EU-Canada trade talks: the devil is in the details

January 14, 2010   by Robert Gallagher

Robert Gallagher, editor at large, keeping an eye on EU-Canada trade talks.

In an age where coupling the words economic and crisis comes as naturally as the union of rhythm and blues or bacon and eggs, ticking off the projected benefits of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) evokes the stuff of dreams.

The aim is for completely open, bilateral competition for public and government contracts, harmonization of regulations to make trade transparent, and free movement of qualified, professional employees. The hoped-for result is that within three years there will be a 20% increase in bilateral trade and a $12-billion boost in Canadian gross domestic product.

Too good to pass up or too good to be true? The first round of talks aimed at hammering out the agreement took place in Ottawa last year and public releases were couched in vague platitudes that were absent of hard facts.

A couple of phone calls to the European Commission in Brussels and Foreign Affairs and International Trade Canada in Ottawa yielded affirmations that yes, the talks had taken place from Oct. 19 to 23 and yes, they were constructive and positive and, of course both parties are looking forward to the January round of discussions. Period.

Why, then, should both parties be less than forthcoming on the details, seemingly hiding behind a wall of silence about the progress on an agreement that has been heralded by both sides as a win-win, an alliance of incontrovertible logic?

The reasons break down neatly into three categories.

The first is the state of the world. History shows us that in periods of malaise in economics and politics the world’s nations tend to, regardless of the consequences, retract into their respective carapaces.

When this happens, nationalism and protectionism take the place of international cooperation and free trade. We are living in just such a moment: witness the inability of the World Trade Organization to get any traction for international agreements to further its Doha Accord, a treaty aimed at doing just that.

The second category is more geographically restricted but potentially more thorny. The EU has already negotiated a trade agreement with Mexico. Mexico and Canada are both signatories, with the US, of the equally comprehensive North American Free Trade Area (NAFTA). It goes without saying, then, that any EU-Canada accord would be subject to compatibility with the terms of NAFTA.

As Mexico has succeeded in walking that tightrope, one might feel optimistic about Canada’s prospects. But such optimism would ignore the influence of the US, Canada’s primary trade partner. It isn’t difficult to imagine resistance from the American administration and industry at being left out in the cold when it comes to a formalized framework for trade with Europe. At least two American manufacturers associations have already expressed their displeasure at this potential state of affairs.

The third category is the details that serve as the devil’s principal residence. Issues here range from the seemingly trivial (European restrictions on the import of products made from Canadian seals, and Ottawa’s requirement that Czech citizens obtain visas before travel to Canada), to far more substantive issues of agricultural policy (domestic subsidies to Canadian dairy farmers and European beef producers).

That some, or all, of these issues were raised during the October discussions is all but certain, and a lack of resolution to them could very well be the source of the public declarations that are studies in discretion. To be fair, as the October round of negotiations was the first, they might well have been characterized by feeling out the other side, testing the waters for certain hard-edge positions, and even some posing and brinksmanship. One would hope that those hard edges will become increasingly supple as the remaining rounds progress.

Still, the public face put on the round of talks to take place in Brussels from Jan.18 to 22 should provide a useful indication of progress. If the declarations are as opaque as they were following the last meeting and without any specific achievements, it may be time to start worrying.

Robert Gallagher is a Paris-based European editor at large for Troy Media in Calgary.

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