Economic analysis

Why Stephen Harper has reason to celebrate CETA

Although major work remains, here's why the PM can highlight this trade deal between Canada and Europe

If reaction to the announcement that negotiators have finally hammered out the text of a Canada-European Union trade pact sounded a touch cautious, that was to be expected. After all, in the more than five years since talks on the so-called Comprehensive Economic and Trade Agreement (CETA) were launched, many confidently predicted breakthroughs had fizzled.

Even after Prime Minister Stephen Harper jetted off to Brussels last fall for the splashy signing of a CETA “agreement in principle” with European Commission President José Manuel Barroso, delays and setbacks at the bargaining table continued. Still, the Aug. 5 announcement that officials had signed off on a detailed text—even though it wasn’t yet ready to be released publicly—appeared to be the real deal at last.

Major work remains on the path to ratifying CETA, mainly in Europe, so it likely won’t be implemented, officials estimate, before mid-2016.

Yet Harper’s strategists have reason to be enthusiastic. Wrapping up negotiations allows them to put trade with Europe at the centre of a planned autumn push to buff up Harper’s image as an economic manager, as partisan jockeying on the key issue of job creation heats up in advance of the federal election slated for fall 2015. Along with Trade Minister Ed Fast, Harper will head a trade mission to the U.K. early next month, before hosting a trade summit in Canada in late September with European leaders.

“The CETA supports the narrative that he and the Conservatives are focused on creating jobs and economic opportunities for Canadian businesses, while the opposition leaders are risky, albeit for different reasons,” said pollster David Coletto, chief executive of the Ottawa firm Abacus Data.

Coletto sees the Tories painting Liberal Leader Justin Trudeau as not serious enough to be trusted with cutting international trade deals, and NDP Leader Thomas Mulcair as ideologically unwilling to pursue them. In fact, neither appears eager to battle Harper on trade, even though the issue once defined the left-right split in Canadian politics.

Last fall, Trudeau declared himself “broadly supportive of CETA.” The NDP greeted this week’s announcement by declaring they won’t decide whether to support the deal or not until the full text is released, analyzed and debated by “business, labour, local and provincial governments, Aboriginal peoples and others.” Opposing CETA would be risky. An Abacus poll last spring found that 58 per cent of Canadians expected it to be good for the economy, compared to just 15 per cent who anticipated ill effects. Breaking down those findings along partisan lines, 78 per cent of Conservative supporters were, unsurprisingly, upbeat about the deal, but so were 56 per cent of Liberal backers and 53 per cent of NDP voters.

Given those numbers, it’s easy to see why Harper is highlighting a trade agenda. His government is touting CETA as having the potential to boost Canada’s business with the EU and its more than 500 million consumers, enough to create the equivalent of 80,000 new Canadian jobs. The Tories badly need fodder for such optimistic projections. After the 2008 recession, Canadian job creation outpaced the U.S. recovery. But since the beginning of this year, U.S. employment growth has strengthened, while Canada’s has slumped. This week, the Conference Board of Canada projected that just 171,000 new jobs will be created in Canada in 2014, the weakest total since 2001.

Of course, CETA will not be in place soon enough to contribute directly to any rebound in Canadian employment before next year’s election.

Still, Harper is clearly banking on using the agreement to burnish his image as a prime minister who can secure Canada’s long-term prosperity. Considering all the political capital he’s patiently invested in it, any chance of the deal falling apart at this late stage must be deeply worrying to Tories. Opponents of the deal contend that some EU member states might well refuse to ratify CETA, which would sink the agreement. They were encouraged recently by news that a German official voiced reservations about its so-called “investor-state dispute settlement” provisions, which allow foreign companies to challenge government policies before special tribunals.

But Canadian officials stressed that the German official “was not cleared to make those kinds of statements,” and that the German government later pledged to “judge CETA on its merits.” Some experts don’t foresee much chance of Germany balking. Dane Rowlands, director of Carleton University’s Norman Paterson School of International Affairs, said Berlin must have been comfortable with this week’s text. “I doubt strongly that it would have been announced as a final draft if there wasn’t a pretty stable consensus,” he said. Stephen Harper is hoping he’s right.