The crossroads of international trade -

The crossroads of international trade


I’m sorry, but this is huge. Huger than huge. Hugeastic. Hugeriffic.

Canadian and European officials say they plan to begin negotiating a massive agreement to integrate Canada’s economy with the 27 nations of the European Union, with preliminary talks to be launched at an Oct. 17 summit in Montreal three days after the federal election.

Trade Minister Michael Fortier and his staff have been engaged for the past two months with EU Trade Commissioner Peter Mandelson and the representatives of European governments in an effort to begin what a senior EU official involved in the talks described in an interview yesterday as “deep economic integration negotiations.”

If successful, Canada would be the first developed nation to have open trade relations with the EU, which has completely open borders between its members but imposes steep trade and investment barriers on outsiders…

A pact with the United States would be politically impossible in Europe, senior European Commission officials said.

Understand what this means. If we pull this off, then Canada would be the only developed country (Mexico has its own deal) with guaranteed access to both the European Union and the United States — the two richest markets in the world, with 800 million consumers between them. Locating in either the US or the EU would give a firm guaranteed access to only one. Only by locating in Canada would they get both.

It also brings with it the usual benefits of free trade, notably cheaper prices and greater selection for consumers. And this:

The proposed pact would far exceed the scope of older agreements such as NAFTA by encompassing not only unrestricted trade in goods, services and investment and the removal of tariffs, but also the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.

But it’s the strategic advantages that are so compelling. Now imagine that we also sign a free-trade agreement with India (or Japan), as the Canadian Council of Chief Executives, among others, have recently advocated. We would stand at the crossroads of international trade and investment.

And if other countries should join us? So much the better. We lose our initlal strategic advantage as the unique point of intersection. But we gain from having more trading partners — and we have the pleasure of knowing that we’ve helped to propel the world closer to the ideal of universal freedom of trade. 

Now that’s a vision I can get behind.

MOREOVER: The latter point is a vindication of the regional or “minilateral” free trade approach, over the multilateral. Economists have always been skeptical of regional free trade deals, on the grounds that they may lead to trade diversion rather than trade creation — ie if Canada and the EU strike a trade deal that excludes other countries, trade may take place between the two that would otherwise not have taken place on efficiency grounds alone, but solely because of the difference in tarriffs between Canada-EU (zero) and some other pairing of countries. If there were no tarriffs anywhere, some of the trade that occurred under a Canada-EU deal might have been more efficiently conducted between, say, Canada-China or EU-China.

But this ignores the dynamic effects of trade liberalization. If Canada and the EU strike a deal, then the very advantage that confers upon Canada will be an incentive for other countries to join the deal — and for the EU and the US to get serious. That’s exactly what happened after the original Canada-Us deal was struck: Mexico suddenly overcame its historic opposition to free trade, and became very interested in striking its own deal. And once Mexico came to the table, Canada had a strong interst in triangularizing the arrangement.

MOREOVEST: One unanticipated consequence of the Canada-EU deal, even before it’s been struck — we can no longer accuse the Council of Canadians of being narrowly anti-American. It turns out they’re also anti-European! Or perhaps they’re just shills for the public-sector unions:

September 18, 2008 / Ottawa – Prime Minister Stephen Harper must make public the draft text of a new “deep economic integration” trade deal with the European Union that rivals NAFTA in scope before voters go to the polls on October 14, says the Council of Canadians…

While the text has not been released, it reportedly includes the unrestricted trade in goods, services and investment, the removal of tariffs, and an open market in government services and procurement – which would require the Canadian government to allow European companies to bid as equals on government contracts for both goods and services, and to not give preference to local or national providers of public-sector services.

Emphasis added.

That said, I agree with the Council — show us the text! The time to talk about this is during the election, not after.


The crossroads of international trade

  1. Calm down, Andrew. There is an election going on.

    The EU Has never shown interest in any such arrangement in the past. What has changed ?
    Mandelson apparently had great persuasive powers as Blair’s flack but…..
    Also, as I recall there was always a “Social Charter” of some sort attached to EU arrangements that contained some items you would probably find distasteful. After all, freedom of association is fine for business but for workers ?
    The EU does not need Canada as back door access to the US market. They have access.
    They can use us for cheap labour ? That’s something to be proud of.
    They want our oil ? Already taken.
    Thom D’Aquino or Maude Barlow ? I’ll take Maude.

  2. You are right that this is very, very significant.

    It may, just may, get a slight mention on the evening news, if there is time after the earth shattering report of a three week old bad joke.

  3. Wow. That is huge. I mean, not that you need my support, but wow.

    Why isn’t this a policy plank? Wouldn’t the business sector plotz themselves in excitement? (To steal Paul Wells’ line from earlier.) Or are they less excited about trade than they should be?

    I’ve commented here about my lack of certainty about the merits of completely deregulated foreign ownership, but I’m absolutely sure about the merits of a Canada-EU trade agreement. Gigantically huge. Wow.

  4. Kody, if you could put your partisan feelings aside for a moment perhaps you will get this. The Ritz problem is not just what he said. It’s that he even went there and said it but worse than that, he wasn’t doing his job. And he wasn’t doing his job because the government secretly killed his role in food safety inspections by privatizing that function WITHOUT telling Canadians. Harper and Ritz favoured corporations bottom line and sacrified Canadian health – life and death – as a result. THAT is why this matters.

    As for this EU thing…no f’n way. This sounds like NAFTA all over again. We got hurt more than anyone in that deal. This will be the same thing. And worse, we will lose our history, our quality, our safety standards will be what? Nonexistent.

    I don’t want another country here doing infrastructure repairs and building and providing service. Canadians help each other and we thrive that way. An EU free trade will be selling Canada out for power on the world stage. We will cease to have any identity, what little we have left already.

    What is wrong with Macleans that this sort of thing is just now heard of and instantly raved about in it’s blogs? No time for rational thought, consideration or care for Canada as a country or it’s citizens.

  5. Riiiiight, cuz the whole country has gone to hell since NAFTA…

    Heaven forbid Canadians do business with those nasty foreigners.

  6. This will make Canada more prosperous and less dependent on the American economy. Mr. Harper is a leader of great vision. He always seems a step ahead of everyone else.

  7. Il joue aux échecs, tandis que les autres jouent les dames!

  8. Classy, Andrew. A game is a game is a game, eh?

  9. I always thought that Canada’s military agreement with Europe doesn’t make sense without an economic agreement.

    For 100 years we have been dying for European freedoms but we are still unreasonably restrained from bringing goods and services to each other.

    It would be nice to see NAFTA become a North Atlantic agreement. Oh right, the article refers to the EU not NATO. Is it possible that the anti-American position is actually a convenient cover for racist restrictions on Latin Americans as well as Turks?

    Not that I’m complaining, I’m all for it. But given our abysmal track record on interprovincial trade agreements, how likely is this to happen in the next 10 years?

  10. May it come to pass. May it come to pass!!

  11. Be very careful what you all wish for.

    Essentially, if I’m not mistaken, as this wording is what it implies “which has completely open borders between its members but imposes steep trade and investment barriers on outsiders” is the U.S. an “outsider”?

    And lets say the U.S. gets “inside”. Lets think about this: “the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.”

    Do you know what that means Andrew and the rest? It means that all government spending will be privatized for “for profit” services.

    I don’t know about you all, but that means that means the entire public sector will be up for tender. It effectively means the privatization of all government services. It means, if you all don’t get it yet, the end of all government crowns, boards, medicare, public spending on eductation, the works.

    Unless I’m mistaken, it would mean all government spending would be turned over to the “for profit” private sector. It also means the end of the need to train people in trades and that means lost Canadian jobs and a huge blow the strength of unions. Some of you might cheer this on… you know, those who believe that all ESSENTIAL SERVICES should be “pay as you go” and if you can’t, you go without. That life saving operation you can’t afford means you die. Can’t afford to put your children through grade school? Thats too darn bad. Guess you should have worked harder. Got hurt or diseased and lost your job? To bad, you shouldn’t have gotten sick.

    Its the difference between exclusion/inclusion of services that people rely on to survive. I’m sorry, but… I believe in the american dream. Y’all remember what that was/is? It means the equal opportunity for anyone born in america to be whatever they want to be if they have the will and potential to do so. Sadly, if we go this route, my fear is that equal opportunity will only come to those born with silver spoons in their mouths.

    Not my cup of tea, folks. Give me the removal of trade tariffs without the need to privatize and deregulate everything under the sun and I might be interested. Until then, it smacks of just another National Citizens Coalition/Frasier institute spun Harper nutter plan to let corporations do whatever the hell they want. Saw enough of that one with the deregulation of the U.S. banking morgage industry that is now spinning the entire world into a recession because of a belief that greedy corporations will self regulate and know whats best. Bush/Harpers same old same O… count me out.

  12. Do you get all the wonderful EU regulation as well then? Or just the free trade? It is hard to imagine the EU signing off on the one without the other, but we can hope.

  13. Fuckin eh!

  14. Do you know what that means Andrew and the rest? It means that all government spending will be privatized for “for profit” services.

    One suspect that for many in this thread, that would be a feature, not a bug. (Including this writer.)

  15. (One suspects)

  16. Ben: So you think that what’s happened due to the privatisation of food safety inspections and financial market regulation is a good thing then?


  17. Clearly, all of us who believe in a less intrusive state apparatus want financial chaos and death.

  18. Lorne:

    “And lets say the U.S. gets “inside”. Lets think about this: “the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.”

    “Do you know what that means Andrew and the rest? It means that all government spending will be privatized for “for profit” services.”

    I don’t think “an open market in government services and procurement” means that, does it?

    I think it refers to government contracts with the private sector, of which we have a lot already. It means that Canadian companies wouldn’t be favoured in the awarding of Canadian Government contracts. It doesn’t mean that the private sector gets to bid on city policing, for example, or on whatever sectors the government chooses to administer itself. Am I wrong?

  19. Indeed, this is huge.

    But: Why is this the first time the electorate have heard about it in any detail? And when are Harper and the Conservatives going to start to talk about it in the context of their political platform for that election that apparently is going on?

    This proposed trade agreement may be a good idea or a bad idea. But Canadians deserve to have big policy shifts, such as this, discussed openly in a transparent, adult fashion. When are the Conservatives going to figure this out? Will they ever?

  20. The problem with Canada signing a trade deal with the new Hanseatic League is that we Canadians could lose our culture. We’ll be forced to send our children to Beligian Immersiono schools so they can communicate with the Eurocrats in Brussels. Men will be forced into teeny-weeny bathing suits on Wasaga Beach. Women will be forced to go topless. Then again, a Canada-EU trade deal could be a good thing.

  21. Update to my comment above:

    Nope, no mention of this hugely important topic on the evening news. The three week old joke? Yup. Front and center.

    A quick glance at the NYT’s stock prices over the last year (if you don’t have time, here’s a quick description – a downward slope like a black diamond ski run) will give you some idea where the Canadian media is headed as a result.

  22. Kody. You should join the Council of Canadians.
    They would like some public discussion of it too.
    You and Maude could become close personal friends.
    As luck would have it though, these things don’t happen under public scrutiny. Can’t. Shine a light on the process and the rats go scurrying.
    Don’t fret though. I’m sure that at some point Don Newman will have Thom D’Aquino explain it all to us. All will be well.

  23. Come on guys, if we start talking about big policy questions during elections it will cut into our all important gaffe-of-the-week coverage.

  24. It would be interesting to get the various parties’ take on this. Perhaps the media might decide to get on with doing their job and informing the public instead of giving airplay, wittingly or unwittingly, to the various political parties’ agendas.

    An extremely unfortunate development in recent years is the trend toward agenda journalism or partisan journalism. If the media no longer have the public’s trust that they are objective purveyor’s of facts untainted by an agenda or an ideology, then we lose an important opportunity to discuss and debate issues.

    The debate or discussion becomes skewed at the outset, and an opportunity for thoughtful and reasoned discussion is lost.

  25. Well I am also excited by this prospect! It’s very early in the discussions and would hold reservations until more details are debated, but I am definitely excited by this prospect.

    It would also be good for the whole country. The first thing that came to my mind was how beneficial this would be for points east of Ontario (mainly Montreal and Halifax) with their ports and I would also think it would increase, greatly, trade coming through Prince George and Vancouver.

    To the gaffe haters – If so many parts of the Conservative apparatus were not so idiotic, we might be able to have some policy debates. Don’t blame the messengers for the blunders of those who wish to lead us.

    But wait until the debate, this issue will be sure to come up and it will play more in the media. And policy announcements are still coming out, so more comprehensive coverage will come, but not until October probably. Still a couple more weeks of Gaffestock to rock out to.

  26. Kody,

    1. Can you try and stay on topic. Your comments aren’t really adding anything to this discussion. There are plenty of other posts on this site to which you can cut-and-paste your usual complaints about the MSM Liberal bias.

    2. Why are you expecting coverage of this topic on the *television* news? The fact that it didn’t get coverage on your evening news cast does not reflect a bias for Liberal over Conservative news, it reflects a bias for simple over complex news, which is largely a result of the format.

  27. I will take a wait and see the fine print approach before I have opinion about this. I am all for free trade in theory but I doubt what will be proposed will be acceptable.

    In his previous life EU Trade Commissioner Peter Mandelson was a master spin-doctor for Blair and came from the Stalinist wing of the Labour party, according to the Independent newspaper, but has now turned into a typical champagne socialist. I am skeptical that an old Stalinist is writing a trade deal that I will appreciate.

    What concerns me most though is what’s going to be harmonized. If it’s strictly trade related issues, I can handle that, but I think it’s going to be much more than that.

    EU bureaucrats are responsible for making 75% of all new laws for member countries. Their latest wheeze is sanctioning trials ‘in absentia’ that means citizen of one country can be tried and convicted and jailed without being present at the case.

    So count me as one who wants to know what exactly the agreement is going to entail before I get too excited by this.

  28. I don’t think the fact they are starting talks is really news, Canada has been trying to do this for years, as Sisyphus points out. Talks don’t mean it will go anywhere.

  29. Wow, this is really something to cheer about:

    “….which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.”

    Hooray to the end of protecting or “favouring” our own. Nationalism is so passe, eh? Let’s give it up for Europe! Let’s just join today. I’m burning my flag with one hand and wiping the tears from my eyes with the other.

  30. I’m all for it if it means we adopt the euro.

  31. But isn’t Europe poised to became Eurabia stricken with Euro-sclerosis? I read that somewhere…

    How quickly things change during an election and a financial market meltdown in Canada’s largest (and insolvent) trading partner.

  32. This also gets us round the Davos roadblock. it is unlikely that global free-trade can move forward at the moment, so this may be the next best thing. Of course, one of the big issues I don’t see mentioned is that of agricultural policy, where Europe is absolutely in a rut (not that we are much better off).

  33. Huge-arrific indeed!

    Wow, it would be waaay cool for Canada to be the free trade hub of the world, all free trade spokes lead to Canada.

    So, um, any chance we can kill off the stupid agricultural supply management garbage, the Wheat Board, and a few other vestiges of non-free trade? If we want to lead the world be example, we had best set a good example!

  34. Oh, and here’s hoping that something, anything like this might find its way to a national discussion in the coming weeks, if we can get past the gripping issues-oriented (*cough*) coverage of a certain election campaign…

  35. Good point re: the triangulation effect. Once it was clear the Mexicans were working on a free-trade pact with the US, there was no way Canada could not have taken part, because it would have given the US a huge advantage (a US plant could export to all three countries).

    I doubt these negotiations will be easy however. GMOs and ‘region of origin’ rules being at the top of the list (seems unlike that Canada or the US would want to INCREASE regulation / DECREASE free exchange in order to have ‘free trade’ with Europe)

  36. I’ll have free trade WITHIN Canada for 200 Alex.

  37. No problem, Mark. Just sell your Ontario goods and services through Spain to Manitoba.

  38. NAFTA’s popularity among working class Canadians is reaching its nadir. Its now associated with lost manufacturing jobs and outsourcing, rightly or wrongly, by the vast majority of Ontarians/Quebeckers.

    Harper will not want this to be debated as this could really turn the tide in the current election.

    This needs to be debated openly or Harper risks revivfying the hidden agenda arguments so frequently made against him.

  39. I am not sure on this particular sentence within your lay-out:

    “some of the trade that occurred under a Canada-EU deal”

    Is it meant to read: “some of the trade that would occur, or were to occur, under a Canada-EU deal, or has it actually ‘occurred’?

  40. A few points: 1) The EU has never before insisted that countries signing a trade agreement adopt all of its regulations, or its ‘Social Charter’. 2) The text of the agreement can’t be made public, as there is no text yet – although I agree that whatever discussion papers do exist should be made public; 3) Responding to JWL, the trade agreement would have nothing to do with ‘in absentia’ trials – anyway the point of the EU legislation on that issue sets limits on the ability to issue cross-border warrants, etc. in cases of absentia trials. It is not about facilitating such trials as such – I agree that in absentia trials are in principle dubious, but they are creations of the national law of EU Member States, not of the EU itself. Plus the case law of the European Court of Human Rights limits the worst abuses of in absentia trials. And EU laws are not made by ‘EU bureaucrats’, they are adopted by the Council of (Member States’) ministers and the elected European Parliament.

  41. Question for Steve Peers: would a trade deal with the EU necessarily outlaw the likes of genetically-modified soy-based ‘parmesan’ ‘cheese’? That alone seems like a political non-starter to me, and a huge impediment to trade with the US.

  42. Steve Peers: “discussion papers do exist should be made public”

    Alas! they have to remain secret, precisely so as to avoid public scrutiny (from both sides). The only way to do these things is to reach a deal and hope everybody likes it; otherwise special interests (in which the EU is the World Leader) start to carp. We just have to trust our negotiators to do a good job, but they are professionals so I think we have a good chance.

    To the anti-trade folk here: all we’d be doing would be selling to Europe that part of our sovereignty that we’ve already sold to the US, right? So it can’t really hurt. In terms of preserving our culture, surely Europe is much less of a threat than the US; indeed, since much of Canadian culture is a blend of the two, more European influence would if anything get us back to a better equilibrium in terms of US cultural influence.

    Any word on when they hope to succeed in making this deal?

  43. You’re right, this is huge. And hugely overdue.

  44. “Man’s heart is the toy of everything, and no one can tell what frivolous circumstance may cause its joys and its sorrows” (Chateaubriand, 1899)

  45. Regardless of whether or not this is good or bad, why are Canadians not being included in the dialogue about this? I’m shocked that people aren’t angry that the Tories haven’t even mentioned this during their campaign. Instead they dangle .02 cent diesel tax cuts in front of people as though that were going to transform our economy and possibly our way of life.

    “A newly completed study of the proposed deal, which European officials said Prime Minister Stephen Harper decided not to release until after the election, concludes that the pact would increase bilateral trade and investment by at least $40-billion a year, mainly in trade in services.

    Ottawa officials say they have overcome what they see as their biggest hurdle: the resistance of provincial governments to an agreement that would force them to allow European corporations to provide their government services, if their bids are the lowest.”

    um….which government services are we talking about exactly, and why is Harper trying to keep this from being discussed?

    Something doesn’t add up.

  46. Can anybody spell

    A M E R O

    The U.S. answer to it’s failing economy

    if the dollar fails
    abandon it for a new currency

    just like they did in Europe years ago
    with the

    E U R O

    so start saving your Canadian dollars they will
    be worth a lot when our newly elected Government
    decides to abandon our currency for the

    A M E R O

    don’t laugh this is real!!!!!

  47. Andrew

    UK PM Brown just appointed EU Trade Commissioner Peter Mandelson to his cabinet, they are old enemies but you know what they say about politics and strange bedfellows, and he’s quit the EU.

    I wonder if the negotiations continue on regardless, are they abandoned or just on hold until new Trade Commissioner is appointed.

  48. And here comes a Hail-Mary pass from out in policy land to “I got Wells for ESL this evening” class.

    ISSUE: Should Canada set the world example for free trade among nations, GATT be damned? And if so, how can it best achieve free trade between Repentigny QC and Whitby ON?

  49. Incomplete hail-mary pass, turnover on downs, winning team runs out the clock. Game over. Sigh.

  50. After reading all of the above comments, I despair for my Country. The E.U. Started out as one single trade agreement. When this comes to a vote in the House, pray we still have a minority government, of any stripe, because this deal neither started with the Conservatives nor will end without them. Inform yourselves, dealing with the E.U. has it’s costs. Not the least of which is making the U.S. paranoid with this ” free movement of people”, on North American soil.

  51. free trade has to have some control we can no just let industry pull out our country and move to Mexico for the slave wages so they can sell it back to us at the same price it was before they moved. how many jobs can we lose before the government stops this.

  52. Amazing that Pierre Trudeau’s vision finally has a chance of being achieved. This is fantastic news and couldn’t have come at a better time for our economy. This will make us the most free trading country in the world ? Nice.