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12 countries, including Canada, reach tentative TPP deal

Canadian exporters can access almost 800 million customers tariff-free

Twelve nations, including Canada, have reached a tentative deal on a massive Pacific Rim trading bloc billed as the largest-ever deal of its kind, with implications for a staggering scope of industries, workers, and for long-term international relations between countries on four continents.

After five days of marathon, around-the-clock negotiations, a deal was announced Monday to create the Trans-Pacific Partnership—which would cover 40 per cent of the world's economy, for starters, and participants predicted it would become the building block for future trade deals.

"Today is a historic day; it is a great day for Canada, it is a great day for Canadians,'' Prime Minister Stephen Harper beamed during a news conference Monday in Ottawa.

"With this agreement, the largest economic partnership in the history of the world, Canadian exporters will gain nearly tariff-free access to almost 800 million customers in the Asia-Pacific region.

"The 11 countries with which we will partner have a combined GDP of nearly $30 trillion, including—crucially for us—Japan, the world's third-largest economy and a vast new market for Canadian enterprise and Canadian goods.''

READ: Harper promises dairy industry will be protected in any Pacific trade deal

First, however, the deal requires political approval.

To take effect, the deal must be ratified by the parliaments and lawmaking authorities of all 12 member countries. Canada will be the first political testing-ground —the agreement lands smack in the midst of a federal election campaign that will decide who will control the Parliament that determines whether it lives or dies.

The drama reached a high point overnight Monday, as a series of delays culminated in an agreement around 5 a.m. on a persistent irritant involving dairy and the future of Canada's tightly controlled sector.

The Canadian government appears to have guaranteed the long-term entrenchment of the supply-managed sector, which is detested by free-market economists but backed by every major political party, provincial governments, and the domestic dairy lobby.

Canada agreed to 3.25 per cent more foreign imports, a minuscule change compared to what some countries asked for. That means a bit more international products like butter on grocery shelves now 90-per-cent dominated by domestic content. For their loss, the government would compensate Canadian farmers billions of dollars under a series of programs over at least 10 years.

"We will keep our supply-managed farmers whole from any loss of income or quota value stemming from this agreement,'' Harper said.

"Cabinet has approved a $4.3-billion fund to be paid to farmers and processors over the first 15 years of this agreement.''

READ: Tractors, cattle on Ottawa streets as farmers express trade talk fears

It's a little less clear what impact the deal could have on the auto sector. The agreement would allow a 17.5 per cent greater tariff-free share of cheaper intercontinental parts compared to the standard set out in NAFTA, although the formula is apparently complex and includes a series of exemptions.

"I want to reassure the Canadians who depend on it for their livelihood that we have reached an agreement that will clearly benefit our auto industry here at home,'' Harper said.

``This agreement will mean the well-paying jobs in the auto sector that they continue to support thousands of Canadian families for years to come.''

New measures to attract auto investment and protect auto-assembly operations in Canada will be forthcoming shortly, he added.

While he didn't make any promises specific to workers in any individual sector, the Canadian envoy to the talks appeared to insist there would be no net negative impact on Canadian employment as a whole.

"We certainly don't anticipate that there will be job losses,'' said International Trade Minister Ed Fast, who suspended his re-election campaign in B.C. for nearly a week to attend the Atlanta talks.

''Obviously there will be some industries that will adapt.''

READ: Key to Canada’s entry in trade deal? More access for foreign farmers, U.S. says

His eminently quotable New Zealand counterpart elaborated on the big picture. Tim Groser, earlier this week, apparently referring to the smaller-than-hoped-for concessions in dairy, said that to complete a deal would require every country to take a deep gulp and swallow a few ''dead rats.''

But he painted the agreement as a historic geopolitical event. He predicted others would join, without naming specific countries. Hallway chatter at the five-day talks focused on whether this might become the blueprint for a trade deal with China, or maybe even a partnership with other regional blocs like the European Union.

''Long after the details of this negotiation on things like tonnes of butter have been regarded as a footnote in history, the bigger picture of what we've achieved here remains,'' Groser said.

''It is inconceivable that the TPP bus will stop in Atlanta. The TPP bus will move on.''

Several countries including Thailand and Colombia have already mused about joining TPP, which involves North America, Chile, Peru, Japan, Brunei, Singapore, Vietnam, Malaysia, New Zealand and Australia.

The proposed agreement reduces or eliminates barriers in a wide range of sectors and could lead to more Canadian exports of pork, beef, canola, high-tech machinery and a variety of other products.

As one example among hundreds, the beef industry predicts exports to Japan will triple. The 39 per cent current tariff in Japan will become nine per cent over the next few years, and barriers will completely disappear in other areas.

But voters can't yet see the fine print.

The actual text of the deal is undergoing a legal review, and it's not clear when it will be available. The government offered no guarantees at a news conference. It simply expressed hope the 12 countries might manage to make it available in the next few days _ before voters pick a government Oct. 19.

Until that text is out, every detail the public sees from the TPP will have been pre-selected and released by their national governments.

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