Somebody in the European Union was kind enough to leak a detailed briefing memo on Canada-Europe trade talks to Quebec’s CAQ party. Here it is. I’ve never seen such a detailed account of the negotiations. Here is what stands out after a preliminary read.
• The memo is from the beginning of this month, so it predates Trade Minister Ed Fast’s meeting with his European counterpart Karel De Gucht this past Thursday. But note that the memo says, in its first paragraph, that for a deal to be reached before the end of 2012, either “a full deal” or “the options for such a full deal” would have to be presented to the EU Foreign Affairs Council by this Thursday. None of the news reports out of last week’s meeting suggest that deadline can be met. Of course schedules can be changed. Looks like they’ll have to be.
• There’s a lot of unsettled questions. This was always going to be the case: bureaucratic trade negotiators settle easy questions and shunt hard ones back for politicians to settle later. It’s later.
• “Overall,” the European memo writer says, “our key challenge remains that our list of offensive interests” — points where the EU hopes to gain access to the Canadian market — “is larger than the Canadian one, which puts Canada at a tactical advantage in the end game.” Woo-hoo! But there’s a “but.” “On the other hand, Canada will, at this point, also have to take into consideration that the EU market… is much larger than its own.” In other words: Europe wants more concessions, but it has more to offer than Canada does. And: the EU is considering “fall-out on future negotiations, in particular the U.S.” I wrote a column on this more than two years ago: the Europeans won’t accept a lame deal with Canada if it would increase the odds of a lame deal with the much larger US market.
• “Offers have not yet been exchanged” regarding just about the only agriculture lines on which any side stands to gain substantially: access for Canadian beef and pork to the EU; and EU access under the Canadian supply-management dome. “There is agreement that these products will not be totally liberalised,” the memo says, so the Andrew Coynes of this world — and the Paul Wellses, come to think of it — who hoped these negotiations would spell the end of supply management can mourn now. Instead there’ll be “TRQs”: Tariff-rate quotas, which mean a set annual quota of umpty-dump tonnes of EU dairy and poultry will be allowed into Canada, after which the usual supply-management quotas will kick in. What remains to be negotiated is the amount of those quotas. Still a sensitive question.
• What everyone suspected is true: the EU wants much longer patent protection for pharmaceuticals in Canada. Canadian big pharma loves this notion; Canadian generic manufacturers don’t like it much at all; and Canadian negotiators have put the whole question in the deep freeze pending decisions “at the highest political level at the end of negotiations.” And a decision on pharma will be “linked” to a decision on supply management.
• Anyone in municipal and provincial government should read Paragraph 4. It says Canada has already offered “the most ambitious and comprehensive” access to public-procurement markets that it has ever offered to anyone, including the U.S. Canada is offering better access for European bidders in provincial and municipal public markets than Canadian provinces now offer one another. But the EU wants more: Full access to public urban transport; more access to energy markets in Ontario, Quebec and Newfoundland; “elimination or redrafting” of provincial regional development. “At a minimum.”
• Perhaps not surprisingly considering recent events, the EU would like to be exempted from net-benefit tests under the Investment Canada Act.
• Good news! In return for all this, the EU is willing to offer up — later, if needed — better Canadian access to European R&D, private education and testing markets. So Alberta could open charter schools in Belgium in return for letting Siemens build a Calgary-Edmonton train, or something. “Canada would certainly argue that this package is unbalanced in favour of the EU, to which we would have to reply that the EU is the larger market.” The Canadian counter-reply — the large EU market is a bit of a sick puppy right now — goes unstated.
• Canada wanted a sweeping exemption for “cultural activities.” The notion was DOA. The EU is willing to be flexible here, but will resist an exemption for “news agencies, printing and publishing.”
• It’s fun to read how others see Canadian policy stances sometimes. At Paragraph 7, Investment Protection, we see that Canada is more eagerly seeking FIPA-style protection in the EU investment market than vice versa, but that Canada “has many barriers to investment market access… is very defensive about them, and will no doubt seize any pretext for withholding concessions.”
There’s more, and I’m no expert on this stuff. To some extent none of it should be surprising. It turns out free trade is free trade, and you get it by dropping protectionist measures you adopted in the first place because there was a domestic constituency for them. Almost every one of the sensitive measures identified in this memo were listed for me by Quebec government sources when I first started writing about Canada-EU trade in mid-2007. This is ending the way it was always going to end.
All that’s needed now is decisions. At the highest political level. We will soon learn interesting things about the Prime Minister.