The Trans-Pacific Partnership (TPP) trade agreement should be policy-makers’ top priority in expanding trade in financial services, argues a new report from Toronto-based think tank the C.D. Howe Institute.
The TPP, which was signed earlier this year, but still requires legislative approval from all of the signatories, ranks as the most appealing trade deal for the financial services sector right now, the report says.
The report ranks the prospects for increasing Canadian financial services firms’ foreign trade both in terms of economic attractiveness and the feasibility of concluding negotiations. With those dual objectives in mind, the report says that the TPP should be Canada’s top priority given that it involves several markets “in which Canada could better exploit its advantages in financial services.” A possible trade deal with China ranks second, the report says, recommending that “Canada should respond to China’s still outstanding offer to negotiate a trade agreement.”
After that, the report recommends that Canada should seek to join the Pacific Alliance trade pact: “Although Canada has a bilateral free trade agreement with Mexico, Peru, Columbia and Chile, it should seek to join the Pacific Alliance group in order to benefit from any deeper trade liberalization within this important economic grouping.”
The report ranks a possible trade deal with India fourth and, says that Canada should also seek a deal with the countries that belong to the Association of Southeast Asian Nations (a.k.a. ASEAN) group, including Indonesia, the Philippines and Thailand.
The report notes that other potentially attractive markets — such as Brazil, Russia and Saudi Arabia — did not make it onto its list of top priorities, given the lack of trade talk prospects with these countries.
“These countries have shown less openness than others to negotiate agreements that liberalize trade and investment in services with any partner, let alone Canada,” the report says. “This does not mean they are not potentially important partners, but the indicators we use suggest only a low potential for progress on trade in services with them.”
The inclusion of financial services in recent trade agreements is “good news for Canada, since financial services represent a source of strength for the Canadian economy,” the report concludes.