Paradigm

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For the exclusive use of Glen Hodgson, hodgson@conferenceboard.ca, The Conference Board of Canada. Canada’s New Trade and Technology <strong>Paradigm</strong> Finding the Right Policy Mix Canada could be a major global player in services trade. national IP policies in the treaty. 31 This is raising concerns since national IP systems generate many low-value patents that can encourage, for example, patent trolls and ultimately reduce innovative activity. 32 These national rules, and their enforcement, may work against the interests of a small economy like Canada, which imports more IP than it generates. 33 Another important issue is that the IP rules in the TPP do not promote new types of innovation and economic activity such as digital trade, or even new ideas in existing industries. Instead, the rules simply create higher returns for those who already hold IP in industries such as pharmaceuticals or film production. 34 What is clear is that as Canada’s trade and global trade becomes increasingly knowledge-based, and as IP becomes incorporated into trade deals, it will be critical to examine the impacts they might have from Canada’s perspective. These rules have not been studied as deeply as, for example, the impacts of tariff reductions on Canada’s economy. Moreover, these types of rules will set the new standards for global trade. In addition, given that innovation is changing in nature and transcends borders—and Canada is a nation of mostly smaller businesses that are mostly importing ideas and, therefore, buying IP rights—it will be critical to ensure that the rules of global trade do not dampen Canadian innovation. In any case, the TPP is not going to be re-opened for further negotiation. The real decision will be made in the United States. If the U.S. Congress ratifies the agreement, Canada would have little choice but to ratify as well, in our view. Otherwise, countries like Japan, Mexico, and Australia would have more preferential and wider access to the U.S. market than Canada. We would essentially be shooting ourselves in the foot with our dominant trading partner. 31 Curtis, What’s Not in the TPP. 32 Ibid. 33 Ibid. 34 Ibid. Find Conference Board research at www.e-library.ca. 28
© The Conference Board of Canada. All rights reserved. Please contact cboc.ca/ip with questions or concerns about the use of this material. The Conference Board of Canada With CETA and TPP in place, Canada would have free trade deals with most of the world that has a material impact on the Canadian economy. What’s next? We see two overarching priorities for Canadian trade policy. The first priority is to deepen Canada’s trading relationship with the United States, which is still our dominant trading partner. Tariffs with the U.S were eliminated decades ago, however a wide variety of subtle non-tariff or regulatory barriers continue to inhibit trade. These barriers are particularly important to trade in high-end services such as finance, IT, computing, media, entertainment, and professional services. Canada could be a major global player in services trade, building on our strong educational system and cultural and linguistic diversity. Easing the movement of Canadians into the U.S., which is fundamental to delivering high-end services, would be a great place to focus. The second trade policy priority is China—the second largest national economy and our second largest trading partner. Although Canadian trade with China has grown in real terms, other nations’ trade with China has grown much faster, particularly Asian countries. As a result, Canada’s share of Chinese imports has been cut in half over the past decade to only 1 per cent. Without deeper trade engagement as part of a larger China strategy, Canada’s trade and investment shares in China will continue to shrink. Expanded and freer Canadian trade with China could be advanced either by China actively seeking to become a party to TPP—once the current participants have ratified the agreement—or through our own bilateral negotiations. If we do nothing, however, Canadian trade with China is likely to lose more market share. Ultimately, the proof of the pudding will be in the eating—through concrete policy action on existing and future international trade files, and by Canadian businesses embracing the benefits of international trade and acting upon improved access to foreign markets. If the new Find Conference Board research at www.e-library.ca. 29
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Paradigm

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