The Canada-European Union Comprehensive Economic and
Trade Agreement (CETA) is already being hailed as the landmark deal of a
generation
After nearly three years of
measured, cordial talks, negotiators on both sides of the Atlantic are
privately hunkering down to deal with the finer points of a high-stakes
international trade game.
Most details remain under wraps
after the recent completion of the ninth formal round of negotiations, but the
Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is
already being hailed as the landmark deal of a generation. For Canada, it
represents the biggest, most significant bilateral initiative since the North
American Free Trade Agreement (NAFTA) in 1994, and in the words of International
Trade Minister Ed Fast, it is, “by far, Canada’s most ambitious trade
agreement.”
“It offers huge opportunities,”
Fast says. “It’s an expansive agreement that is not only restricted to goods.
It will include services, it will include procurement, it will include
investment provisions. We expect it will also include provisions on the
environment and on labour. This may become the gold standard agreement if we do
this right.” Fast insists the Canadian government won’t be boxed in by any set
deadline, but officials are quietly eyeing a mid-2012 completion date.
There is no shortage of critics
complaining about a secretive process and provisions of the agreement that
could have negative impacts—not to mention the timing of the deal, coming at a
time when Europe appears headed for financial disaster. But Fast believes CETA
will help improve Canada’s position in an increasingly complex, competitive
world market. Without losing sight of blossoming markets like Asia, India and
Brazil, Fast says Canada still views Europe as a top trading partner. It is the
world’s largest trading bloc, with 500 million consumers, including 100 million
from Eastern European countries where a middle class continues to grow.
While it may be too early for
firms to begin hatching new business plans, Fast is seeing increased
mobilization and a real awakening to the potential benefits of doing business
in Europe. He expects the agreement will boost bilateral trade by 20 per cent,
grow Canada’s economy by $12 billion a year and create 80,000 new jobs.
Opponents of CETA—who range
from environmental groups to community activists—worry the sweeping package
will open procurement processes for key municipal services like water and waste
to large European firms at the expense of environmental and development
considerations. Critics also charge it will cause prescription drug prices to
climb. But the pro side argues the deal will make Canada the only country with
preferential trade and investment agreements with both the U.S. and the EU.
They expect greater investment in Canada and new opportunities in Europe in a
broad range of sectors that include agriculture, manufacturing, aerospace,
chemicals, plastics, aluminum, wood products, fish and seafood.
Jason Langrish, executive
director of the Canada Europe Roundtable for Business, says both the economic and
political stakes are high, with credibility on the line for leaders on both
sides. “This is a generational trade development. Basically, every 25 years you
do a really big deal and it eats up a lot of political capital, and this is the
deal that’s going to eat up the Harper government’s capital,” he says.
The proposed Canada-EU
agreement is complex because it includes the provinces and involves rules that
govern commercial exchange like intellectual property, rules of origin and
public procurement. With official rounds completed in late October, negotiators
are now moving into smaller, focused meetings to hammer out remaining issues.
Langrish rejects the notion
that Canada is hitching its economic wheels to a troubled region, pointing to
the fact that the vast majority of trade occurs with the healthy economies of
Europe—Germany, Sweden and the Netherlands. “We need to be in these places like
China and India, but it’s exaggerated as to how much we can do. In the United
States and Europe, we have national treatment; we’re treated exactly the same
as a local firm so we have real immediate economic opportunities,” he says.
“There is huge potential in Asia, and we need to be there, and there is huge
potential in Brazil, and we need to be there. But they’re still fairly
state-driven economies, which limit the opportunities for Canadians.”
But Michael Hart, who holds the
Simon Reisman chair in trade policy at the Norman Paterson School of
International Affairs at Carleton University, sees CETA as a “last gasp of the
past” for those hoping to rekindle a relationship with the EU instead of
setting sights more firmly on new, emerging markets. Indeed, Ottawa appears to
have hedged its bets, indicating that Asia will be a key trade focus.
“Europe is not where the future
lies. The future is more likely to lie across the Pacific than across the
Atlantic,” Hart says. “Secondly, we are very much part of the North American
economy. And it is together with the U.S. that we’re making progress in gaining
access across the Pacific, which is the future. To now negotiate a
comprehensive agreement that may very well conflict with our interests in North
America and the Pacific is of questionable benefit.” Suggesting the agreement
has been overhyped by both sides, Hart says he’s not convinced the deal is in
Canada’s best interests.
If the proposed agreement has
some trade experts scratching their heads, it has some activist groups reeling.
Lending loud voice to the opposition side is Maude Barlow, national chairwoman
of the Council of Canadians, who is as much riled about a process that lacks
meaningful public input as she is about potential impacts of the deal. She
accused the EU of staging a “resource grab” in an agreement that could have
far-reaching effects on local economic development and farmers. Europe is
“sinking fast”—and she believes it’s a mistake for Canada to tie itself more
closely to that part of the world.
“Europe is in a race with China
and trying to stay as a superpower in light of the crisis it’s in,” she says. “It’s
seeking access—permanent access—to our resources. Everything from potash, to
pulp and paper, to diamonds, to fish, to uranium—you name it.”
One element of contention is a
proposal to extend eight-year intellectual property protection for data by two
years, which critics say would drive up the cost of pharmaceuticals. But
Russell Williams, president of Canada’s Research-Based Pharmaceutical Cos.,
says CETA will lead to more innovation, research and, therefore, better health
care. Canada has a $1.3-billion share of the annual $100 billion invested
globally in life sciences research, and Williams said CETA has the potential to
make that figure grow.
The EU’s 27 member states now
stand as Canada’s second-largest trading partner in goods and services. With a
GDP of nearly $16.8 trillion in 2010, the EU is also the second-largest source
of foreign direct investment in Canada, and the EU accounts for almost 25 per
cent of Canadian direct investment abroad.
Perrin Beatty, president and
CEO of the Canadian Chamber of Commerce, insists there is no “either the U.S.
or Europe or Asia” proposition going forward: Canada needs thriving economic
exchanges with all three. “While the U.S. remains our No. 1 economic partner by
a long shot, and will almost certainly remain so, trade statistics show
Canadian companies have been diversifying trade and investment away from the
U.S. to other markets, including Europe, over the past decade,” he says. “If
anything, the negative impact of the 2008–2009 financial and economic crises
has galvanized quite a number of Canadian businesses to look more aggressively
at diversification. Businesses should be paying close attention to Europe.”
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