A Canada-EU trade deal? ‘Hmm …’

Paul Wells explains why CETA seems so unlikely

by Paul Wells

One of the longest-lasting stories in Stephen Harper’s tenure as Prime Minister will end this month. Unless it doesn’t end. But everyone’s going to give it a college try.

While the current issue of Maclean’s is on newsstands, Ed Fast, Canada’s trade minister, will travel to Brussels to meet his approximate counterpart, European Trade Commissioner Karel De Gucht. The subject is an ambitious trade deal Canada is trying to reach with the European Union. Bureaucrats and negotiators from both sides have been meeting regularly for 3½ years. They left all the hard decisions to the end. This is the end. Fast’s meeting with de Gucht will be the first negotiation among politicians instead of civil servants. It comes six weeks before the New Year, the date Stephen Harper named during the 2011 campaign as the deadline for a deal.

Everybody connected to the negotiations assures me there will be a deal. Every public sign I see makes me think there won’t.

At the end of October, De Gucht, a former Belgian foreign minister, sat down for a webcast interview with an EU journalist about the negotiations. His body language was comical. “I hope that we can finish these negotiations by the end of the year,” he said. “That’s the day after tomorrow, hmm?” Translation: that deadline is really freaking close.

So, he said, Fast would come to Brussels. “But we should have no illusions. There are still a number of difficult issues to tackle. So I’m not promising anything. But we will make a major effort to close the deal before the end of the year. That’s what we are going to do. But there are a number of issues I believe that you can only resolve at the political level. That’s why . . . we will have a ministerial [meeting] to, yeah, to close the deal, I mean to sort it out and do the necessary political arbitration.”

Pro tip: if an automobile salesman describes his product to you in similar halting terms, don’t buy the car.

Two weeks later, De Gucht was sounding far more chipper. “I expect to conclude a comprehensive agreement with Canada very soon,” he told a business audience in Mexico. “Even more crucially, it is possible that we will start talks for a deep free trade agreement with the United States, if our leaders agree on this in the new year.”

But now it was Harper’s turn to sound less than bullish. “There’s a lot of roadblocks out there in all these relationships, China, India, the negotiations with the European Union, the Americas strategy,” he told the Toronto Star. “Frankly, because of all the impediments, my judgment is that we have to go hard on all fronts and see what actually progresses.”

Why does it matter? Because the so-called Comprehensive Economic and Trade Agreement (CETA) with Europe is the biggest and oldest trade file on the government docket. Jean Charest started pushing European contacts to take the idea seriously during his first term as Quebec premier, in 2006. Harper came on board in early 2007. Negotiations began in 2009, after a preliminary study suggested an agreement could be worth $12 billion a year to Canada. Back then, Stockwell Day was the trade minister and he said he’d like to see negotiations conclude by the end of 2010. They slipped, and slipped again, and slipped some more, and now it’s two years later.

Why is it so hard? A Canada-EU CETA would be much more ambitious in opening markets in services, investment and government procurement than the Canada-U.S. free trade agreement. A broad range of domestic interests on both sides would rather keep those markets closed. And the opponents of CETA have been far more effective at mobilizing opposition than its proponents have been at mobilizing support.

The nationalist Council of Canadians lists more than 70 municipalities and municipal organizations that have debated local resolutions demanding that they be exempted from CETA’s procurement provisions. They want the right to prefer local contractors instead of letting European firms bid. Then there are CETA negotiators’ proposals to extend patent protection on Canadian pharmaceuticals to match European protections, which would tend to drive up the cost of prescription medication. Finally, farmers whose products are supply-managed don’t want to open the Canadian market to an avalanche of European dairy and other products.

I’ve talked to a succession of Harper trade ministers who didn’t buy any of those arguments. Harper devoted several days to pitching CETA on the campaign trail last year because he sees his support for trade as a key contrast with the NDP and other opposition parties.

But Harper has tried to play this file differently from the way Brian Mulroney played the Canada-U.S. free trade wars. He thought he could low-bridge CETA, keep the whole process low-key, avoid ratcheting up the tension. Now the deal’s opponents have outflanked him on every side. He can still storm ahead, reach a deal and pass it with nobody else’s approval.

But Harper has had a rough several weeks over far more obscure trade files than CETA. Something, or a bunch of somethings, has made this negotiation drag on twice as long as the government first hoped. All those somethings remain. It’ll be an interesting end to a long year for this Prime Minister.




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A Canada-EU trade deal? ‘Hmm …’

  1. rough several weeks over far more obscure trade files than CETA

    Which other trade files are you referring to? Ottawa signed the FIPA agreement with China (although with some notable concessions), and invited to discussions at the TPP (after the media widely reported that we would not get invited, and what a disaster that would spell for Canada’s free-trade hopes, disaster for the economy, our image, yadda yadda…). Generally good news, and at the very least, it’s progress. Are you referring to India?

    • India is far away from being completed… or even securing an m.o.u. Steve Harper is so desperate to cut deals… in the illusion of progress. We are so late that we have to lead with major concessions to these opportunities. Supply management of dairy products was put on the table as a pre requisite to the invitation at the TPP. They are terrible failures at negotiating ( read military procurement ) They buy their own press clippings… They roll over Canadian traditions in parliament and think they can dictate equally with our friends and allies. But they can see through it and drag their heels until we cave… but heck we have a deal ( sic ) If the Conservatives have created 900,000 NET new jobs. How come the unemployment rate is not much much lower. Lies lies and more lies.

  2. Canada’s Supply Management for dairy and poultry products has only managed to jack up prices so that Canadian families with children pay way too much for basic nutritious foods like milk, cheese, and eggs.

    Canada’s generic drug manufacturers and their market-rigging dealer network have managed to give Canadians some of the highest priced generic drugs in the world.

    Canada has had a Patented Medicine Review Board for 25 years now. That is why we pay far less than the Americans and more or less the same as other similar countries.

    What Canada really needs is a Generic Medicine Review Board and a national open tendering system for stocking our domestic medicine cabinet.

    And we need to stop listening to the poppycock being spouted by the Canadian Generic Pharmaceutical Association. They may be the people behind the disgraceful Bill C-398 campaign.

  3. I think there are too many trade talks, it is bewildering. Why is Canada – EU doing their own deal if US – EU and Mexico are talking now as well. And deals with EU right now might be useless in a few years if EU members can’t agree on new political and financial arrangements that are currently being discussed. EU as it is today might not exist in five years, I think there is good chance UK will be radically changing its relationship with EU and who knows about other countries. Fritz and Marianne’s marriage looking very troubled in the medium future and the children of southern europe are ill.

    Not engaging in free trade with other countries is cut off nose to spite our face behaviour. Harper just has to eliminate tariffs and bob’s our uncle, free trade issues are settled and then Harper will be known for his wealth creation acumen.

    • What makes you think the UK will change much vis vis Europe. Labour will likely make it make in having found a pretty savvy politician in Miliband? Cameron seems to look more of a tosser with each passing day.

      • Euro is making some european countries consider closer ties – monetary and fiscal union – and Germans are keen to have a euro panel that will oversee each country’s annual budget and euro bureaucrats will be able to alter spending plans if they don’t approve.

        Problems with euro are going to create new problems within EU and countries are going to have seriously think about their relationships with one another. EU project so far has mainly been political, now it wants to move on to next stage of closer fiscal ties and I don’t think electorates of many countries are as eager to merge and lose their national identities.

  4. Four Boneheaded Biases of Stupid Voters:

    Like most noneconomists, he suffers from anti-foreign bias, a tendency to underestimate the economic benefits of interaction with foreigners. Popular metaphors equate international trade with racing and warfare, so you might say that anti-foreign views are embedded in our language. Perhaps foreigners are sneakier, craftier, or greedier. Whatever the reason, they supposedly have a special power to exploit us.

    There is probably no other popular opinion that economists have found so enduringly objectionable. In The Wealth of Nations, Adam Smith admonishes his countrymen: “What is prudence in the conduct of every private family, can scarce be folly in a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry.”

    Even theorists, such as Paul Krugman, who specialize in exceptions to the optimality of free trade frequently downplay their findings as abstract curiosities. As Krugman wrote in his 1996 book Pop Internationalism: “This innovative stuff is not a priority for today’s undergraduates. In the last decade of the 20th century, the essential things to teach students are still the insights of Hume and Ricardo. That is, we need to teach them that trade deficits are self-correcting and that the benefits of trade do not depend on a country having an absolute advantage over its rivals.”

    http://reason.com/archives/2007/09/26/the-4-boneheaded-biases-of-stu

  5. I guess Paul Wells knows the deal will go through, but as he cannot bring himself to congratulate anything the Cons do, he has to belittle the deal as to take away its value. So typical of the media.

  6. I don’t pretend to have anything better than a 90,000 ft view of these things, and it seems Wells’ article (appropriately) is operating at 30,000 ft. But even at 90,000 ft, it seems to me that the contentious issues have the EU being hawkish on free trade and Canada being a bit “wet”, as Thatcher would say? Which is, of course, counter to my sense of what the Prime Minister would prefer.
    The resulting questions are 1. will Canada be in a position to get the EU to agree to ancillary processes for the contentious bits to achieve a “win-win” (i.e., phasing out supply management with EU free trade as a fig leaf), and 2. are there additional issues where Canada is being hawkish in the EU’s court that we haven’t read about?

    • Many of those SM seats are in On and QC. Who needs them most come 2015?

  7. What’s “political arbitration” when it’s at home?

    Never thought i’d ever come to think of BM purely in terms of being a consultative, inclusive politician who tells you where we are going… but compared to low bridger Harper [his forte']…

    “Even more crucially, it is possible that we will start talks for a
    deep free trade agreement with the United States, if our leaders agree
    on this in the new year.”

    How much does this play a role in our affair [unconsummated] with Europe i wonder?
    Edit: Maybe unrequited’s better….less tacky, more classy. More Paris street cafe/salon, less Hamburg street walker.

  8. Harper’s been on a trade deal rampage, but I don’t think he understands the long term implications of these on our existing businesses, consumer prices, values, and especially our environment. As with most Canadians, I just don’t trust him, and I don’t think he’s a good leader. He is far too secretive and undemocratic to be arranging these deals that are not being vetted/ thoroughly analyzed as they should be.

    • Apparently you don’t like Europeans.

  9. Apparently there are 70 municipalities and municipal organizations that want the taxpayer to pay more for less.

  10. No one should be making deals with anyone with the prior knowledge and consent of the people. I will oppose any deal until I know all the terms of the deal.

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