Canada-Europe Trade: State of play

Paul Wells shares a detailed briefing memo on Canada-Europe trade talks

by Paul Wells

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.

 

 




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Canada-Europe Trade: State of play

  1. Under point 1 – Trade in Goods , it states: “The parameters for the final stage of the negotiations for these products are set out in the Annex to this paper.”

    Is the Annex available for reading? Would be interesting to read – more so for personal interest than wanting to further comment on this Meeting Document.

    • This comment was deleted.

      • I’m trying to imagine what kind of turns my life would have to take for me to decide that the best way I could make my contribution in the world would be to make 21,000 off-topic comments on other people’s blogs. After a while I’d start to question the decisions I’d made. But that’s just me.

        • This comment was deleted.

          • And once again we see why I keep asking Disqus for an “ignore” feature.

          • This comment was deleted.

          • Sorry, but that’s not my ass your head is up.

          • I like girls, sorry…

            Wolltest du nicht zur juedischen Bank gehen?

        • Remember, Paul: The prevalence of borderline personality disorders in society is much higher than you think. As a public figure, you get to see this first hand every day.

          Either that, or some alcohol or other stimulant is at work.

        • You won’t get many complaints if Winston Blake is blocked. He really does stink up the comments board.

  2. that Briefing Note is golden, what a leak

    • why?

  3. The comment about indirect expropriation is interesting. Canada appears to be offering something less than Canadian law typically provides and the EU appears to want something more than Canadians would get. (see the SCC Tener case: if you create a park on top of mineral leases that you’ve sold, you may have to refund the purchase price of the leases, or worse – your legislation can also legitimately say “there shall be no compensation for this action” but must do so baldly).

  4. Seems to me that Canada has less to benefit from any free trade agreement with the E.U. We already import more ‘luxury’ goods from Europe and they import more essentials from us. It would not be that difficult to turn up the pressure to restrict import by applying tariffs. There is no shortage of demand for Canadian resources in the world. To think that Canadians will be able to make great inroads with our manufactured goods in delusional.

    I feel that Canada should take a more aggressive role in trade to ensure we play with our advantage.

  5. PW – Regarding your notions on Big Pharma. The patent protection being sought by the EU is not ‘much longer’. Canada’s home grown Big Pharma are the members of the Canadian Generic Pharmaceutical Association (CGPA), Their favorite tactic is to portray themselves as being the righteous saviors from high drug prices. Nothing could be further from the truth.

    Canada has some of the highest priced generics in the world. I live in Europe now. The price of one generic I use is 1/10 the price of the same prescription drug in Calgary. It’s made by a Swiss company. Another form of the same generic drug, as a needle (injectable), is made in India. It’s only 1/3 of the price for the same medicine in Calgary, though the price in Calgary is for the brand name patented version. There was a shortage of generic injectables in Canada last summer. It seems the big CGPA members are not really interested in low margin generics, just those little yellow blue pills. But they really are keen on providing free humanitarian aid in the form of royalty free generics to Africa and any other developing country.

    Do I worry about quality here? No. After reading a couple of other recent (and excellent) stories right here on Macleans…

    http://www2.macleans.ca/2012/11/20/canadas-drug-problems

    http://www2.macleans.ca/2012/11/20/a-national-embarrassment-2

    my faith and trust in Health Canada has left the country.

    • This comment was deleted.

      • I was going to make a comment about the importance of taking your meds Winston Blake, but maybe it’s time to discuss the possibility and positive outcomes of a frontal lobotomy.

  6. I demand cheaper Italian and French cheeses, German beer[ particularly Hefeweizen if we must have quotas] and a straight out swope of the UK Parliament for ours.[ if only because their scandals -both sex and entittlement - are so much more interesting than ours.

    On the negative side they can keep the EU Parliament and the England national soccer side - we already have the leafs to tide us over.

    Less seriously, why is there no mention i can see of market access to the oil sands?Surely a big item for us and perhaps them? And why has it been easier to get info out of Quebec govt sources than the federal govt?

    I really thought it would occur to someone to trade off market access for our oil, for more access to our somewhat less than wonderful dairy market? [ i don't mind subsidizing our farmers, but did i say i liked Italian cheeses/deli meats and German beer more? I wouldn't say no to cheaper Rioja or Polish vodka[ this one will do if there's to be a quota - NV Grasovka Bison] either come to think of it]

  7. Two hundred years after Wealth Of Nations, it is delightful to start the week with mercantilism from our governments. Cons are behaving conservatively and I certainly can tell why we feel like we live in a time of Reason because it makes perfect sense to continue to force the working class to pay more for basic food stuffs in order to protect 13,000 millionaire farmers.

    Harper knows perfectly well all he has to do is eliminate tariffs domestically and we get benefits of trade – access to EU is extra benefit. Cheaper goods and products from Europe is the peanut buster parfait here while getting access to Europe’s bigger market is cherry on top.

    I wonder if one of the delays in finalizing this deal is Europe is on fire and its member states are likely to change over the next couple of years. Countries could be expelled or they could leave willingly – Greece could get the shove, UK or Scandinavian countries might get tired of guaranteeing debts of catholic countries of France, Spain, Italy. Germans are also rumoured to be pushing for closer fiscal ties where Germans will be in charge of approving other nations annual budgets and that is bound to stir up controversy.

    • Your reasoning never fails to astonish me. Who could possibly have guessed that holding the catholic faith is also a serious impediment to economic stability and sound finances? You are aware that Germany has one or two catholics knocking about inside its borders somewhere or other?

      • A century or so ago, German sociologist Max Weber observed that Protestant countries in northern Europe tended to outperform the Catholic and Orthodox countries in the south of the continent …

        Economists have since largely abandoned Weber’s insights, and in general have turned against “cultural” explanations for economic outcomes. Yet Weber would not be surprised if shown a map of credit downgrades in Western Europe anno 2012. Western Europe can still roughly be divided into a northern, Germanic language, Protestant region, and a southern, Latin/Greek language, Catholic/Orthodox region.

        These two Europes differ both in terms of culture and in terms of social and economic outcomes. France, Italy, Spain, Belgium, Portugal, and Greece have all been downgraded by Standard and Poor’s, sometimes repeatedly. Meanwhile, Germany, the United Kingdom, the Netherlands, Switzerland, Denmark, Sweden, Norway, and Finland all currently maintain the highest credit rating. Southern Europe on average has a debt-to-GDP ratio of more than 100 percent and deficits as a share of GDP of more than 5 percent, while northern Europe is closer to a balanced budget.

        http://www.american.com/archive/2012/february/the-american-lefts-two-europes-problem

        • This nuts. There are countries on that northern list that have significant catholic constituencies. Are you claiming all their bankers/businessmen are protestants?

          • Wolltest du nicht zur juedischen Bank gehen?

      • I think the argument is that being able to hold the catholic faith tends to coincide with traits that are unhealthy for an economy when they are held by a bulk of the population in an area.

        I hesitate to speculate on what those traits might be.. simply because it’s touchy ground.. but I’m not willing to say the theory might not have merit.

        • I don’t see it having any obvious merit. Not when there are catholic countries that are doing relatively well economically.

          • Are there? Serious question, I honestly have no clue about the religious nature of most countries, to say nothing about how that compares to how they’re faring economically.

          • Maybe TA has me here…although not entirely?

            Well there’s this. Which would tend to support TA’s argument with important caveats – such as degree of secular political control.
            http://www.guardian.co.uk/education/2011/oct/31/economics-religion-research

            And i’ve found an interesting website taken off the CIA facebook site, if you can believe it? Maybe it’s a different CIA?

            http://en.wikipedia.org/wiki/Catholic_Church_by_country

            This is fascinating. Look at the numbers for Canada and Australia for instance.

          • Wolltest du nicht zur juedischen Bank gehen?

            Unsere Welt wird brennen, der Zweifel und die Angst werden im Feuer untergehn.

        • My maternal grandmother was Catholic and my paternal grandmother was Protestant. One grandmother was telling me Pope would save my soul while the other was telling me to warn her if I learned of any popish plots to overthrow UK or Canada.

          Catholics are do-gooders who want to help poor and downtrodden and control the Nation’s morals but they can’t be trusted with public purse. Catholics are more forgiving of sin and always trying to improve people and society. Many Catholics also have socialist tendencies, help your brother doctrine.

          Debate right now about setting EU budget for next seven years and its UK and Germany vs France. I have no idea why exactly but countries are different – Northern Europe countries are different than Mediterraneans.

        • Not enough thrifty Swabian housewives in France or Italy.

          Guardian Sept 2012:

          In the sleepy, picturesque towns and villages of south-west Germany, the paragons of thrift are doing what they do best. They shop frugally, use credit cards rarely and save up to a third of a property’s value before applying for a mortgage.

          The schwäbische Hausfrau – southern Germany’s thrifty Swabian housewife – is frequently invoked by Angela Merkel. The German chancellor argues that Europe has been living beyond its means and can learn from these women’s frugal housekeeping and balanced budgeting.

          http://www.guardian.co.uk/world/2012/sep/17/angela-merkel-austerity-swabian-housewives

  8. The fact it’s gotten this far is a miracle. Hopefully it reaches the end-point.

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