Canada and the Eurozone Crisis

10 11 2011

As frequent readers of this blog will know, Canada and the European Union are in the process of negotiating a free trade agreement, commonly known as CETA. The negotiations began back in 2009. Canada and the European Union completed the ninth round of talks on 21 October in Ottawa. At the close of last month’s bargaining round, Steve Verheul, who is Canada’s chief negotiator, said that his goal was  to reach an agreement on most of the major issues by early 2012. It sounds as if real progress has been made.

So far, so good. However, an article about the negotiations that appeared in today’s edition of Embassy, an online journal devoted to Canadian diplomacy, speculates that the CETA deal could be derailed by the spiralling debt crisis in the Eurozone, which is throwing the continent’s economies and political systems into chaos. The last few days have seen resignation announcements by Greek Prime Minister George Papandreou  and Italian Prime Minister Silvio Berlusconi. As I write this, the European Commission has just announced that it is cutting its growth estimate for the European economy. The bad economic and political news is coming now in a seemingly continuous stream. The sovereign debt crisis has raised some really profound questions about the whole nature of the European political system and the nature of democratic legitimacy. Some of Europe’s leaders believe that the best way to respond to the crisis is change the EU’s political system and move even further away from national sovereignty: France and Germany are certainly pushing for closer integration of economic and fiscal policies in the euro zone (i.e., the right of European Commission to veto national budgets). Read more here and here. To add to the atmosphere of crisis, Ed Milliband, the leader of the British Labour Party, has called for an emergency super summit of EU leaderson the grounds that the existing political institutions of Europe are broken.

What does all of this mean for Canada and the CETA agreement? In the current climate, it is increasingly difficult to predict what sort of condition the European economy will be in in 2012, when the CETA agreement is finalized and presented to their respective governments for ratification. Indeed, it will be hard to predict who will be in power in many of the European countries and what their attitudes to trade liberalization may be.

The recent events in the Eurozone underscore the need to reflect on and to discuss the CETA agreement and what it might do for both Canada and the EU. It is, therefore, a fitting time to gather to talk about CETA.

Next Friday, 18 November 2011, a small conference on CETA will be taking place in London. Full details of the conference are available here. To attend the conference, you must pre-register by 15 November.