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SLIGHTLY UPDATED:Trade winds


 

The day brought news of a major breakthrough in negotiations between Canada and the E.U. on enhanced trade. (If you’re late to this story, you can find a thick briefing book, combining my journalism with flotsam from across the Internets, here; and unbridled enthusiasm from the Realm of the Coyne here.) Recall that the purportedly shadowy existence of these talks was a fleeting micro-issue during last autumn’s federal election campaign: Harper’s talking to the Europeans? What about? What’s he trying to hide? I found this a bit frustrating because I found no evidence he was trying to hide anything, and considerable evidence that a lot of people weren’t covering a story that seemed boring, and a lot of other people weren’t reading about it when it was covered.

But anyway. Three days after the election in Quebec City, Canadian and European governments tasked their officials with “scoping” a negotiation: deciding what would be on the table or off. Deciding how ambitious they would be. This was seen, on the European side, very much as a potential deal-breaker. Especially in the European Commission (the union’s permanent bureaucracy), officials were a bit annoyed that the Canadians were so insistently tugging on their sleeves. They understood why Canada would want access to a market of half a billion, but not why Europe would care about unfettered access to a market of 30 million. Especially because they didn’t believe it would be unfettered: interprovincial barriers and naked protectionism in Canada’s most valuable markets, including public procurement, were major turnoffs. (France’s Alstom had to go to court for the right to bid on a Montreal subway contract.) So the scoping exercise amounted to Europe saying, “You people need to prove you are serious or this ends here.”

The Canadians appear to have demonstrated sufficient seriousness. From the outset, the scoping agreement declares an intent to be ambitious: “given the objective of concluding an ambitious agreement, commitments should go beyond current WTO levels. The agreement should include, as a minimum, all the chapters of the most ambitious EU and Canadian bilateral economic agreements to date.”

Concretely what’s that mean? Lots. On tariffs, they want to go way past WTO, and the scoping agreement includes this paragraph, which I think means supply management is on the table: “The Scoping Group recognised that any agreement should address the issues of agriculture export subsidies and state trading enterprises and assess any possible distortion of competition and barriers to trade and investment these issues could create.” (This is really not my field of expertise. I would welcome informed comments about whether I’m right about supply management from readers in the comments below.) (SLIGHT UPDATE: The dairy farmers aren’t worried. See Yves Leduc’s comment below.)

On trade in services, more broad language: “the objective of any agreement should be substantial sectoral coverage, measured in terms of numbers of sectors, volume of trade and modes of supply. Any agreement should provide for a considerably higher level of ambition than the current WTO commitments, with the aim of achieving market access, non-discrimination and compliance with Article V GATS. In this regard, the Scoping Group took the view that the services provisions of any agreement should apply to measures taken by all levels of government, as well as non-governmental bodies, in the exercise of powers delegated by any level of government…. any future agreement should include provisions to facilitate mutual
recognition of professional qualifications. ”

On procurement, what might be called the “justice for Alstom clause:” “…aiming to achieve full coverage of central and sub-central government procurement in all sectors, to ensure inter alia treatment no less favourable than that accorded to locally-established suppliers.”

On labour mobility, only slightly more timid language: “facilitating the legitimate temporary movement of persons related to bilateral trade and investment.”

What’s it all mean? See Coyne for the Big Picture; more prosaically, a joint study, measuring only benefits that are easy to predict and therefore probably lowballing the dollar value of a deal, anticipates annual benefits to the Canadian economy of about $12 billion per year. An agreement on topics for negotiation is very far from being a final deal, but it is a real tribute to Jean Charest (who came up with this project and has prodded and led negotiations from the beginning) that they have progressed even this far.

Buy-in from the provincial governments was crucial to convincing the Europeans of Canada’s seriousness; their reward is a substantive say in negotiations as they proceed. Nobody will be surprised that Danny Williams is being a pain. Michael Ignatieff, successor to those free traders Laurier and Chrétien (and to Trudeau, who sought a “third way” to diversify trade beyond the bilateral Canada-US link), should simply say his party supports the broad national multipartisan consensus on the wisdom of pursuing freer trade with Europe. There will be other fights to pick elsewhere.


 

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