Montreal – As regional trade negotiations become more complicated and contentious in the midst of Brexit, anti-NAFTA rhetoric in the United States and mounting opposition to CETA and the TPP, strengthening the World Trade Organization (WTO) should be a central objective of Canadian trade policy, says a new study from the Institute for Research on Public Policy.

“With trade talks at the WTO largely stalled, negotiators had shifted their efforts to preferential trade agreements, like the TPP, hoping to more efficiently establish new trade rules with smaller groups of like-minded countries. Unfortunately, these agreements will not be useful stepping stones to a more coherent global trading system,” says Robert Wolfe (Professor, School of Policy Studies at Queen’s University). In his study, Wolfe analyzes trade negotiations in what he calls a “G-Zero world,” one where power is more diffuse and no set of countries — including the G-7 or G-20 — is able or willing to lead the way on international trade issues.

According to Wolfe, although deals like CETA and the TPP have concluded, they face serious challenges. They lack public support, in part because their negotiations weren’t sufficiently transparent; they lack the institutional support they need to function effectively; and they create confusing overlaps and inconsistencies between agreements that will be unmanageable for firms that operate in multiple countries. Moreover, they omit important trading partners like China, which limits their potential impact.

“The WTO is ultimately Canada’s best hedge against the inherent uncertainty about future trade and investment patterns — of not knowing today which foreign markets Canadian firms may wish to pursue in ten years’ time,” Wolfe says. He adds that losing what’s left of the WTO’s stalled Doha Round wouldn’t be the end of the world for the WTO. But losing the WTO would be disastrous for deals like CETA and the TPP, since they are effectively WTO side deals that depend on rules that must be determined multilaterally.

Strengthening the WTO will require moving past the long-standing obstacles to agreement on old issues and bringing new policy issues into the mix. Indeed, a key missing element needed to create a more coherent global trading system is China-US accommodation, says Wolfe. In the near term, Canada can contribute by consciously choosing to negotiate with, rather than around China, the world’s largest trader. Wolfe suggests that Canada seize the opportunity to launch bilateral talks with China in order to help both sides learn about further integrating China into the world trading system.

The study will be part of a forthcoming IRPP research volume, which can be downloaded from the IRPP’s website (irpp.org).

Redesigning Canadian Trade Policies for New Global Realities, edited by Stephen Tapp, Ari Van Assche and Robert Wolfe, will be the sixth volume of The Art of the State. Thirty leading academics, government researchers, practitioners and stakeholders, from Canada and abroad, analyze how changes in global commerce, technology, and economic and geopolitical power are affecting Canada and its policies.

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The Institute for Research on Public Policy is an independent, national, bilingual, not-for-profit organization based in Montreal. To receive updates from the IRPP, please subscribe to our e-mail list.

Media Contact:    Stephen Tapp    tel. 514-787-0747    stapp@nullirpp.org