Trans-Pacific Partnership talks near deal as negotiators get down to dairy

Negotiators have taken a big step toward an historic agreement that would knock down trade barriers on four continents while opening important sectors to greater foreign competition.

A Trans-Pacific Partnership deal could be announced Saturday if negotiators clear the final hurdles including the tallest remaining one involving Canada: dairy import limits.

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The broad contours of a deal are mostly sketched out. Canadian exporters of beef, pork, canola, grains, machinery, medical devices, minerals, seafood, aeronautics and other products would have greater tariff-free access to 11 countries including Japan, Vietnam, Australia and Peru.

Now those countries are knocking on Canada's door.

They've demanded a greater presence in two areas that have historically supported good-paying jobs: the auto sector, and dairy. A deal on auto parts is mostly done, according to various stakeholder groups watching the negotiations. The final fight turns to Canada's grocery shelves, where importers want more than the meager 10-per-cent space set aside for foreign milk and cheese.

That politically sensitive issue remains one of the few obstacles to completing a pact that would cover 40 per cent of the world's GDP, including some fast-growing economies and additional countries already angling to join.

"I'm pretty optimistic it will come together (this weekend) 80-20," said Alan Wolff, a former U.S. negotiator who now leads the American National Foreign Trade Council, a commercial association.

"But because it's a negotiation there could always be a holdup."

That's exactly what happened at the last round in Maui. Canadian and Mexican negotiators were blindsided by a Japan-U.S. deal that would have doubled the allowance for cheaper car parts without tariffs from Japanese suppliers in non-TPP countries like China and Thailand.

Those differences appear to have been settled.

The hallway chatter from industry lobbyists at the convention site suggested the percentages for import thresholds might not differ significantly from the Maui offer with perhaps a five-per-cent change for parts. But it's expected that new exceptions will be built into the agreement for different types of parts, limiting the scope of the change.

Canada's envoy to the talks wouldn't talk percentages. He also said some details still must be worked out. But International Trade Minister Ed Fast confirmed Friday that major moves had been made.

"There's still some work left to be done," said Fast.

"But we're optimistic that issue can be solved and we'll have an outcome that will support our Canadian auto sector and ensure its long-term viability in Canada."

The autoworkers' union fears the loss of middle-class jobs. But some Canadian parts manufacturers are enthusiastic about the opportunity to grow an international presence.

Fast used more guarded language on dairy. Of that, he said: "There's still lots of work to be done."

The Canadian government faces domestic pressure from dairy-producing provinces, who are not at the negotiating table but have provincial representatives in Atlanta pushing against any opening to foreign milk and cheese.

Canada isn't the only country with domestic pressure: the American delegation has received a public letter from influential lawmakers urging it to walk away unless it can secure certain gains for American businesses.

But the biggest U.S. business lobby is urging a deal now.

It says the decade-long TPP project could be destroyed by domestic politics if it doesn't happen immediately, with elections in Canada, then the U.S., Japan and Peru next year and governments under pressure to protect individual sectors.

"If we miss this opportunity I believe we may lose it forever," said Tami Overby, vice-president at the U.S. Chamber of Commerce.

"We have the Canadian election. No one knows what that outcome's going to be. We also get closer to the U.S. 2016 (presidential race) that gets harder. So from my perspective nothing gets better. But the risk increases, and in some cases quite significantly as time goes by."

As if to underscore her point, NDP Leader Tom Mulcair announced Friday that he wouldn't consider himself bound to ratify any deal reached during the election campaign.

Overby encouraged all countries to put some of the proverbial water in their wine.

For Canada, that wine comes with a little more foreign cheese.

She said New Zealand hasn't asked for much. But it helped spearhead the TPP project years ago, with its one major demand being access to dairy markets.

Other Canadian industries are thrilled at the prospect of a deal.

The head of Canada's pro-free-market agriculture group said he expects a nine-per-cent increase in canola exports alone, with big gains for other industries including pork, beef and barley.

"We're extremely optimistic for our sector," said Brian Innes of the Canadian Agri-Food Trade Alliance, and vice-president of the Canola Council.

"We face significant trade barriers, this is the most ambitious deal in decades, and it could have a major impact on our ability to export."