Published in the Globe and Mail on October 18, 2013
By Lawrence Herman
We finally have a deal with Europe, called a comprehensive economic and trade agreement (CETA).
It took longer than expected and there was a real sense of drift, many thinking that the effort wasn’t going anywhere. But persistence and goodwill seems to have paid off.
The only problem is, we don’t have the text yet. All we have is the outline of an agreement in principle. A lot of what’s being put out by the Prime Minister’s Office has to be accepted on faith.
Judging from the rosy press conference given by Prime Minister Stephen Harper and EU President Jose Barroso earlier Friday, however, the hard negotiations are over and it’s now just a matter of scrubbing the legal text.
Even without the final text, we’ve known for months that this will be a vast agreement.
Beyond the usual market opening aspects, including elimination of most tariffs – itself a matter of considerable importance – it will cover many areas not included in the North American free-trade agreement – like provincial procurement, mutual standards recognition, competition policy, agricultural access and increased patent protection.
Incidentally, the NAFTA is now 20 years old and Canada hasn’t signed a major trade deal since. So the CETA not only breaks new ground: it breaks a log-jam in Canadian trade efforts and has huge political significance for the Harper government.
Let’s also not underestimate CETA’s symbolic importance for Europe, where the economic news has been dismal the last few years. A trade deal with Canada is a good story for them. By providing a template, will actually help the EU in its trade negotiations with the Americans.
As we go through the internal approval processes here, including Parliamentary debate, we can expect the usual rear-guard actions by opponents of free trade, including the Canadian dairy lobby.
The dairy farmers have already started wailing, saying they are “angered” because a relatively small volume of European cheese will be allowed into Canada’s heavily protected dairy sector.
Canada and the EU trade almost $100-billion annually in goods, not counting many additional billions in services. Letting in few thousand tonnes of European cheese, frankly, is of no importance in the overall scheme of things.
As to ideological opponents, they miss the point. For decades, Canadian governments have been trying to diversify our trade away from our over-dependence on the United States, reliance on a single customer being a poor business strategy. Canada needs a variety of strong trading partners.
The CETA will provide that, with access to a wealthy and stable market of over 400 million people. But its access on a preferential basis is the key.
It means that Canadian companies will have trading privileges that suppliers from countries without an agreement don’t have. That’s of value to Canadian automotive, aerospace, industrial equipment, transportation companies, not to mention agri-food exporters.
When we talk about $60-billion in Canadian exports to the EU, that doesn’t include the billions we do – and where there will be real gains – in exporting services, such as construction, architecture, engineering, consulting, computer software.
The immediate challenge lies in the months ahead, as the CETA’s final provisions emerge. There will be close examination of each line of the hundreds of treaty pages. In this exercise, it will be important to keep perspective. Trade agreements are more than sum of their parts.
At the end of the day, however, the CETA is only an inter-governmental framework for the conduct of business. By itself it can’t increase trade or add jobs.
In getting the CETA done and fully implemented, the government will have accomplished the first task. If the private sector doesn’t rise to the occasion and take advantage of the deal, there will be little reward for these efforts.
Lawrence L. Herman, Cassels Brock & Blackwell LLP, and Senior Fellow, C.D. Howe Institute, Toronto.
