HALIFAX, N.S.—Canadians are decidedly unmoved by prospects of a new trade pact with the European Union. A couple of decades ago, the agreement with the United States renewed anxieties about whether Canada could truly compete with the American conglomerate. Many were afraid that our branch plants would dis- appear and our resources would be pillaged.
When Mexico was added into the trade equation there were concerns in the United States as well as Canada that cheap Mexican labour and lax environmental standards would trigger a steady loss of goods-related jobs to the South.
All those fears notwithstanding, the evidence—at least as measured by Canada’s trade and current account positions—testifies that the country has benefited very significantly from trade liberalization.
Unlike the earlier discussions, the European Union, burdened with highly-regulated business and labour arrangements, hardly seems to represent a threat to Canada’s manufacturing jobs and can’t be accused of plot- ting to divert our fresh water supplies. Moreover, unlike the hugely dominant role played by the United States in our trading pattern the Canada-EU traffic is insignificant—and we have long aspired to diversify and reduce our dependence on U.S. markets. It is that apparently marginal importance of the Canada-EU relationship that engenders such indifferent interest in the Comprehensive Economic and Trade Agreement (CETA). While the EU is Canada’s second largest trading partner, accounting for just more than 10 per cent of our exports— that trade is spread over the 27-member countries of the union. This country represents a staggeringly inconsequential less-than- two percent of EU exports. So if we can’t be excited about the deal, why should the Europeans care?
EU officials don’t attempt to mask the reality—an accord with Canada is a test case for a future European-United States trade agreement. If for no other reason than that, their negotiators are prepared to bargain aggressively. There are huge and significant philosophical differences in the manner in which both government and business operate on the two continents. From a practical perspective those differences are by no means so pronounced. Trade agreements are no longer much about tariffs on physical items— and much more concerned with the more subtle barriers countries mount to protect their interests at the same time as gaining access to those of others. These “concerns” run the gamut from “national security,” to agricultural policy, health and safety considerations and intellectual property protection.
Agriculture is a prime example of how non-tariff practices distort markets. The European “Common Agricultural Policy” has long been ridiculed for its apparently sense- less subsidization of unsaleable mountains of surplus foodstuffs and rigid protective regulation. U.S. policymakers, while deriding Euro- pean practices, have endorsed massive farm subsidies and elaborate corn-ethanol programs ostensibly designed to assure energy security. Some poorly-developed countries have complained that heavily- subsidized U.S. rice exports have obliterated local producers. Canada’s elaborate supply management program managed through agricultural marketing boards is on the negotiating block. The Europeans would be pleased to wrest increased access to the Canadian market—but much more satisfied to establish a beachhead in their attack on U.S. agricultural protection. Ironically, the Canadian consumer may be the biggest gainer if the agreement moves ahead.
Intellectual property protection is another example of how CETA may help Canada save itself. Among developed countries Canada has a relatively low reputation when it comes to patent protection and copyright defence, the joint EU-Canada Scoping Exercise explicitly anticipates that stronger intellectual property protection would be part of any agreement.
What would that mean for Canada? The European position on electronic data and artistic property safeguards are markedly tougher than those in Canada and penalties for piracy or abetting piracy are more stringent. Harmonization with those standards would mean extended copyright protection for Canadian print, film and music talent along with improved shelter from illicit copying.
According to leaked bargaining positions, the agreement would tighten the rules related to pharmaceutical patents and extensions as well as ensure the secrecy of proprietary research findings and address the issue of expensive jurisdictional test duplication. With this more competitive intellectual property regime in place, Canada would be better positioned to attract even more of the estimated $100-billion that is invested annually by the global life science sector across the world.
In face of the not-so-hidden agenda of the Europeans, Canada will need to negotiate skillfully, but even the peripheral consequences of reaching an agreement may provide some valuable benefits to Canadians.
Don McIver is the director of research at the Atlantic Institute for Market Studies, an independent economic and social policy think-tank based in Halifax.