Inside the Canada-Europe trade talks: How politics are undermining the deal
Globe and Mail
June 19, 2013
A man on a mission, Prime Minister Stephen Harper is using his European tour and the G8 summit to advance the Canada-Europe free-trade agreement – known as the Comprehensive Economic and Trade Agreement with the national leaders who constitute the European Union’s ‘board of directors.’
CETA was the central message in his meetings with British Prime Minister David Cameron, French President François Hollande, and Irish Taoiseach Enda Kenny. He urged the Europeans to take what he described as a ‘monumental’ and ‘historic step’ that promises to increase two-way trade by 20 per cent.
We both want a deal.
The Europeans thought we should have had a deal in January. That we do not has left both sides frustrated.
The Europeans see this agreement as laying an opening framework for their trade negotiations with the United States – “the biggest bilateral deal in history” – that begin next month in Washington.
For Canada, the EU deal would also be a trampoline to potential progress in the ongoing Trans-Pacific Partnership trade negotiations.
For Mr. Harper, a deal would help change the channel on domestic travails. Better for the Tory caucus to be defending the trade deal on the barbecue circuit this summer than running defence on Senate follies.
But by publicly raising the ante on CETA, Mr. Harper risks leaving the impression with the EU that, for Canada, this deal is a necessity. For the Europeans, it is merely desirable. It enjoys nowhere the level of public attention in Europe as it attracts in Canada.
The Europeans carefully studied our system before entering into negotiations and, because trade and commerce is a shared federal-provincial power, they insisted that the provinces be at the bargaining table. As a result, joke the Europeans, when the Canadians come to Brussels they could fill a European Airbus, while the Europeans would fit comfortably into a Canadian Challenger.
The Europeans are surprised at our stubbornness and inflexibility on key issues. There is also a sense we tried to do an end run around their negotiators during the spring visit to Canada of French Prime Minister Jean-Marc Ayrault, and and again with Prime Minister Cameron during Mr. Harper’s visit to London for the funeral of Margaret Thatcher.
The Europeans argue that if we succeed with a deal through such an end run, then negotiations will be doubly difficult with United States. The EU is requiring a guarantee in the form of congressionally-approved Trade Promotion Authority from the Obama Administration to ensure an up-or-down congressional vote passage of any deal.
The EU system was designed to prevent end-runs, in part to insulate leaders from such pressure. They say we need to understand that in their process the route to a deal runs only through Brussels.
But does it? Even Europeans will tell you that key decisions are still made in Berlin, Paris and even London and that the eight presidents of the various European institutions are not in the same league as the national leaders.
The presumption was that European Trade Commissioner Karel De Gucht, a former tough-minded Belgian Foreign Minister, held the EU negotiating mandate. He does, but he operates within the European Union system.
Too often in the negotiations there has been a sense on the Canadian side that the decisions are made within the rival directorates within the labyrinth of the Brussels bureaucracy. Canadians have ruefully experienced the reality of Henry Kissinger’s jibe about European unity: “Who do I call if I want to call Europe?”
But, given our own federal system, complexity in governance is something that we should have figured out beforehand.
The outstanding issues are difficult but not impossible. It is now down to a give-and-take on these key points:
- How far do we give in terms of patent protection for pharmaceuticals?
- How much access do we get for our pork and beef?How much access do we give to cheese and dairy imports?
- How much are both sides willing to give in terms of government procurement, especially for local and sub-state purchasing?
- Can we use the agreement to push back threatened restrictions on oil sands products?
- How do we establish rules on financial services, with Canada holding the moral upper hand?
- Can we define the rules of origin on everything from cars to beef to chocolate. Supply-chain integration means much of what is ‘Made in Canada’ includes parts from the United States. The EU doesn’t want to give away now what will be negotiable with the Americans.
- What are obligations in the Strategic Partnership Agreement that the EU insists upon will be part of the package?
- What are the exemptions that inevitably will reduce the potential benefits of the agreement?
Mr. Harper could do with advice from someone who appreciates his situation. He should call Brian Mulroney. The architect of the Canada-US free-trade agreement, the North American free-trade agreement and the Acid Rain Accord, Mr. Mulroney understands the sensitivities of the end game and how to manage the caucus, the provinces and the public.
After four years of negotiation, we should be popping the corks on the Champagne (or the Canadian ice wine). It would be a terrible shame if this deal goes flat, not on policy differences, but because of the mechanics of the negotiating process.
A member of the teams that negotiated the FTA and NAFTA, Colin Robertson is vice president of the Canadian Defence and Foreign Affairs Institute and a senior advisor to McKenna, Long and Aldridge, LLP.