7 01 2011

In coming days, Canadian and European officials will intensify negotiations on a new trade agreement most Canadians have never heard of. The Canada-European Union Comprehensive Economic and Trade Agreement is by far the largest free-trade deal this country has ever undertaken.

That’s from an opinion piece in today’s Globe and Mail by Maude Barlow, a prominent Canadian nationalist who is most famous for her staunch opposition to the 1988 Free Trade Agreement.

CETA is Canada’s biggest bilateral initiative since the succesful negotiation of  NAFTA, the North American Free Trade Agreement in 1993. The road to this agreement has been a lengthy one that began with the Canada-EU Summit in Ottawa in March 2004 and a second Canada-EU Summit in Prague in May 2009 (see photo below). This agreement is intended to move beyond traditional market access issues (such as tariffs), to include areas such as trade and investment facilitation, restrictions on foreign investment, mutual recognition of professional qualifications, and sharing science and technology.

The head of the Canadian negotiating team is named Steve Verheul. All of the overseas meetings he has had in connection with this treaty are listed in this document, which gives a sense of the rough chronology of the negotiations.

Group photo, from left to right: High Representative for CFSP Javier Solana, Czech Foreign Minister Karel Schwarzenberg, Canadian Minister of International Trade Stockwell Day, Canadian Prime Minister Stephen Harper, Czech Prime Minister Mirek Topolànek, EU Commissioner for External Relations Benita Ferrero-Waldner, European Commission President José Manuel Barroso and EU Commissioner for Trade Baroness Ashton of Upholland

It is interesting that Barlow is opposed to this agreement. Historically, most Canadian nationalists have welcomed closer commercial ties to the European Union (and before that the British Commonwealth) as a way of counter-balancing the enormous economic gravity of the United States. Barlow’s position, which seems to be against all bilateral trade liberalization agreements, would risk dooming Canada to continued trade dependence to the United States. It is pretty obvious, at least to me, that Canada is most likely to suceed in preserving its sovereignty and freedom to manoevre if its international trade is balanced amongst a variety of countries rather than concentrated on just the United States.  I believe that this reasoning is why so many left-of-centre Canadians in the 1970s supported the so-called Third Option (bilateral trade deals with the EEC, Japan, and other non-US countries) then championed by the government of Pierre Trudeau. It is somewhat ironic that the Conservative government of Stephen Harper has the greatest success in recent memory in actually getting the EU to the bargaining table, given that Harper and the Tories are often accused of being continentalists and the poodles of George Bush.  The Liberal Party, which was in power before 2006, actually accomplished relatively little when it came to diversifying Canada’s trade.

Steve Verheul, Canada's Lead Negotiator, is Shown at Left

I’m broadly supportive of the idea of a comprehensive Canada-EU trade agreement, but with three caveats.

First, the agreement being discussed right now would appear to involve some harmonization of Canadian policies with those of the EU. This might affect the fine-grain details of many areas of Canadian public policy in a variety of ways that we can’t really anticipate right now. Consider the debate that has been ranging for several years in Canada over “fee for carriage”, the idea that cable TV and satelitte distributors should have to pay the Canadian TV networks for the free-to-air terrestial TV channels they currently bundle into cable TV packages. (Let me say right now that I am agnostic on this question, which has pitted the TV networks and their shareholders against the cable firms and their shareholders). The regulator has proposed a new regime whereby cable companies have to pay the broadcasters for these channels and this proposal is currently before Federal Court of Canada.

Now it appears from preliminary reports that the draft version of CETA agreed in October would require Canada to adopt the principle of “signal right for broadcasters”, which is a principle of intellectual property law in all EU countries and which gives TV networks the exclusive right to authorize or prohibit the re-transmission of their broadcasts by any means. If Canada were to ratify the agreement in this form, it would require Canada to bring the IP laws governing carriage of signal into conformity with those of the EU. This may or may not be a good thing (I’m not really qualified to say),  but it surely has implications for Canadian cultural industries, cable companies, broadcasters, advertisers, smart phone providers, consumers, and other interest groups.

Second, I’m a strong believer in decentralization and provincial rights. Canada is like the EU in that it is a multinational federation, although obviously Canada is far smaller in population and only has two official languages, not dozens.

Canada has survived because it is decentralized– if the central government decided to assert control over school curriculum, the certification of doctors and other professionals, or property law, this would give tremendous impetus to separatist sentiment in Quebec. One of the curiosities of Canada’s partially written and partially unwritten constitution does not clearly specify which level of government has the right to negotiate and ratify treaties.

Section 132  of the 1867 constitution says:

The Parliament and Government of Canada shall have all powers necessary or proper for performing the obligations of Canada or of any province thereof, as part of the British Empire, towards foreign countries, arising under treaties between the Empire and such foreign countries.

In the past, Canada’s federal government has been able to invade matters of provincial jurisdiction by signing a treaty with a foreign power or powers that requires the Ottawa parliament to pass legislation in a particular area. For instance, in 1919, shortly after Canada started engaging in independent diplomacy, Canada singed an international aviation agreement. The federal government subsequently used the need to fulfil its international obligations under this agreement as a rationale for asserting control over aviation. (See the Aeronautics Case, which was decided in 1932). This extension of federal power at the expense of the provinces was upheld by the courts as constitutional, although in 1937 the JCPC issued a somewhat contradictory ruling in the Labour Standards case saying that an international treaty did not give the Ottawa parliament the right to pass labour laws, which were traditionally regarded as a matter of provincial jurisdiction. How the courts would rule today is anyone’s guess really, since the precedents are so confused and contradictory.  In practice, Canada’s provincial governments are often consulted on diplomatic matters that affect them. (See here).

It occurs to me that the professional qualifications section of this agreement might result in centralization through a backdoor route. For instance, suppose the agreement meant that Canada had to harmonize its qualifications for, say, doctors with those of the EU. Ensuring that Canada’s national standards were compatible with those of the EU would involve the federal government legislating in an area normally reserved for the provinces. One of the factors complicating the current negotiations is that some provinces are more enthusiastic about free trade with the EU than others. Quebec’s Premier Jean Charest has been a champion of the agreement and seems particularly fond of the idea of a mobility agreement which would give Canadians and EU citizens the right to live and work in the other jurisdiction. The Province of Ontario, in contrast, is opposed the agreement, or at least the sections of it that relate to public-sector procurement and might impact its untendered green-energy project with a South Korean company.  (See here and here).

Third, while I support a trade agreement with the EU, I would ask “Why only Europe?” Why don’t we try to negotiate similar agreements with such fast-growing economies as China, India, and Brazil? Why are the negotiations with India stalled? New Zealand ratified a Free Trade Agreement with China in 2008 and Australia is currently working on a similar agreement. (Until recently, Australia had a PM who was fluent in Mandarin, which doubtless helped with the diplomacy).  Very few  Canadians have  complained about the failure of successive governments to do much about negotiating free trade agreements with the BRIC countries. The fact Canada isn’t involved in the negotiations for the Trans-Pacific Partnership Agreement a proposed mega free-trade treaty that currently involves nine countries: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the US has occasioned almost no discussion in Canada. Why aren’t Canadians more outraged concerned about the fact they are missing the boat? The widespread lack of concern may be because of the persistence of an archaic and Atlantic-centric view of Canada as a bridge between Europe and North America and a subtle bias against trade with more “exotic” cultures.


The great historical works on Canadian economic diplomacy include Michael Hart’s A Trading Nation: Canadian Trade Policy from Colonialism to Globalization (Vancouver: University of British
Columbia Press, 2002) and Bruce Muirhead’s The Development of Post-War Canadian Trade Policy: the Decline of the Anglo-European Option (McGill-Queen’s University Press, 1992).

Update: Routledge will publish a collection of essays on the Canada-EU trade agreement in March. The editor is Kurt Hübner, who is the Chair for German and European Studies and Director of the Institute for European Studies at The University of British Columbia, Canada, as well as Jean Monnet Chair for European Integration and Global Politics.



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