Impacts of CP-TPP on Ontario's Agri-Food and Automotive Sectors
On January 23, 2018, Canada and ten other remaining members of the Trans-Pacific Partnership concluded discussions in Tokyo, Japan on a new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP). Achievements such as enhanced language in the agreement strengthen Canada's progressive trade agenda in the areas of corporate social responsibility, the environment, labour, Indigenous issues, cultural identity and gender.
While CP-TPP supports Ontario's goals of greater trade diversification by providing new and expanded opportunities for Ontario businesses and industries, it also poses significant impacts to Ontario's automotive and agri-food sectors.
Impacts on the Agri-Food Industry
Ontario's agri-food sector contributes $37.6 billion in GDP to the provincial economy and employs more than 800,000 workers -- or 11.5 percent of the province's labour force.
Analysis by the Ontario Ministry of Agriculture, Food and Rural Affairs shows that under CP-TPP, by 2022 Canada's supply-managed agri-food sector is estimated to lose farm level revenue of $1.5 billion over five years, and more than $300 million annually after that. Ontario is estimated to lose about $500 million over five years -- or one-third of the Canadian total. Most of the losses will be incurred by the dairy sector.
Impacts on the Auto Sector
The auto sector is an important contributor to Ontario's economy. In 2016, auto assembly and parts sectors, combined, directly contributed $16.5 billion to the province's GDP and employed more than 100,000 people directly, as well as hundreds of thousands more in spin-off jobs across the province.
Based on 2015 analysis by the federal government that estimated CP-TPP would reduce investment in Canada's auto sector by two per cent, Ontario's auto industry is expected to see an investment shortfall of $66.4 million per year. This would result in an economy-wide reduction in annual GDP of $80 million, as well as potential job losses.
Ontario's Requests for Federal Transitional Assistance
In 2015, the previous federal government announced a series of new programs and initiatives totaling $4.3 billion for supply-managed producers and processors to support them through the implementation of what was then known as the Trans-Pacific Partnership.
For Canada's auto sector, in October 2015, then-Prime Minister Stephen Harper also committed to providing transitional assistance of $1 billion through the Automotive Innovation Fund.
Ontario is calling on the federal government to fulfill these previous commitments to provide transitional assistance that is front-end loaded to help Ontario's automotive and agri-food sectors adjust to the new realities created by the CP-TPP before ratifying the deal.
Ontario is requesting at least $1.4 billion over 10 years in transitional assistance for our agri-food sector -- or about one-third of the total committed by the previous federal government for Canadian producers.
This will allow supply-managed sectors to adjust to the new access provided under CP-TPP while supporting innovation that leads to improved productivity and job creation. It would also support further investments in market development activities so that our export-oriented firms are better positioned to seize new market opportunities.
Ontario is requesting an assistance package for the automotive sector of at least $1.26 billion over 10 years to make up for the estimated 2 per cent reduction in investment and GDP losses. The factors contributing to the estimated drop in investment, as identified in the model developed for the analysis conducted by the Government of Canada in respect of TPP-12, include, among other things, the phase-out of tariffs and the impact of new rules of origin.
The transitional assistance would be used to support productivity-enhancing investments for original equipment manufacturers and auto parts producers, as well as establishing a trade diversification agency that supports automotive suppliers in accessing new markets in CP-TPP member countries.
“It is important to acknowledge that the CP-TPP’s automotive content levels will negatively affect the value proposition of the sector’s Ontario-based manufacturing. Transitional funding that helps rebalance foreign policy concessions addresses real concerns for the thousands of people employed in the sector.”
“Premier Wynne has acknowledged that the CP-TPP should not go forward at the expense of Ontario production and jobs, and is right to urge the federal government to not rush to ratification until outstanding elements of the agreement have been finalized and considering the importance of the ongoing NAFTA negotiations.”
Mark A. Nantais
“On behalf of Ontario's dairy farmers, we appreciate the Premier and Minister of Agriculture's ongoing support of Supply Management and the recognition of its importance to the Ontario economy. Ontario's dairy contributes as much as $5 billion to the Ontario GDP, and trade deals such as the CP-TPP erode its impact. It is important that the contribution of Ontario's dairy not be diminished because we are one of the major contributors to Ontario's strong rural economy and Ontario's economy as a whole.”