Canada & the European Union:

Free Trade for the Rest of Us

by Gian-Paolo Mendoza

The nature and depth of economic relations between Canada and the world's most deeply integrated regional bloc are about to be taken to an unprecedented level. The near-finalized negotiations over the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) serve to help set the stage for the opening of new markets between Canada and Europe. An internationally recognizable deal for both parties, it will be the European Unions first trade arrangement with a developed nation, as well as Canadas largest bilateral deal since the Canada-U.S. Free Trade Agreement. Analysts project the total bilateral trade to increase by nearly 23 percent by 2014, with Canadian exports to the E.U. increasing by over twelve billion dollars. However, the negotiation processes over the terms of the CETA have not been without a fair share of critics. Think tanks such as the Canadian Centre for Policy Alternatives and a number of prominent Canadian labour unions have raised many concerns over the implications for the competitiveness of Canadian businesses in the face of an invitation for further European imports in recent years. Proponents of the deal conversely project the immense job creation opportunities and economic growth that could help to boost the economies of both actors in the agreement. Just as a trade deal could never occur without the cooperation of at least two parties, neither can an assessment of the implications it contains for Canada. What follows is how the rest of us can attempt to make sense of this increasingly important and potentially groundbreaking trade agreement.

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CETA's Promises
The CETA arrangement has been characterized as the first in a new 'generation' of free trade agreements; one that covers rules for trade in investment, intellectual property, as well as labour and environmental standards, in addition to more 'traditional' arrangements for trade in goods and services. CETA's promised benefits for Canada stand out in the context of a few distinct areas of economic activity, listed in the following. CETAs proposed tariff reductions on imports carry some significant implications for the export of particular Canadian goods. The seafood, textile, automotive, and forestry industries across the country have been particularly featured in terms of the Canadian industries that may be set to benefit from more open trade regulations with the EU. The forestry industry is particularly set to shine in this regard, as CETA would help to facilitate the opening up of new opportunities for Canadian lumber exporters to explore the European market, given their rocky past in the market with the United States. Agriculture and farming are two areas that also strike significant interest on both sides of the Atlantic. The renowned farming subsidy framework of the EU and Canada's supply management system for dairy farmers are two firmly established protectionist measures that have definitely not been left out of talks in the initial stages of negotiations, despite the obvious barrier they pose to market competition between European and Canadian industries. While Canadas dairy supply management system will remain untouched under CETA, loosening of regulations in the trade of other types of agriculture, such as grain, beef, and cheese, currently remain on the negotiating table with Europe instead. It is unlikely that the Europeans will budge on their subsidization framework as well.

Implications and Causes for Concern

Public and Provincial Consultation - Nothing New Here
The idea of Canada courting economic relationships with countries beyond the Asia-Pacific region and the North American continent is not new, but neither is it discussed widely. The relatively closed nature of trade negotiations has been one of the most prominent concerns of the civically-conscious of this generation, and the method of the current government in going about these negotiations with Europe has certainly not deviated from this fashion. One related criticism of the CETA agreement is that it would open up a number of new corridors for investor-state complaints and other trade-related disputes, leaving substantial implications for the reach of the Provinces in determining their priorities in this arrangement. Canada has proposed a counter to this concern in CETA in an instrument similar to the Buy America agreement negotiated with the United States. In this element currently on the negotiating tables with Europe, each of the provinces and territories have listed out proposed exemptions to the procurement requirements under CETA, namely in the provision of things such as water and transit spending.

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Privatization and Local Governments' Service Provision

In this same manner, critics of CETA have also cited some potentially adverse implications for municipal public service provision in Canada. The federal government has affirmed that only larger cities undertaking multi-million dollar infrastructure projects will need to tender internationally, but a core tenet of the CETA retains that government procurement contracts must remain open tender down to the municipal level. The notion of potential 'forced' privatization of municipal water, waste, and electrical systems as part of procurement regulations is a strong point of contention. The Federal Government has stated that there exists no provisions in any of Canada's international trade agreements that would encourage municipal governments to privatize or deregulate the provision of their public services, nor prevent the ability of local governments to set quality standards for drinking water. While the learning curve for Canadian municipalities may prove to be cumbersome in the future, the ability to impose their own environmental or local labor standards proves promising for Canada in the context of this particular issue.

Moving Forward What Else is Left?

The Canadian narrative around CETA has focused largely on the effects of the agreement on Canada; there has yet to be a greater dialogue on what leverage Canada may be set to gain in the European markets. When looking at a trade agreement, attention must be given to both countries' current status trading with each other. Are their current and capital accounts balanced? Is one taking in more imports than the other? Who gains and loses within each sector of economic activity covered in the deal? These are questions that need to be asked for a more comprehensive assessment. Others that need to be asked involve the implications that CETA proposes for regional integration within the EU: how will this affect the politics behind each members export policies? What will be required of EU members as part of this agreement? The EUs debt situation cannot be left out of this discussion either: what implications will this have for those members that are continuing to experience severe trade imbalances? These are only but a few questions that still remain without a clear response from both critics and proponents of this new type of agreement. Time can only warrant the appropriate answer if there is an intentional effort put forth by the stakeholders and policymakers in the CETA to present the benefits Canada stands to gain in what may just potentially be Canadas biggest and most politically significant trade deal in the current global economic environment.

Final Note: Submitted as the Features Piece element of the Application Portfolio for Gian-Paolo Mendoza as part of an application to the UBC School of Journalism (MA Program) for the Fall 2013 Semester.

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