What are the changes that Canada would like to see, and how valid are the concerns? Press reports indicate that there will be three working groups set up, to review auto rules of origin, intellectual property (IP) and culture. In addition, the core principles announced in Da Nang reaffirmed the importance of both environmental and labour standards, which reportedly both Malaysia and Vietnam were trying to roll back.

On rules of origin for the auto industry, the looser rules in the TPP work to Japan’s advantage as they allow it to source components from its Asian supply chain in non-TPP countries. This is clearly not to the advantage of Canadian parts manufacturers. A bilateral deal will have to be reached on these rules between Canada and Japan, likely including Mexico.

On intellectual property, the IP chapter in the TPP is to be “suspended.” Press reports have talked about this chapter long being a concern of the Canadian high-tech sector, but despite all the bluster from critics, they seldom actually identified anything specific in the IP chapter that they objected to. There were other changes in the copyright area that some have criticized, such as the extension of the term of copyright protection and enshrinement of anti-circumvention rules (that are currently part of Canadian law) in the agreement. While there are good reasons from a Canadian perspective to extend the term of protection to bring it into line with the US, the EU, Australia and a number of other countries, extension has vocal opponents in Canada. These critics would also like to roll back the existing law on anti-circumvention of technological protection measures.

These and other issues will be reviewed next year as part of the mandated review of the Copyright Modernization Act, so on the one hand the government is keeping its options open by making no TPP commitments at this stage, and on the other, it has retained these measures as possible bargaining chips for the closing phase of the NAFTA negotiations.

With respect to culture, it is difficult to see what the substantive concern is. In the original TPP agreement Canada fully retained its ability to protect and subsidize its cultural industries by taking chapter-by-chapter exceptions. This was a different approach from that taken in the original Canada-US Free Trade Agreement (FTA) or NAFTA where there was a “cultural exemption” clause (although if Canada took measures that violated the FTA, if not for the exemption, the US could retaliate with measures of equivalent commercial effect).

A key issue today is what constitutes a cultural industry or a cultural measure, as is well illustrated by the debate about whether offshore content companies like Netflix that supply content to Canadian households over the Internet should be regulated by the CRTC and be required to contribute to Canadian production. Canada is unlikely to get much pushback on this from its current TPP partners as both Australia and New Zealand take proactive measures to promote their own cultural industries, and if a cultural exemption clause is inserted into the agreement, the Trudeau government will be able to proclaim that it has strengthened protection for Canadian culture. Substantively there is no difference; optically this will look like a win.

Finally, one issue on which currently there is little clarity is that of supply management. Both the US and New Zealand pressed Canada for more access to its closed dairy market, and the US continues to do so in the context of NAFTA. In the original TPP, Canada agreed to open 3.25 percent of its market to dairy imports from TPP countries. Even this limited and long overdue reform came with a hefty price tag as the then-Conservative government promised over Cdn$4 billion in compensation to Canada’s 12,000 dairy farmers (plus chicken and egg producers) to offset this minimal opening.

The Trudeau government, like all previous governments, has signed on publicly to the myth that supply management is good for the Canadian economy. More realistically, it does not want to pay the political or financial price for opposing this powerful lobby. While New Zealand, the world’s largest exporter of dairy products, will push for some opening, they will have less clout than the US. In any event, NAFTA discussions on this topic are still ongoing so nothing is going to happen regarding supply management until the NAFTA angle is sorted out.

So, while there are valid substantive reasons for Canada to “slow walk” on the TPP 11 negotiations, without sinking or derailing them, there are also important domestic optical reasons to be seen to be “standing up” for Canada.

It was important for Trudeau to signal at this juncture that Canada would not be stampeded into endorsing an agreement prematurely, as the Japanese clearly seemed intent on doing. When the time comes to explain to Canadians what has been achieved in a new “progressive” TPP11, assuming it is concluded sometime next year, this will greatly increase the chances of its public acceptance. Getting the details right and sending the right messages now are important steps to bringing home the successful negotiation of the TPP11, or whatever new moniker is attached to it. This will be an agreement that promises to position Canada well for future trade opportunities in the Asia Pacific and bring significant benefit to important elements of the Canadian economy.

Positive signals have now been given on the TPP11 and the hard bargaining will begin on some of the finer details. In the meantime, the NAFTA negotiations will play out while Canada and China decide whether or not to proceed on negotiations. If the stars align, the new TPP11 agreement should be ready for conclusion in 2018. That is a good outcome from Canada’s “Da Nang Moment.”