Canada-EU trade: Any day now

Why is it taking so long? Paul Wells explains


 

 

After a while my nonstop constant pessimism over trade negotiations with Europe became contagious. (The first of those four links takes you to an article from 2009. I first expressed skepticism that Canada and the EU would ever conclude a trade deal at an Ottawa conference in the spring of 2008.) IP expert Michael Geist succumbed in March. Today he offers a list of media claims of the negotiations’ imminent success. Geist’s list is 39 stories long, begins in 2010, and should be emailed to the next columnist who claims a deal is imminent. One did yesterday on one of the Sunday chat shows; the penalty for being wrong yet again is, of course, zero.

There’s still a good chance that at some point Canada and the EU will sign some kind of agreement that increases bilateral access for market access, investment protection, public-sector procurement, patent protection and all that other good stuff. On that day, I’ll have been wrong once, while all my friends who’ve predicted a deal every several weeks for three years like Charlie Brown kicking at Lucy’s ball will be vindicated. But why’s it taking so long? A short list of reasons:

• Stephen Harper preferred to low-bridge the negotiations rather than make them the centrepiece of a highly public show of brinksmanship, as Brian Mulroney did with Canada-US trade in the ’80s. Mulroney used public psychodramas between negotiators to strengthen his hand against the Americans (or so he hoped) and then turned the 1988 election into a referendum on the result. Harper has preferred that almost nobody know negotiations were happening. He hasn’t been secretive — my honest impression is that stakeholder groups have been given periodic and frank briefings on the process — but he has preferred not to trumpet the whole affair. The problem with that is that it has given opponents of freer trade a clear field to organize and propagandize, un-rebutted by proponents.

• He has not had an empowered trade minister or negotiating team to do the horse-trading at their level without sending it up to his desk. Karel de Gucht, the European trade commissioner, was astonished in February to arrive in Ottawa and discover that Ed Fast, sitting in his own capital city, had no authority to consent to trade-offs without kicking everything up to Harper’s office. I’m told he went home furious. You’ll note that Canadian teams are camped out in Brussels; it’s because European teams are done coming here.

As a bonus, Harper has also not had an empowered intergovernmental minister to cajole the provinces. Partly because Jean Charest led in the original push to negotiate this treaty, and because it would (if it were successful) extend deep into provincial jurisdictions, the provinces have been closely involved and have each sent their own negotiators as part of the federal delegation. But who’s riding herd over all those sometimes-convergent, sometimes-competing Canadian provincial interests? Nigel Wright, apparently, when he called Newfoundland’s Cathy Dunderdale last autumn to try to browbeat her over Muskrat Falls. And Nigel’s been busy lately.

Upshot: Eighteen months ago, the Europeans figured remaining issues could be wrapped within several weeks. They haven’t been.

• Which takes us to the latest problem: the EU formally launched trade talks with the United States on Monday. Any concession they grant us is one they must consider granting, approximately, to a market nearly 10 times as large.

I first wrote about these negotiations six years ago. I presented them as a bold extension of the Mulroney trade legacy, led by Charest, facilitated by Harper in a refreshing display of a new approach to federalism as a tool of policy creativity in the service of advancing Canadian prosperity. I still hope I was right then, and that my later, skeptical stance will turn out to have been cheap pessimism. It’s up to Stephen Harper. It always was.

 


 

Canada-EU trade: Any day now

  1. I could forgive Harper a lot if he got this done.

    Not everything mind you….but a lot.

    • I wouldn’t store a lot of hope in this. The EU can’t get anything done. Too many bureaucrats, too many countries and too many policies. It is crippling their productivity.

      • It’s $12B for the Canadian economy.

        • Yeah but it takes this bunch three months to arrange a meeting, a year to decide the agenda and two years to put it to a vote. Weren’t you following the Euro crisis? It was a joke.

          • The situation is not a ‘joke’, it’s a crossroads.

            After centuries of warfare amongst themselves….ending in WWI and II…..Europe looked for a way to stop this insanity, and the EU was born

            It’s been put together over half a century….there are 27 countries involved, each of them with a traditional culture, so it’s no small accomplishment to have come this far. I mean, Sweden and Italy??

            But it’s working…..countries have lined up to join.

            But they’ve finally reached what they were aiming for…..the next step…..which is the ‘united states of europe’……and it’s hard for them to do it. They will eventually.

            It’s not like we’re speedy ourselves ya know.

          • Yes, I know. I didn’t need a history of the EU and no, the EU has not stopped wars, NATO has. Secondly nobody was asked whether they wanted to be part of this United States of Europe and separatist parties are forming in the UK, in Germany, in France and in Spain. Until they can solve their “democratic deficit” they are in danger of a huge blow up.

          • Who do you think NATO is?

            Stopped wars no, prevented them yes.

            Yes, the EU is made up of those countries wanting to eventually be the US of Europe.

            What a bunch of dorks do is irrelevant.

          • NATO is not the EU. Sorry. If you want to go ahead and support a technocracy, go ahead. I’ve no time for it.

          • No of course NATO is not the EU. How did you manage to get that confused?

            NATO has 28 countries and is a military organization. One no longer needed, but….whatever….

            And what this has to do with a technocracy I don’t know. Apparently you didn’t even have time to look it up!

          • I’m glad you found Wikipedia.

          • Is there some reason you’re being stupid tonight?

          • Speaking of trade, the euro-zone crisis was significantly aggravated by Germany’s mercantilism (the country runs a huge trade surplus.) Other countries like Greece and Spain were expected to undergo “internal devaluation” (wage deflation) to make their economies as competitive as Germany’s. Instead they ran huge trade deficits which turned into huge budget deficits (according to the “twin deficits” hypothesis.) This has wreaked economic havoc on the countries.

        • Utterly contrived and meaningless statistic. This is the reason economics never developed into a science. So-called economists make up statistics as they go along to push political agendas.

          Trade deals do not create wealth. The only way Canada can increase wealth off of a trade deal is if the country runs a trade surplus (mercantilism.) But then Europe would have to pay for it with a trade deficit. The ideal is a trade balance. Then wealth is neither gained or lost.

          • That’s the official stat….it will actually be more.

            But I’m not interested in your dipper economics.

          • Paul Krugman is not a dipper. You are simply ignorant.

          • No, he’s an American leftie

          • Now you sound like a Tea Bagger. Krugman is a free-market-leaning Keynesian centrist. He generally supports free trade and won a Nobel Prize in economics for his work on international trade. He says there are reasons why trade is desirable. But to claim it will boost GDP growth or create jobs is a fallacy according to widely-accepted economic theory. He is not the one misrepresenting the facts here.

            Trade Does Not Equal Jobs
            http://krugman.blogs.nytimes.com/2010/12/06/trade-does-not-equal-jobs/

          • I know who Krugman is thank you. I even know what he bought with his Nobel money.

            I am still not interested in him or his views.

          • That means you aren’t interested in international trade or facts. Canada needs more than slogans to create good job and business opportunities and boost anemic GDP growth.

          • Thankfully, I don’t need either your permission or blessing.

  2. Okay… I still have a problem with the description of the 1988 election
    as a referendum on free trade. Referendum implies some form of a
    question with some form of a “yes” or “no” option. If free trade ( a most
    misleading term) had been presented in that way, based on the vote
    result it would have lost.
    At this point it doesn’t matter. And I don’t have much of a dog in the fight.
    But it just irritates me to see it presented that way.

    • If this was a referendum, the fact is 45% voted “yes” (PC + Reform) and 55% voted “no” (Liberal + NDP; back then the Liberals opposed the FTA.) Given Canada’s ridiculous idea of democracy (doling out absolute corrupt power to minority parties,) it’s not surprising our history is subject to such absurd interpretations. (Considering the PM — who usually represents a minority of voters indirectly — is the de facto head of state and we appoint senators, makes Canada a laughing stock among developed countries…)

    • I don’t think it’s inaccurate to describe the ’88 election as a ‘de facto’ referendum. It was THE dominant issue, to an extent we really haven’t seen since. The (largely hyperbolic) polarization – “our only hope for economic prosperity vs. surrendering sovereignty to the Americans” – made it pretty hard to cast a vote with other issues in mind.

      • Don’t disagree. But my point is that a referendum implies
        that you count the votes for and the votes against. Didn’t
        happen. A small , and by now, irrelevant point. Just my
        irritation with the use of the word … for people who didn’t
        live through the time, they might actually think it means
        something. It doesn’t.
        It was an issue (a big one) in a multi-issue and multi-party
        election.

  3. I wonder when Paul is going to finally come in from the cold? Out there manfully hoping that it is the job of the present govt to give us better governance? That’s true; it’s still true. But at some point you got to wonder if Harper’s style of governance – the command and control model that should have died with the soviets – IS the problem. Just as all roads once led to Rome, in SH’s Ottawa, all files lead to his desk. We know he doesn’t trust Canadians, apparently he doesn’t trust anyone in his govt to exercise authority either.

    • Actually I think this works in our favour. The EU is not a state, it is a bureaucracy. They don’t like dealing with democratically elected individuals and prefer pointmen to go to who will be there when the current elected incumbant leaves. The fact they have to keep going to Harper means they aren’t building “relationships” with our bureaucracy.

  4. People who promote free trade as a vehicle for job and wealth creation, know little about economics. Here’s a concise article from Paul Krugman (who generally supports free trade,) that explains how free trade does not create jobs (using widely-accepted economic principles.)

    Paul Krugman: Trade Does Not Equal Jobs
    http://krugman.blogs.nytimes.com/2010/12/06/trade-does-not-equal-jobs/

    This free trade deal with Europe doesn’t sound very free to me. It gives European corporations the right to sue various levels of government on contracts they award. It will raise the cost of prescription medication by forcing Canada to dole out longer patents to pharmaceutical corporations. This deal is meant to give corporations more power, democratic government less. So much for the wonders of misguided ideology…

    • Mr. Waller,

      I have a serious problem with both the tack you take with your arguments and their underpinnings. Firstly, I would recommend reading outside of just Krugman. He is a laudable economist, but lately his views have been getting more and more skewed and incomprehensible. In fact, you are so quick to point to his Nobel-worthy credentials, but if you go back and read his earlier work you will find a much different thinker. If you read Krugman’s great piece on trade in LDC’s from the 90’s I think you will get a better appreciation for why today most economists tend to look with tired sadness at his transformation from cogent thinker to the doggish, anti-conservative hawk he has become. (http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html)

      Now onto your fallacious arguments. You fall victim to the incorrect tendency of equating wealth creation and job creation with an FTA’s only goals. In fact, there are myriad others consequences of trade pacts that are neither wealth creating or job creating. The introduction of new and innovative products to an economy does not create wealth, but it increases variety and is generally regarded as one of the chief benefits of free trade. Facilitating the in and outflows of foreign capital is a laudable goal in of itself and is another outcome of free trade agreements.

      Furthermore, nearly all studies done on CETA, conclude that it WILL create jobs, wealth and growth for Canada (see the Joint Scoping Report by the EU and Canada or Kitou’s paper for more info). Free-trade has been the world’s greatest engine for reducing poverty, increasing innovation, and stimulating economic growth and it is rarely recognized as such. http://www.economist.com/news/leaders/21578665-nearly-1-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim (link may require subscription)

      While trade agreements should be subject to rigorous scrutiny because they occasionally are deleterious, please don’t make the mistake of conflating that with the conclusion that all trade is bad.

      • I never said trade was bad.

        Your attempt to dismiss Krugman as “anti-conservative” is absurd. He is an expert in international trade for which he won a Nobel Prize. (BTW, I’m not the one equating FTAs with job creation and GDP growth. Ignorant politicians and corrupt businessmen are.)

        Krugman supports free trade in general. He just points out the fallacy of promoting it as a macroeconomic policy.

        The only way to boost jobs and GDP with trade is to export more than is imported: i.e., mercantilism. That is obviously not the goal of any free-trade agreement. It is a balance of trade. That means for all the jobs and GDP created with increased exports, there is a relatively equal amount lost from increased imports. If you understood the Krugman blog you would get that.

      • “Free-trade has been the world’s greatest engine for reducing poverty, increasing innovation, and stimulating economic growth and it is rarely recognized as such.”

        That’s the biggest load of crap I’ve ever read. For one, we had much greater productivity growth and GDP growth in the post-war Keynesian era than over the past 30 years of free-market deregulation, which includes free-trade. (BTW, the free-market counter-revolution culminated in a global economic meltdown we have yet to recover from…)

        According to the Conference Board’s Total Economic Database, Canada’s GDP growth for the 23 years after the 1988 Canada-US FTA was 69%. For the 23 years preceding the deal, it was 143%. Average annualized real GDP growth: 1965-1988: 3.9%; 1988-2011: 2.3%. Clearly, these free-trade deals were stimulating economic growth in the wrong direction.

        Sure hundreds of millions in the developing world were moved out of poverty into … poverty. They suffer the same kind of economic oppression and exploitation workers in first-world countries suffered in the 19th century. And it was not free-market ideology that created modern living standards. It was centrist Keynesian economics and the welfare state employed during the post-war era. These “emerging economies” will be emerging for centuries using free-market economics, spinning their wheels, unless they do the same as we did. (Which is to ensure all levels of society share in the benefits of economic and productivity growth via regulation and progressive taxation.)

        The reason corrupt businessmen love free trade is because it gives them special powers and allows them to bypass first-world regulations by moving production to developing countries (creating massive trade deficits that destroy wealth and jobs.) That’s why free-trade globalization is causing many more problems than it is solving. It is a creating a race to the bottom which will end in global depression (which could already be happening.) Then even insatiably-greedy plutocrats will be in hot water.

  5. I am curious to know what the delay is – usual government inertia or is Canada worried EU might not exist as presently constituted in a couple of years or ….. – why is it taking so long?!?!

    They have been negotiating for years, it is time to fish or cut bait. Cons are not the party of trade, not historically at least other than Mulroney, so why did they enter negotiations if they were not going to conclude a deal.

    I also wonder about EU/US trade deal, why doesn’t Canada just join those negotiations. What would be best, actually, is if UK got out of EU and CDN/US/UK created anglosphere deal that would make us rich, rich rich.

    And if Cons were really worried about trade and improving people’s condition, Harper would just eliminate tariffs blocking things from entering Canada. High tariffs like Canada has is ‘cut off nose to spite face’ behaviour – we are punishing ourselves by not letting in cheaper, better goods and products. The point of trade is to increase people’s standard of living, making foreign products more expensive like Canada does just reduces our standard of living for no good reason.

    Why are Canadians so parochial and apprehensive of foreigners?

  6. “my honest impression is that stakeholder groups have been given periodic and frank briefings on the process”

    Umm, aren’t all Canadian citizens “stakeholders”?

    • Only on E day.

    • Nope. You aren’t a stakeholder unless you have a stake in the negotiations. I was surprised to find my local Round Table on Climate Change only allowed councillors, NGO’s, and people who had green businesses to sit on its round table. If you disagreed, no seat for you.

  7. Here is a fascinating report prepared on the possible (and worrying for Canada) effects of a US-EU trade agreement. Bit surprised it is not getting more press.

    Essentially it predicts that depending on the degree of trade liberalization between the US and EU, Canada will experience a change of -0.7% (light liberalization) to -9.5% (deep liberalization) of real per capital income as a consequence.

    http://www.bertelsmann-stiftung.de/cps/rde/xbcr/SID-F6ABB7A4-8B43B437/bst_engl/xcms_bst_dms_38065_38066_2.pdf

  8. At the risk of being off-topic:

    These negotiations may not be secretive. However, the negotiations with the US over a FATCA (Foreign Account Tax Compliance Act) IGA (Intergovernmental agreement) have been decidedly secretive. Considering the sovereignty and constitutional (*) issues involved, can we expect to see journalists take more of an interest in this topic at some point? And it would be nice if the Green Party wasn’t the only federal party with an actual position on FATCA.

    (*) google “Peter Hogg FATCA” (without the quotes) to see what Constitutional expert Peter Hogg has to say re a Canadian IGA.

  9. Random speculation: Mr. Wells, does your spidey sense on this detect Harper playing the timing on this issue as it relates to Quebec? As you mention, this was a Charest-driven initiative and Quebec has the strongest immigration, linguistic and business links to Europe of any province. I always had the impression that any EU-Canada free trade deal would probably involve a Canadian PM having to throw the Quebec dairy and egg lobbies’ supply management under the bus. Could Harper be delaying as not to undermine Couillard’s ascension?

  10. “OPPOSITION” Sucking Up to CHINA; C-CI Treaty & CETA DELAYED for IMPROVEMENTs
    Mr. Estrin, President and Ms. McMillan, Executive Director, Green Party of Canada;

    Regarding Ms. Elizabeth May’s, Green Party of Canada, letter to me dated Oct.11, 2013,
    I am not going to belabor the despair, disenchantment, etc. that she is
    contributing to Canadians, both: Native and non Native, by way her
    inability, &/or, lack of desire to answer the simplest and most basic questions.

    However, as a demonstration of her veracity regarding her claim that she and
    the Green Party have left no stone un turned in her/your attempts to use every
    means of the “democratic” process in order stop, improve, &/or, reject the
    Canada – China Investment Treaty C-CIT; aka; FIPPA), the Comprehensive
    Economic & Trade Agreement (Canada – European Union CETA), et al,

    I will ask you to direct Ms. May to answer the following, simple due diligence
    questions:
    1) have you raised in the House of Commons the “Private Citizen’s Bill”, with
    its prerequisite political deniability for the Green Party, that demonstrate how
    most of the citizens of Canada, CHINA and the European Union can start to use the
    C-CITreaty an the CETAgreement discussions in order to exculpated themselves
    from having to pay any “contribution” to The Compensation (similar to The Residential
    Schools’ Compensation, but, far larger) that is embodied in The W.A.D. Accord
    (aka; “The Australian Question”)?
    2) have you given the House of Commons, the Chinese government (President Xi Jinping)
    and the European Union (EU; Parliament, Council and Commission);
    “The NOTIFICATION of Preexisting CHALLENGES to the C-CITreaty”
    “The NOTIFICATION of Preexisting CHALLENGES to the CETA”
    from each and every citizen of Canada, China and the European Union (the 95% – 99% of the citizens of Canada, both; Native & non Native, CHINA, the European Union, et al,
    who will not be shareholders in The C-CITreaty, The CETAgreement, et al)
    that you have already had the opportunity to consider, question, share with, etc. the
    aforementioned information?
    3) have you raised the questions regarding the relationship between:
    corporate Canada, particularly the Canadian financial institutions, and its shareholders
    via their lobbyists
    and
    the executives of political parties,
    and informed the Canadian taxpaying voters, ie. including the uninformed Conservative, Liberal, NDP voters, et al, that:
    a) without the non shareholders’ (the 95% – 99% of all Canadians, both;
    Native & non Native) taxes to pay for corporate Canada’s & their shareholders
    costs in “their” enterprises related to the C-CITreaty and the CETAgreement,
    including the punitive penalties and “damages” caused by corporate Canada
    which will secretly ascertain how much the non shareholders will have to
    pay to artificially increase the value of the shareholders’ stocks and dividends
    and
    b) the continuing cuts to existing programs, including; health, education, etc., will
    free up more tax dollars to fund “their” C-CIT & CETA enterprises that exclusively pay
    the shareholders even more dividends.

    Do you, Mr. Estrin, Ms. McMillan, Ms, May, et al, actually think that the “coveted” Chinese
    investor who said:

    “It’s not that we are racist when it comes to dealing with Canadians,
    its just that we can’t stand the way that you suck up to us”,

    approves of corporate Canada’s demand for the aforementioned secret
    tribunals that protect corporate Canada’s very lucrative and exclusive control of
    tax spending for the benefit of their corporations and shareholders, etc.
    and
    at the cost of hundreds of billions of dollars to the non shareholders?

    Have you even tried to reach out to the “coveted” Chinese investor who, in conjunction
    with his associates, has a direct line of communicating with the top levels of
    the government of China?
    Do you want me to introduce you to him? And, if you, et al, really are as concerned
    as you would like to convince others that you are
    and
    are sincere in your desire to greatly improve the C-CIT (and the CETA),
    then,
    what is a “good” time for me to introduce you to him;
    do you have a problem with tomorrow?

    By way of closing, one final small item, would mind asking Ms. May to refrain from
    saying “thank you for your interest” when we, et al, write to her with simple, due diligence questions?
    Don’t you find that the remark is just a bit condescending when you consider that Ms.
    May has no intention of, &/or, the where with all to answer these simple questions?
    On the other hand, is she your first choice to work with the “coveted” investor, et al?

    Sincerely,

    David E.H. Smith
    – Researcher/ Bach. of Enviro. St.
    – “Qui tam…”

    cc.
    Hong Kong Economic Journal