With CETA, Harper may trade his way to victory


Prime Minister Stephen Harper tabled the technical summary for what he is publicizing to be the biggest trade agreement in Canada’s history.  On October 29th the final negotiated outcomes of the Canada-Europe Trade Agreement (CETA) were brought forward in the House of Commons.  The potential agreement is being touted as an exciting avenue for future Canadian prospects.  Yet, some are becoming more worrisome of its potential impacts.

Just two days after the new session of Parliament began, Harper met with Jose Manuel Barroso, President of the European Commission, in Brussels.  The two reached a final political agreement on key elements of the comprehensive and economic trade agreement.

The thirty-page document, entitled “Technical Summary of the Negotiated Outcomes: The Canadian EU- Comprehensive Economic and Trade Agreement” was tabled shortly thereafter, and provides Canadians with an outline of the agreement in principle.

Harper claims that this “is a milestone towards the biggest, most ambitious trade agreement in Canadian history, representing thousands of new jobs for Canadians and a half-billion new customers for Canadian businesses.  Our Government takes pride in the fact that the trade negotiations have been the most transparent and collaborative that Canada has ever conducted, with provinces, territories and business sectors informing negotiations every step of the way.  The tabling of the summary of negotiated outcomes is yet another example of the openness that has characterized this entire process.”

The deal aims to remove trade barriers and enhance economic interactivity between Canada and the 28 members of the European Union – Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

Yet, the summary came across as more of a sales pitch being pushed by the Conservatives than a transparent trade agreement.

Canada’s ten provincial governments were involved in the negotiations from the beginning, but only at the request of the Europeans who realised that the provincial buy-in was necessary for the arrangement.

Some highlights of the summary include:

  • Full elimination of duties on all non-agricultural goods.
  • 99 per cent of industrial goods will be duty free immediately (100 per cent after seven years), including forestry, chemical and plastic products.
  • 95.5 per cent of fish and seafood products will be duty free immediately (100 per cent after seven years), including live lobster, frozen lobster and frozen shrimp.
  • 94 per cent of agricultural tariffs will be eliminated, with tariffs immediately eliminated from items including maple syrup, fresh and frozen fruits, cherries, fresh apples and cat and dog food.
  • Canadian beef producers will be able to sell  50,000 tonnes of beef; pork producers will be able to sell 81,000 tonnes of pork
  • There will also be duty free, quota free access to the EU dairy market.

The trade will provide Canada with preferential market access to more than 500 million consumers in the EU and to its annual economic activity of $17 trillion.

The Government’s Action plan website states that “A joint Canada-EU study that supported the launch of negotiations concluded that a trade agreement could boost Canada’s income by $12 billion annually and bilateral trade by 20 percent.  Put another way, this is the economic equivalent of adding $1,000 to the average Canadian family’s income or almost 80,000 new jobs to the Canadian economy.”

Yet, Jim Stanford, an economist at the trade union, Unifor, is suspicious about the government’s claims that the deal will add 80,000 new jobs and boost Canadian GDP by 0.6%; he fears jobs will be lost instead.

CETA has been the product of four years of negotiations, and will take several more years before it is ratified. It will tentatively be finalized in 2015, the same year Harper will have to show Canadian voters that his government deserves another majority mandate.

Yet, how will everyday Canadians benefit from this deal?

Firstly, and most importantly, access to cheaper goods.  Canadians will pay less for goods including foods, wines & spirits, and even high-end European cars.  As most EU tariffs on agricultural goods and seafood will be eliminated immediately it directly translates into cost reductions for consumers.  That is so long as retailers and European manufacturers share the savings form the removed tariffs.

European imports of cheese will also increase from 13 000 tonnes to 29 000, which is causing more of a stink than the cheese itself as it has drawn the concern of some Canadian dairy farmers.

Ron Versteeg, the vice president of the Dairy Farmers of Canada, told CBC News that they are concerned about giving the EU greater access to “one of the jewels” in the Canadian dairy industry.  “It’s a bit discouraging to see something that we’ve put a lot of blood, sweat, and tears into developing — to have it sort of eroded and given away to the Europeans,” Versteeg said.

The Government is currently considering compensation for Canadian dairy farmers.  Both Ontario and Quebec have asked the federal government for a guarantee that their dairy farmers will receive compensation for any negative impact resulting from the trade deal.

The deal would also raise the quotas for Canadian pork, beef and bison, giving famers greater duty-free access to the overseas markets. This translates into an estimated increase of $1 billion in potential annual sales.

Claims that the government had made gains in beef, pork and bison industries at the expense of dairy farmers were refuted by Agriculture Minister Gerry Ritz.  “Not true, not at all,” Ritz said.  “Our dairy industry has complete, unfettered access for all dairy products into the European market… Personally, I don’t think there will be any hurt.”

The protection of intellectual property rights and patents was a concern for the EU during negotiations, particularly in relation to pharmaceuticals.  Canadians may have to wait longer for newer drugs to become available as cheaper generics.  This is because patent protection for brand-name drugs produced by EU companies would be extended from 20 to 22 years.

Canada’s Research-Based Pharmaceutical Companies (Rx&D), which represents brand-name drug manufacturers, encouraged the deal, stating that “a more level playing field in intellectual property protection can lead to more investment in the research and development of new medicines and vaccines here at home.”  Though it may mean consumers will wait longer, it could be promising for new innovations.

Lastly, the deal will affect provincial and municipal contracts.  The European Commission issued a memo which states that “CETA covers new ground, as it is the first time that all sub-federal levels of government in Canada have committed themselves to bilaterally opening their procurement markets.”  Meaning it will provide EU companies with an enhanced ability to bid on local and provincial contracts.  According to the Canadian government, the CETA procurement rules will apply only to “high-value” contracts, ensuring that municipalities are still able to support local initiatives.

Ontario estimates the deal will create roughly 30 000 jobs in the provinces.

However, The Royal Bank, Canada’s largest financial institution, questions the likely benefits of the pact, particularly in the short term.  Likewise, Capital Economics judged that the deal will provide only modest economic benefits to Canada.

Yet, the real problem seems to be that there was in fact a lack of transparency during negotiations.  Contrary to Harper’s praising of the deals transparent nature, it seems a lot of discussion was carried out behind closed doors without any meaningful public debate.  The Conservatives have already tabled the final summary of the tentative agreement, and have refused to release the text of the signed agreement in its entirety. It seems they won’t be giving citizens the opportunity to provide input on the content of CETA, or the chance to vote on the deal itself in the next federal election.

It is no doubt that the negotiated outcomes of this deal were finalized during a trying time for Canadian politics.  But, the Conservatives are looking to move past the Senate spending scandals given the recent suspensions.

The Liberals are largely supporting the tentative deal.  The New Democrats, Harper’s official opposition, say they are withholding their judgement on CETA until the full details are released, which may take several months.

The landing of CETA may help to heal the Conservative image.  It is largely being regarded as a win for Harper considering his focused agenda to expand trade and foster greater economic growth.  He has increasingly tried to diversify Canadian trade by expanding beyond the U.S., Canada’s biggest trading partner.  Though it will not be ratified for a few more years, it appears to be a promising and perfectly timed victory for Harper’s Conservative government.


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