system.” Otherwise, “Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years,” he said. American exceptionalism dies hard.

Unlike the U.S.-brokered TPP/CPTPP, the IPEF won’t involve tariff reduction offers from the U.S. But the framework’s pillars do aim to produce binding commitments covering cross-border data flows and other contested “digital trade” matters, market access for U.S. products of biotechnology (e.g., pesticide-treated GMOs), common (i.e., non-Chinese) standards on U.S.-competitive and emerging technologies like 5/6G and artificial intelligence, and labour and environmental standards—all matters covered in some way by the CPTPP and CUSMA.

The U.S. also sees the IPEF as a means to “ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology.” So, is it or isn’t it just another new trade pact in the region, only this time with the United States and a few extra non-CPTPP countries like India and Thailand? Or is it something else?

U.S. business lobbies hate the framework for not being a status-quo trade deal, while Canada’s corporate class is clamouring to get in. International civil society groups from several TPP countries are extremely guarded and calling for transparency. Arthur Stamoulis of the Citizens Trade Campaign points out that “ongoing rights abuses in the Philippines and some other IPEF members would undermine the Biden administration’s goal of establishing a new model for international trade that prioritizes working people over corporate interests.”

True. But as New Zealand trade justice activist and professor Jane Kelsey implies, in her contribution to the same CSO release, these are early days still:

“If President Biden, USTR Tai and Commerce Secretary Raimondo can produce a real alternative that puts people and the planet front and centre, and can convince our governments to genuinely support that new paradigm, we will work to make it succeed. But if IPEF is just another way to promote the old corporate agenda, and a proxy for the U.S.’s geopolitical goals, we will campaign against it like we did with the TPP.”

There will be more to say about all this as the IPEF negotiations move forward, as planned, over the next 18–24 months. For now, I’ll point out two ways I think Biden’s Indo-Pacific strategy contrasts favourably with the one being pursued by the Trudeau government. (Much of what follows draws from my May 4 presentation to the House of Commons Standing Committee on International Trade, which is studying Canadian business opportunities in the Indo-Pacific.)

First, the U.S. plan wastes no time worrying about the treatment of U.S. investors and investment in the Indo-Pacific region whereas Canada is currently negotiating NAFTA-like ISDS clauses in status-quo trade deals with Indonesia, India, and the Association of Southeast Asian Nations (ASEAN). Why would Canada be doing this after repudiating ISDS in the renegotiated NAFTA? It has at least something to do with mining, as you can read in Hadrian Mertins-Kirkwood’s excellent new CCPA report on Canadian ISDS cases abroad, On the Offensive.

Second, minimum core labour standards appear to be a first principle of the IPEF whereas Canada has already signalled to the Indonesian government that worker rights are negotiable in its Indo-Pacific trade deals. This might change as the separate Canadian and U.S. talks progress, but for now the contrast on labour is especially disappointing.

Negotiable labour standards

While Canada is insisting on the highest investment protections in the CEPA with Indonesia, and in free trade talks with India and ASEAN, the Trudeau government appears ready to water down its stated commitment to high labour standards and other “inclusive trade” elements in new trade deals.

According to a civil society briefing from Global Affairs Canada this April, the Indonesian government told Canadian negotiators a labour chapter is a non-starter. Indonesia has not included binding labour provisions in any of its trade treaties, including a 2020 deal with Australia—a country with which Indonesia does four times as much trade as with Canada.

The obvious question, at least to me and probably many of us in the Trade and Investment Research Project, is why would Canada waste any more time negotiating a deal with Indonesia if the labour talks are likely to fail—or fail to produce satisfactory, pro-worker results? The Trudeau government seems to be sleepwalking, or sleep-negotiating, into an outcome that will be negative for workers, women, Indigenous and rural communities, and the environment.

As I mentioned in my trade committee presentation, a sustainability impact assessment of the European Union’s planned CEPA with Indonesia states: “Trade liberalisation could have some potentially negative impacts on working conditions in Indonesia as the prospective FTA is expected to result in increased demand for employment in sectors historically less likely to meet decent working conditions including textile, wearing apparel and leather industry. Concerns also arise that vulnerable groups, including women and children, would bear the brunt of poor working conditions.”

That impact assessment also notes that “considering Indonesia’s rather weak implementation of laws on Indigenous peoples’ land rights, increasing trade in sectors where concerns on land rights are relevant, such as forestry and wood products, could run the risk of increased human rights violations.”

Greenpeace Canada was clear on this point in its presentation to the same trade committee hearings on Canada’s Indo-Pacific strategy. The CEPA would be a boon for chemical fertilizer monopolies in Canada and unsustainable palm conglomerates in Indonesia, but with hugely negative repercussions for biodiversity and human rights in both countries, said the organization.

“[A]ny deal should distinguish between goods based on how they are produced, and guarantee traceability of all products,” said Shane Moffatt, head of the food and nature campaign at Greenpeace Canada. “This requires enforceable guarantees that Canadian forest products are not originating without the free, prior and informed consent of Indigenous peoples, or originating in threatened species’ habitat. The same goes for Indonesian products like palm oil originating from deforestation or linked to human rights abuses.”

Without a strong floor for labour and environmental rights, and effective ways to monitor supply chains for environmental or labour violations, it is unlikely Indonesian workers and communities will see any benefits flowing from a trade deal with Canada. It’s much more likely they will be worse off.

Canada’s status-quo Indo-Pacific strategy

Biden’s Indo-Pacific Economic Framework is a work in progress. I agree with trade justice activists who fear the individual country pacts (IPEF pillars are voluntary and unique to each country) could end up looking like Trump’s “mini” trade deal with Brazil, painted over by rhetoric about inclusive trade and shared democratic values. Like the IPEF, that deal also emphasized trade facilitation, supply chains, and “good regulatory practices”—all major priorities for the U.S. Chamber and other corporate lobbyists.

Ultimately, "friend-shoring," or finding friendly, non-Chinese and non-Russian places to source cheap resources and labour for high-tech U.S. military and consumer products, may trump bottom-up benefits for workers in Asia as a top priority of the Biden administration.

However, it’s still too early to tell what the U.S. framework agreements will look like, and worker-centred talking points continue to permeate USTR and White House press statements. In contrast, Canada’s Indo-Pacific strategy is all but locked in, based on the briefings we’ve had so far on the Indonesian and Indian negotiations. It is both uninspiring and, in the case of workers’ rights and livelihoods, an extreme disappointment.

By staying at the negotiating table without a commitment from Indonesia to a high standards labour outcome, Canada is signalling—to Indonesia as well as India and ASEAN nations—that it is flexible on this point. The government is saying it’s fine with a status-quo corporate trade deal that guarantees strong rights for corporations and minimal protections or benefits for workers, human rights, gender equality, and sustainable development.

There was a period around 2016-17 when Canada appeared to be pioneering a somewhat more progressive and sustainable trade policy. The government has done some interesting things since then with gender chapters in new trade deals and is starting to take more seriously Canada’s obligation to include Indigenous peoples and interests in treaty negotiations and outcomes. Canada appeared to turn the page on ISDS when it agreed to remove it from NAFTA and avoid putting it into the U.K. bilateral.

It would be a shame to toss this progress aside, to continue signing lopsided trade and investment treaties, just as our biggest trading partner starts underlining the importance of worker- and decarbonization-focused partnerships in the Indo-Pacific.

 source: CCPA