Lexpert Magazine

LEXPERT MAGAZINE | MARCH 2016 63 | COLUMNS | BY GEORGE TAKACH TECHNOLOGY For Canada, where global trade makes up nearly a third of GDP, ratifying the TPP is no trivial matter Going Trans-Pacific: Part I YOU WILL BE hearing a lot about the Trans-Pacific Partnership trade agreement ("TPP") this year. e Harper Conserva- tive government signed it on Oct. 5, 2015, but for it to be effective for Canada, it has to be ratified by the new Liberal govern- ment of Justin Trudeau. is outcome, presumably, is not a foregone conclusion — the new International Trade Minister, Chrystia Freeland, said the new govern- ment will take a very close look at it. And so you can expect a lot of advocacy and com- mentary on the TPP in Ottawa and across Canada in the coming year. e trade agreement will also come un- der close scrutiny in the US. is is an elec- tion year south of the border, and there will be partisans on both sides of the TPP rati- fication debate. Some of the commentary in Washington will influence decision- makers and opinion-formers in Canada. is will all make for interesting political theatre — which would be entertaining if the stakes weren't so high. In this column, and the next two, I will discuss specific aspects of the TPP related to e-commerce and intellectual property. But before I do, let me disclose straight away that I am an ardent free-trader. And I'll try to convince you why Canada should be pro free trade as well. WHY CANADA NEEDS TRADE Canada is one of the largest countries in the world when it comes to its territorial ex- panse. While Russia is by far the biggest in terms of physical surface area (17,075,200 square kilometres), Canada (9,984,670) is the second largest, with the United States (9,826,630), China (9,596,960), Brazil (8,511,965) and Australia (7,686,850) fill- ing out the top six. While we are enormous in terms of our physical expanse, we are modest in terms of population. On this metric, the behemoths are China (1,385 million) and India (1,252 million), followed by the US (320 million), Indonesia (249 million), Brazil (200 mil- lion), Pakistan (182 million) and Nigeria (173 million). Canada, with a population of 35 million, ranks 37th in the world in terms of population, with only 0.49 per cent of the world's people. (China is at 18.8 per cent; India 17.6; US 4.4; Indonesia 3; Brazil 2.8; Pakistan 2.6; Nigeria 2.5). In other words, this country of ours is a relatively small market. Nevertheless, in terms of our gross domestic product as a percentage of the world's GDP, Canada's number again increases to 1.48 per cent. is is still a small figure, but quite a bit higher, proportionally, than our popula- tion percentage (at 0.49 per cent). In a nutshell, if Canada's businesses and professionals could only sell their goods and services to other Canadians, we would all be quite the poorer for it. Simply put, if we tried to pull a "North Korea" in terms of economic autarky, we would be about as poor as the Hermit Kingdom. Instead, because of our ability to trade with other countries around the world (but particu- larly the US), we have come to enjoy a rela- tively high standard of living. Indeed, Canada is one of the most active trading countries in the world. Compare our exports as a percentage of total GDP: Canada 31 per cent; Australia 20; Brazil 11; China 22; US 13. Trade is important to all these listed countries, but to us it is vital — almost one third of what we produce is sold to buyers in other countries. is reality is even more pronounced when you consider the high-value-added world of technology-oriented products and services. Again, while Canada has a good- sized market, it pales in comparison to the much larger ones in the United States, Europe and Asia. For example, virtually all Canadian soware companies that I work with have sales to customers outside of Canada, and indeed those foreign sales typically make up 80 to 95 per cent of their total sales. ere are a few exceptions to this rule, but not many. FOR EXAMPLE: DESIRE2LEARN To illustrate the role – and criticality – of international trade to the Canadian econo- my, consider the example of Desire2Learn (or "DTL" as it is oen called). DTL was founded in 1999 by an enterprising Uni- versity of Waterloo engineering student who wanted to use information technol- ogy, and other digital assets, to change the way education and learning are carried out and managed. Today, the company has over 850 em- ployees, mainly in the Kitchener-Water- loo area in Ontario, but it also has offices around the world (in Australia, Europe, Brazil, Singapore and most recently Dubai). DTL sells a suite of soware prod- ucts, and related products and services, to schools, universities and increasingly large enterprises, in each case to assist them with managing and carrying out ambitious on- line learning objectives. Put succinctly, DTL's market is global, and international trade agreements help PHOTO: SHUTTERSTOCK

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