by John Melia and Katherine Humphries
Last October, 12 countries—Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam—concluded negotiations with respect to the draft text of the Trans-Pacific Partnership (TPP). In February, each of these countries signed the legally verified text of the agreement. TPP is generally considered to be the most comprehensive regional trade agreement presently in existence. When it is eventually implemented into Canadian law and ratified, it may present significant benefits for Canada’s construction sector. Stakeholders, however, should be cognizant of some potential risks.
Upon coming into force, TPP will affect the conditions of competition for both:
- Canadian exporters of construction goods and services to the relevant foreign markets; and
- importers in Canada of construction goods and services from the relevant foreign markets.
For example, the partnership eliminates almost all existing customs duties on goods imported into Canada from other TPP countries (and vice versa). This ‘tariff elimination’ encompasses customs duties that currently apply to metal-based goods, wood products, and articles of concrete, cement, and aggregate—all materials commonly used in the construction industry. Considering that virtually all these tariffs will be eliminated immediately when TPP comes into force, stakeholders should now begin to carefully consider the potential impacts—including the potential opportunities and risks—that may arise as a result.
For example, how will the manufacturing quality and standards of the construction materials imported into Canada from TPP countries be regulated, both in the exporting countries and here? Construction and design professionals tasked with identifying and sourcing competitive supplies of appropriate building materials for use in construction projects must be aware of the potential risks created by new trade flows from these countries. Care should be taken to ensure goods imported from new, competitive sources of supply in TPP countries for use in the Canadian construction market meet all the applicable Canadian quality standards and requirements. Working with local associations and lobbying to ensure quality standards are enforced will help to address such risks. Developing good relationships with reputable suppliers in TPP countries will also likely provide a greater level of comfort.
Another aspect of TPP that could potentially pose some risk to the Canadian construction industry concerns the lateral movement of foreign-trained workers. The agreement requires the parties to work on implementing ‘mutual recognition agreements,’ which are binding agreements between respective TPP countries that provide for the reciprocal recognition of professional and labour qualifications based on the results of conformity assessments conducted against the appropriate technical regulations or standards in various sectors. This includes the construction sector.
It is anticipated the implementation of mutual recognition agreements will add another layer of regulatory oversight in TPP countries, including Canada, whereby the relevant regulatory bodies will be tasked with implementing measures and procedures for the purpose of formally recognizing professional and labour qualifications through registration and licensing programs.