Canada-EU trade: risk-al imbalance

Paul Wells on skepticism and CETA

Sorry about the headline. You try making this stuff interesting. I was struck last night to read this blog post by intellectual-property smart guy Michael Geist, based on the same leaked European Union memo that led me to write this blog post on our own website on Sunday.

Geist has been following the Canada-EU trade talks very closely, and he has superb sources, so when I ran into him several days ago I couldn’t help asking whether my recent skepticism about the likelihood of a final Canada-EU trade deal is justified. “Probably not,” he said. And fair enough. It’s hard to imagine Canada engaging the EU in five years of talks, and three years of hard negotiations, on what would be the most ambitious trade deal either has undertaken, only to walk away in the home stretch.

But lookie here. Geist now writes that a Canada-EU agreement “is no longer a certainty.” Why? “The EU recognizes the deal is unbalanced as there are far more demands for Canadian changes than European ones,” Geist writes.

“This ranks as perhaps the most important CETA leak to date, since it clearly identifies the key remaining issues, the European demands, and the massive changes that would be required for Canada to comply with the treaty.  Some of the changes demanded by Europe include patent reform that could add billions to Canadian health care costs, the removal of foreign ownership restrictions on telecommunications and book publishing, the opening of public procurement for the energy and public transport sectors, eliminating Investment Canada Act review for European investments, new restrictions on the sale of a myriad of products such as feta and parmesan cheese, changes to agricultural protections (ie. supply management), and the adoption of European standards on passenger cars. This would require dramatic changes across the Canadian economy, all for what even the Europeans acknowledge are limited gains for Canada.

Now, as I’ve written many times before, there is not a single issue on this list that Canadian negotiators didn’t see coming from the very first preliminary talks in 2007. In fact trade negotiations broke down five years earlier precisely because an earlier Canadian government had no stomach for this list of demands. Nothing here is a surprise. But it is bracing to see it all written down, on EU letterhead.

And indeed: to repeat myself again, throwing open your procurement, telecomms, dairy and pharmaceuticals sectors to international competition is what free trade looks like. I remember my amazement when I got Jean Charest on the phone in 1997 and he pronounced himself a champeen free trader before listing all the concessions he wouldn’t consider. This’ll be interesting, I thought.

[I should address the notion of relaxing foreign-ownership restrictions in telecomms, since Maclean’s is owned by a large telecomms firm, Rogers. I don’t know whether Rogers has a corporate position on the question and I take care not to ask. My own opinion predates my employ with this company: I have long believed that permitting foreign ownership of any Canadian media company, whether print, broadcast or internet, is an excellent idea because it would increase the pool of potential investors and drive competition.]

Geist surveys the range of concessions the Europeans are seeking, while offering few of their own, and wonders whether it’s possible to substantially ratchet down the stakes of the whole enterprise. “Canada should be considering whether a scaled down version of CETA – one that focuses primarily on a reduction of tariffs for trade in goods – is a better model.”

But in 2009 I wrote about the lead European negotiator for this deal, who went to Montreal to say the EU has cancelled trade talks in the past for insufficient ambition on the other side, and would not hesitate to do so again. Europe sees CETA, if there is to be a CETA, as a model for EU-US trade talks that would be an order of magnitude more important for the Europeans. They have no interest in adopting a useless model.

If Stephen Harper implements a trade agreement at all similar to the one described in these European memos, it will be the most radical move to liberalize Canadian markets since Brian Mulroney opened North American trade. Opening provincial procurement markets to more European investment than Canadian provinces offer one another would force the provinces to further liberalize inter-provincial trade. Making Canadian dairy farmers compete, even if only against a low annual quota of European imports, will be the biggest change in most farmers’ career. And so on. At the National Citizens’ Coalition, Stephen Harper would have found the case for these changes open and shut. But he doesn’t work at the NCC any more. I had a hunch when I began writing about this file that it would be worth following. Nearly six years later I haven’t regretted it.

UPDATE: Here’s the agenda for today’s meeting of EU trade ministers. This was the meeting at which ministers needed to approve a final deal, or choose among options for a final deal, if there was to be an agreement by the end of the year. Instead their agenda presents them with a bewildering list of still-unsettled issues. This thing is now certain to go into extra innings. Once again.

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