Column: Economic clouds loom as the G7 meets

On the agenda are measures to address the global economic slowdown, terrorism, the humanitarian crisis and ongoing conflicts.

PM Justin Trudeau has been in Japan all week doing meet and greets, re-invigorating the trading relationship between Canada and Japan and hopefully wowing the Japanese auto industry to invest more of their production in Canada. It culminates in the G-7 Summit with Canada, France, Germany, Italy, Japan, U.K. and U.S. backdropped by global dark cloud challenges.

On the agenda are measures to address the global economic slowdown, terrorism, the humanitarian crisis and ongoing conflicts. There are worries on the uncertainty of what Europe might look like if Britain votes in its referendum June 23 to split from Europe (the Brexit equation), the growing mood among populations toward anti-immigration and anti-establishment, and the dire consequences should Donald Trump become the U.S. president in November.

The notion that Hillary Clinton is a slam dunk for the presidency is perilously slipping away as Trump, the presumptive presidential nominee for the Republican Party, closes the gap in what could be the mother of all election campaign battles leading up to the November polling day.

All the elements are in play for a unique political storm.

Canada depends heavily on its exports and it looks to countries east, west and south for trade deals. We were log-jammed on clauses on a trade agreement with the EU until earlier this year. Four years ago we began free trade talks with Japan.

Japan was once Canada’s second-largest trading partner but, according to Statistics Canada, it now sits in 4th place behind the U.S., China and the U.K. Trying to prop up flagging trade, Canada and Japan began trade talks a few years ago but they got put on hold when the countries joined the Trans Pacific Partnership talks that included 12 Pacific Rim countries. Together those countries represent a combined market of nearly 800 million people and a GDP of $28.5 trillion. Canada is in the contemplation stage of the TPP, having signed it in February but not yet ratified it.

The purpose of the TPP is to drop tariffs and barriers and stimulate trade. British Columbia’s exports to TPP countries averaged $20.6 billion annually from 2012 to 2014 despite existing trade barriers. Merchandise includes agricultural products, fish and seafood, forestry, industrial goods, and metals and minerals. TPP proponents say the pact will eliminate tariffs on all key exports and give access to new opportunities in the Asia-Pacific. Those against TPP claim it could drive down wages and jobs.

Both the U.S. presumptive presidential candidates are against the TPP, Trump vehemently so and Clinton, doing an about-face after supporting it when she was Secretary of State, is also against it. G-7 leaders are hugely anxious about Trump, should he become president, putting a strain on world order. Trump is clearly anti-free trade and has already threatened to launch a trade war with China by imposing a 45 per cent tariff on imported Chinese goods.

If the TPP falls apart without the U.S. endorsement, Trudeau needs that backdoor plan for a Canada-Japan free trade agreement. If the TPP flies and with the EU trade deal (Comprehensive Economic and Trade Agreement, or CETA) in its final stages, Canada will have free trade agreements with 51 nations giving Canadian business access to over 60 per cent of the world’s economy.

CETA provides access to the European market with 500 million people in 28 countries with a combined GDP of $20 trillion. According to Global Affairs Canada, Canada is the only G-7 nation with free trade access to the United States and the Americas, Europe, and the Asia-Pacific region.

But how it all plays out depends on what happens with the Brexit vote and who, finally, opens up shop in the White House.