Canadian Trade Minister Peter Van Loan wishes the mainstream media would pay more attention to the anti-globalization crowd. After all, if trade naysayers made the front page of national papers more often, then more people might realize Canadian trade negotiators are well on their way to making history with an ambitious plan to better integrate our national economy with the European Union. As Van Loan points out, the Council of Canadians, which claims a deal with the EU could threaten Canadian access to safe drinking water, recently held “a wonderful news conference” to voice its concerns—but it got virtually no media pickup. “I was actually disappointed,” Canada’s trade minister says, “because there should be more of a spotlight on these negotiations.”
True enough. If all goes as planned, Canada will become the first developed nation to land a free trade agreement with the economic grouping of 27 European nations sometime next year. The EU—the world’s largest market, not to mention home to the wealthiest pool of investment capital and some of the largest and most important companies on the planet—is already Canada’s second-largest source of trade and foreign direct investment. In 2008, Canadian exports to the EU totalled $52 billion. Imports amounted to $62 billion. But there appears to be plenty of room for growth. After all, the Canadian economy is 150 per cent larger than the Indian economy, which has similar trade levels with the EU. Furthermore, Europe trades about 25 per cent more with South Korea, which has a smaller GDP than Canada.
If a deal is reached, a joint government study published in 2008 estimates it could generate a $38-billion boost in annual bilateral trade (mostly in services) and provide Canada with a $12-billion gain in gross domestic product. And Van Loan insists the endgame is a pact with Europe that would go much further than NAFTA by allowing the free movement of labour and recognition of foreign professional standards while opening up government services and procurement to foreign players. That’s in addition to removing tariffs and other barriers that hinder trade in goods, services and investment, even in sensitive sectors such as agriculture.
Nevertheless, Canadian trade officials are frustrated by what Ontario’s chief negotiator Maurice Bitran calls the business community’s “dearth of interest” in this deal. At a recent information session in Toronto, Bitran and two federal counterparts pleaded for more visible corporate support and input for the deal.
Michael Hart, a former Canadian trade official and founder of Carleton University’s Centre for Trade Policy and Law, says corporate Canada is yawning because the cross-Atlantic business relationship is more about investment than trade. “Rather than sending things back and forth,” he says, “Canadian manufacturers tend to produce overseas what they think they can sell.” According to Hart, a deal with the EU that actually lives up to its billing will be more than a little surprising. He notes individual EU members already have World Trade Organization agreements with Canada, and there are few major tariffs to tear down. Finding other ways to improve trade and investment, he adds, is a waste of time because “what’s negotiable is not worthwhile, and what’s worthwhile is not negotiable.”
Business lobby groups beg to differ. Roy MacLaren, chair of the Canada Europe Roundtable for Business, says private-sector support for a trade deal with the EU dates back to his days as Canada’s minister of international trade in the mid-1990s. The direct benefits, he adds, are obvious in any free trade deal between Canada and a market of 500 million people. As for indirect benefits, MacLaren says they include the potential to further break down Canada’s internal barriers to trade while setting a North Atlantic example that could stimulate multilateral talks.
Everything, of course, depends on the details. Keep in mind that the study used to sell this deal assumed “a successful outcome of the Doha Round, in which both non-agricultural and agricultural tariffs will be reduced by a substantial margin.” That didn’t happen, and what is actually negotiable in these talks remains an open question. Canadian trade negotiator Vincent Sacchetti recently promoted the trade talks to a business audience in Toronto with a presentation that suggested everything is on the table. But Canada is committed to protecting its supply management systems for dairy, poultry and egg products. And Europe isn’t expected to give up agricultural protections or cave on the issue of geographic indicators for products like champagne or feta cheese.
Chris Sands, a senior fellow with the Washington-based Hudson Institute who specializes in Canada, suspects Canada and the EU will strike a symbolic agreement that “does little, or nothing, to move the needle on trade and investment.” Sands, however, notes that Europe has agreed to not tax or block raw materials, low-end manufactured items and agricultural goods that selected developing countries sell in return for access to government procurement. And, he says, there is a chance that the EU will let its guard down for Canada, at least enough to reach “a reciprocal deal of some sort,” since our nation has become a rather attractive dance partner in a bilateral world.
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