Cave or Cancel?: The Future (or End) of the Canada - EU Trade Agreement
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Friday March 15, 2013
Last November, Maclean's columnist Paul Wells wrote a piece
on the Canada - EU Trade Agreement in which he expressed doubt about
the ability to conclude the deal ("Everybody connected to the
negotiations assures me there will be a deal. Every public sign I see
makes me think there won’t."). I was skeptical about the prospect of
years of negotiations falling apart and expected the political level
meetings in November to wrap things up. They didn't. Last month,
International Trade Minister Ed Fast and his European counterpart Karel
de Gucht tried again. Still no deal.
While Fast wants everyone to believe that momentum is building toward an agreement, it clearly is not. Over the last year, Canada's lead lawyer on the negotiations resigned, Canada's lead agricultural negotiator was re-assigned, and the EU's lead negotiator has added the EU - Vietnam agreement to his responsibilities with rumours that he will head the EU - Japan trade talks. Fast says he won't negotiate the agreement in the media and then proceeds to do exactly that by staking out positions on agriculture and investment. The same business groups that have been lobbying for the deal issue a public letter on the agreement that does little other than promise "future support."
All of this adds up to missed deadline after missed deadline. In 2010, officials said the deal would be completed in 2011. In early 2011, they said it would be completed by the end of the year. By late 2011, the deadline had moved to 2012. Yet it is now 2013 and Fast admitted this week that there may not be an agreement this year.
indicate that progress is being made, but the outstanding
issues have remained unchanged for years. Some commentators
the agreement is being held up by "nickel and dime politics", but
leaving aside the nearly $2 billion cost to health care from the
patent reforms alone (which is a lot of nickels), the reality
seems to be that the hold up involves more than just political
posturing. Given that everyone knew the key issues going in,
Canada seems to have hoped that the negotiations would follow a
conventional compromise script: the EU would compromise on some
key concerns (agriculture, investment) in return for Canadian
compromises on issues such as pharmaceutical patents and
But with the EU the
stronger of the two parties, it doesn't see any urgency to
compromise. In fact, with a growing number of EU negotiations
(including talks with the U.S.), compromise with Canada may
undermine its position in more economically important deals.
If CETA were the only deal on the table, it might be willing to
find middle ground, but given the effect on talks with the U.S.,
Japan, India, and Vietnam, the Canadian deal just isn't important
enough to harm its position elsewhere. That suggests the EU is
presenting a take-or-it-leave-it deal to Canada - it wants to win
on all its issues in order to make the agreement worthwhile.
If that is the case,
that leaves three possibilities. The first is that Canada
continues to hold out hope of a compromise. That approach has
failed for several years but hope springs eternal, particularly
when this is the only option that allows the government to present
CETA as a "win." The second is that Canada simply caves to the EU
demands. This gives the government its trade deal, but with
an election in 2015, caving on everything from agriculture to
investor protection to pharmaceutical patents, is a risky
political strategy as a CETA deal won't win many votes but could
prove costly among certain vocal constituencies.
possibility is that CETA is replaced by TAFTA, the Transatlantic
Free Trade Area. At the moment, TAFTA involves only the U.S.
and EU, but there have been reports
that Mexico wants in and Canada might follow suit. The argument
for TAFTA would be that Canada is consolidating its negotiations
into major agreements covering the Pacific (TPP) and Atlantic
(TAFTA) to ensure that it is part of two potential large trading
blocks. The danger with this approach is that Canada becomes
a bit player in both negotiations with even less leverage to
promote Canadian interests. But if CETA isn't going anywhere, the
switch would buy time and the hope that a restart would lead to a
Friday March 15, 2013
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