With tariffs removed, Canada’s trade will change
Article: Aidan Macnab – Contributor
Negotiations have concluded on The Canadian-European Comprehensive Economic Trade Agreement (CETA).
According to the Globe and Mail, Prime Minister Stephen Harper and European Commissioner Jose Manuel Barroso, announced they had reached an “agreement in principle” on Friday, Oct. 18.
The trade pact will not come into effect for another two years. It will be subject to legal overview. Given that 29 different countries are parties to the deal, the text needs to be translated into 24 different languages, as well as ratified by all governments involved. The Prime Minister is confident that this process will unfold smoothly.
As for what’s in the deal, the details, in their entirety, have not been released to the public.
According to the Globe, the pact reduces tariffs on goods, allows European companies to bid on municipal and provincial public contracts, raises quotas on Canadian goods like agricultural products, and makes it easier for Canadian professionals to work in Europe and vice versa. The deal also allows European Pharmaceutical drugs an up to two-year extension on patent protection.
Not only do Canadians not know the details, no substantive changes can be made to the bill while it’s debated and voted on in Parliament. This may sound undemocratic, but is necessary, according to the University of Regina Professor of Economics, Dr. Jason Childs.
“You never want to negotiate in public because that then gets political and nothing happens… It’s impossible for someone to back down or compromise, particularly a politician in that environment.”
The CBC reported on Oct. 21, that the government would like to see the deal put into effect as quickly as possible, as it gives Canada access to a market that is “the largest in the world,” with “500 million consumers, (and) $17 trillion GDP.”
The Harper Government has also claimed that Canadians stand to gain 80,000 jobs and add 12 billion to the GDP as a result of CETA. These claims may “be optimistic,” says Dr. Childs, but are, “not impossible.”
Dr. Childs cautions that the job numbers probably aren’t taken into consideration the jobs that will be lost.
“That’s probably a gross number not a net number. That’s a standard game [for politicians]… If you like the deal you talk gross, if you don’t like the deal you talk net.”
Liberal Premier of Ontario, Kathleen Wynne, supports the deal and expects Ontario will add 30,000 jobs, as the manufacturing sector will have unprecedented access to European markets.
Wine producers in her province are not as excited. With the Government’s claim that CETA will remove 98 per cent of all tariffs, it will be great for those who want to buy European wine, but not so great for those who’ve been producing Canadian wine while relying on their trans-Atlantic competitor’s product to have an inflated price, due to tariffs.
The Globe has reported that, when the agreement takes affect, the EU will also be allowed to export an extra 17,000 tonnes of cheese, tariff free, to Canada per year.
This portion of the deal has the Dairy Farmers of Canada claiming that, “Canada would lose its small, artisan and local cheese makers and a world-leading industry with top quality products”.
The dairy farmers also call CETA a “giveaway” to Europe. They claim that the pact won’t benefit Canadian consumers “as the vast majority of EU cheese already comes into Canada with little or no tariffs.”
[pullquote]“You never want to negotiate in public because that then gets political and nothing happens… It’s impossible for someone to back down or compromise, particularly a politician in that environment.”[/pullquote]
Dr. Childs cautions that not all businesses benefit from free trade.
“The question is how much and how should you compensate those who are harmed by moving from a system of tariffs, to a system of international competition,” Dr. Childs said. “There is going to be opposition to removing tariffs from those who are protected [by tariffs].”
Those currently being protected are Canadian cheese and wine producers.
Prime Minister Harper has said that the Government would consider compensating those who “will be hurt by the deal.” This includes possible compensation for provinces, which may deal with higher health-care costs due to CETA’s extension of patent protection for European Pharmaceutical drugs.
An upside to CETA is that one can expect to pay less for European cars, which generally have a tariff of around ten percent.
Cars, according to Dr. Childs, are a product that has become much less expensive due to a similar free trade agreement signed by a previous Tory government, the North American Free Trade Agreement (NAFTA).
The Carillon spoke with Conservative Member of Parliament for Palliser, Ray Boughen, who says he will be voting in favour of CETA, and said also that NAFTA has benefited the average Canadian consumer in that “they probably gain an extra thousand dollars more a year.”
Boughen also thinks that gains from CETA will be even larger because Canada will join 28 countries instead of just two.
When asked who among the Canadian public have been hurt by NAFTA, Dr. Child’s responded, “we have lost a lot of those fairly repetitive manual assembly line type jobs. That work has gone, a lot of it, to Mexico because they’re willing to do it cheaper.”
But there is more included in the agreement than just opening up borders for trade.
There is also a controversial portion of the document that deals with investor rights. Inclusion of an investor-state dispute settlement mechanism in CETA has ignited opposition from groups such as the Council of Canadians and Canadian Union for Public Employees (CUPE).
CUPE claims on their website that Canada should follow Australia’s lead, who stopped “the practice of including investor-state dispute settlement in their trade and investment agreements,” in 2011.
Including these dispute settlement arrangements in trade deals, according to CUPE, creates a situation where democracy is undermined, and where human and Indigenous rights and environmental protection are compromised.
The Huffington Post reported on an example one such dispute.
Lone Pine Resources is suing the Quebec government under NAFTA, for a moratorium on hydraulic-fracturing or fracking. Lone Pine had leased land for development in Quebec prior to the ban, and is claiming damages of $250 million. Lone Pine is a Calgary-based company, but is registered in Delaware.
The attitude of CUPE and the Council of Canadians and other opponents of this parallel legal system for trade-disputes is that if Quebecers want to ban fracking, they ought to be able to.
But Dr. Childs says, “It’s changing the rules midway through the game, that’s when you get sued.”
“The European rules around investors rights… aren’t going to be completely nuts. They’re not worth panicking about,” he said.
On Friday, Jeffrey Simpson of the Globe and Mail wrote an editorial pointing out that trade deals like CETA usually don’t live up to the expectations of those advocating for and celebrating them, but also don’t become the disasters that the deals’ opponents foresee.
As for what CETA’s affect will be on Canada, it will be a long time before we’ll know for sure.