Canada-EU trade: risk-al imbalance

Paul Wells on skepticism and CETA

by Paul Wells

Sorry about the headline. You try making this stuff interesting. I was struck last night to read this blog post by intellectual-property smart guy Michael Geist, based on the same leaked European Union memo that led me to write this blog post on our own website on Sunday.

Geist has been following the Canada-EU trade talks very closely, and he has superb sources, so when I ran into him several days ago I couldn’t help asking whether my recent skepticism about the likelihood of a final Canada-EU trade deal is justified. “Probably not,” he said. And fair enough. It’s hard to imagine Canada engaging the EU in five years of talks, and three years of hard negotiations, on what would be the most ambitious trade deal either has undertaken, only to walk away in the home stretch.

But lookie here. Geist now writes that a Canada-EU agreement “is no longer a certainty.” Why? “The EU recognizes the deal is unbalanced as there are far more demands for Canadian changes than European ones,” Geist writes.

“This ranks as perhaps the most important CETA leak to date, since it clearly identifies the key remaining issues, the European demands, and the massive changes that would be required for Canada to comply with the treaty.  Some of the changes demanded by Europe include patent reform that could add billions to Canadian health care costs, the removal of foreign ownership restrictions on telecommunications and book publishing, the opening of public procurement for the energy and public transport sectors, eliminating Investment Canada Act review for European investments, new restrictions on the sale of a myriad of products such as feta and parmesan cheese, changes to agricultural protections (ie. supply management), and the adoption of European standards on passenger cars. This would require dramatic changes across the Canadian economy, all for what even the Europeans acknowledge are limited gains for Canada.

Now, as I’ve written many times before, there is not a single issue on this list that Canadian negotiators didn’t see coming from the very first preliminary talks in 2007. In fact trade negotiations broke down five years earlier precisely because an earlier Canadian government had no stomach for this list of demands. Nothing here is a surprise. But it is bracing to see it all written down, on EU letterhead.

And indeed: to repeat myself again, throwing open your procurement, telecomms, dairy and pharmaceuticals sectors to international competition is what free trade looks like. I remember my amazement when I got Jean Charest on the phone in 1997 and he pronounced himself a champeen free trader before listing all the concessions he wouldn’t consider. This’ll be interesting, I thought.

[I should address the notion of relaxing foreign-ownership restrictions in telecomms, since Maclean's is owned by a large telecomms firm, Rogers. I don't know whether Rogers has a corporate position on the question and I take care not to ask. My own opinion predates my employ with this company: I have long believed that permitting foreign ownership of any Canadian media company, whether print, broadcast or internet, is an excellent idea because it would increase the pool of potential investors and drive competition.]

Geist surveys the range of concessions the Europeans are seeking, while offering few of their own, and wonders whether it’s possible to substantially ratchet down the stakes of the whole enterprise. “Canada should be considering whether a scaled down version of CETA – one that focuses primarily on a reduction of tariffs for trade in goods – is a better model.”

But in 2009 I wrote about the lead European negotiator for this deal, who went to Montreal to say the EU has cancelled trade talks in the past for insufficient ambition on the other side, and would not hesitate to do so again. Europe sees CETA, if there is to be a CETA, as a model for EU-US trade talks that would be an order of magnitude more important for the Europeans. They have no interest in adopting a useless model.

If Stephen Harper implements a trade agreement at all similar to the one described in these European memos, it will be the most radical move to liberalize Canadian markets since Brian Mulroney opened North American trade. Opening provincial procurement markets to more European investment than Canadian provinces offer one another would force the provinces to further liberalize inter-provincial trade. Making Canadian dairy farmers compete, even if only against a low annual quota of European imports, will be the biggest change in most farmers’ career. And so on. At the National Citizens’ Coalition, Stephen Harper would have found the case for these changes open and shut. But he doesn’t work at the NCC any more. I had a hunch when I began writing about this file that it would be worth following. Nearly six years later I haven’t regretted it.

UPDATE: Here’s the agenda for today’s meeting of EU trade ministers. This was the meeting at which ministers needed to approve a final deal, or choose among options for a final deal, if there was to be an agreement by the end of the year. Instead their agenda presents them with a bewildering list of still-unsettled issues. This thing is now certain to go into extra innings. Once again.




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Canada-EU trade: risk-al imbalance

  1. Well of course this is the toughest part….where it gets down and dirty, because they leave the most difficult things to the last.

    But if Canada wants to finally be a ‘big prosperous trading nation’ and get past the stage where our national capital can seriously be referred to as a ‘shitty little town’……then I say blow the doors off, release the hounds and let’s get on with it.

    • Yeah, because giving away the keys to the house to anyone who comes knocking is a real good move for our future. I’m not against trade agreements, but I guess I now have to quality that to read, “I’m not against balanced trade agreements”.

      • We have skilled experienced trade negotiators ya know…..how be we stop peering over their shoulders and trust them to do their job?

        If we want to be a ‘playa’ on the world stage, then we have to stop being misanthropic hoarders around the farm kitchen-table.

        • Baloney. There’s a lot of ways that Canada can be known on the world stage. But skipping the lube while we bend over for the EU isn’t a good one.

          And a good portion of the EU demands have little to do with us being hoarders and more to do with the EU not being willing to open up their own products and services:

          The parties have identified dozens of products that are at issue including foie gras, munster cheese, bratwurst, feta cheese, asiago cheese, gorgonzola cheese, parmesan cheese, and prosciutto. The EU is demanding that some of the Canadian versions of these products be phased out within 10 – 15 years. The EU also wants enhanced border measures blocking entry of non-European GI products.

          Or wanting to make sure their own IP doesn’t become subject to public interest — two of the demands of the EU with regard to patent reform are patent term restoration, and an extension on data exclusivity.

          • Small-minded misanthropic nonsense, Thwim….the time has come to leave our protected nursery and go out into the world as adults.

            As far as the ‘they demand this, and they demand that’…..having lived through the FTA and NAFTA, I don’t believe a word of it. Maudie Barlow is still waiting for the Great Lakes to disappear.

          • Well, you can choose not to believe what the Europeans themselves have written down if you want to but that’d just make you an idiot.

          • Lots of things are being discussed right now Thwim, only an idiot mistakes negotiations for an end result.

            On edit: Since I’m often accused of wild things by slow people, I’ll make this part clearer. We have discussed brand names on here several times, and no we aren’t going to be allowed to use them on our cheeses, wines and meat etc…anymore than if we made a brown soft drink and called it Coca-Cola. It’s a wonder to me we haven’t been sued over this kind of stuff already.

        • We may have skilled, experienced trade negotiators. But they currently work for HARPER! They don’t get a say.

          • It was Mulroney last time, and we did alright.

          • I would give a heck of a lot to have Mulroney back about now.

          • So would I. But in typical fashion Canadians fussed about his shoes and his jaw and Schrieber instead of focussing on the country. Like I said….small-minded.

  2. Wells I agree with your opinion that Ibbitson has narrow view of what social conservatism is and Harper not being keen to liberalize trade is good example of Conservative party behaving conservatively.

    I think Harper wants to keep economic conservatives content so he pretends to negotiate free trade deals but no significant results so far. Harper can claim that Canada is involved in a few trade deal negotiations but nothing is going to actually happen while Harper is in charge. Harper knows perfectly well that all Canada has to do is reduce or eliminate our tariffs and we will get benefits of trade but endless trade negotiations allows Harper to rag the puck.

    • Well, now I think you’re using a very broad definition of social conservatism, but I think I see your point. Another way to put it, something I’ve been thinking about a lot lately, is that there’s no such thing as a Burkean Lincoln: at some point, principles and incrementalism come into direct conflict. At that point, even if you are intent on avoiding controversial decisions, you’re going to make one anyway because refusing to make a decision will be plenty controversial.

  3. 4 Boneheaded Biases Of Stupid Voters:

    A shrewd businessman I know has long thought that everything wrong in the American economy could be solved with two expedients: 1) a naval blockade of Japan, and 2) a Berlin Wall at the Mexican border.

    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.”

    http://reason.com/archives/2007/09/26/the-4-boneheaded-biases-of-stu/1

  4. The size of the Euro vs Canadian markets should be irrelevant. Canada should not give in to such a stupid argument. Both sides should make equal concessions. In the end you would expect the same amount of goods to travel in either direction, so the relative market size should mean nothing.

  5. When asked by mathematician Stanislaw Ulam whether he could name an idea in economics that was both universally true and not obvious, economist Paul Samuelson’s example was the principle of comparative advantage. That principle was derived by David Ricardo in his 1817 book, Principles of Political Economy and Taxation. Ricardo’s result, which still holds up today, is that what matters is not absolute production ability but ability in producing one good relative to another.
    http://www.econlib.org/library/Enc/ComparativeAdvantage.html

  6. But, but, but…We’re an “energy superpower”.

    It’s pretty simple: No E-U- ee, no gooey.

    • That’s what i thought too.But apparently the ball may be in the other court. Maybe they don’t need our gooey as much as some of us would like them to? Maybe we need their approval more?

      • Once Carney discovers a humongous oil sands deposit in the North Sea we’re screwed.

  7. Someone please, does a country have to have trade or agreements, or can a country like Canada be independent of trade agreements? Do trade agreement only benefit large corporations?

    • Well North Korea doesn’t have trade agreements.

    • We don’t, no. But that tends to make things a lot more difficult because whether your product is allowed into the country, has to pay duties, has to deal with competition, is confiscated for the public good, etc all of those can be changed at a whim by governments if there are no agreements in place. So it makes trying to operate in a country without any agreements a much higher risk venture.

      Not impossible.. just a lot more risky.

      Which tends to shy people away from doing it.

  8. Talk about blind leading the blind. What inside knowledge do either of these individuals bring forward on this agreement?

  9. I recall standing with one of the EU’s elite at a Beijing “7″ star hotel and carefully counting my rings after shaking hands with him. The term “everyone does what everyone does because everyone does it” is a way of life in the EU and when I say my prayers at nite before settling into a restless sleep filled with dreams of high cost drugs, rising costs and instability, I pray that “Mr. Harper” takes an end run around the financial vortex thrown up but pseudo intellectual, out dated global financial thought. Todate Mr. Harper has risen above my hesitant expectations but underneath these flashes of impressive insight I fear there lies a man who craves to be accepted rather than a man who lives to lead.

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