We've been following the CETA (Comprehensive Economic and Trade Agreement) negotiations between Canada and the European Union since 2010, starting with a legal analysis of early leaked documents, commissioned by the Centre for Civic Governance at Columbia Institute. That analysis, by trade lawyer Steven Shrybman, identified problems for municipalities who want to pursue "buy local" policies and noted that the legal framework established by such an agreement would give large European corporations a basis for lawsuits against local governments -- much as the EU is using WTO rules to challenge the Ontario government's local manufacturing provisions in the green energy act. These provisions were put in place to grow local jobs and the Ontario economy. A Nov. 2 ruling from the WTO has not gone in favour of Ontario.

Many municipalities and the Union of BC Municipalities (UBCM) have called for the exclusion of local governments from the agreement. The Federation of Canadian Municipalities (FCM) has passed resolutions designed to strengthen the municipal voice on this issue.

Two more sets of recently leaked documents show that Canada does indeed seem to be trading away local government control over procurement and other key economic development tools.

CETA most restrictive trade agreement ever

Confidential internal documents from the EU Trade Policy Committee leaked to the Quebec media on the weekend of Nov. 24-25 indicate that the Canadian government is giving the EU almost everything it wants in terms of access to local government procurement in Canada.

According to the leaked EU documents, Canada's procurement offer is "highly satisfactory" and "the most ambitious and comprehensive offer Canada and its provinces have made to any partner, including the U.S." The EU document states that the offer "also outreaches the mutual commitments between the different Canadian Provinces in the Agreement on Internal Trade (AIT)."

This revelation directly contradicts assurances that CETA procurement rules will not add any new restraints on municipalities that don't already exist under the AIT. For example, while the AIT allows "Made in Canada" content requirements in public purchasing, it appears this will no longer be permitted under CETA.

Local gov't authority used as bargaining chip

There is no indication that resolutions from the at least 40 Canadian municipalities that have requested to be exempted from CETA are reflected in the negotiations.

While some Canadian provinces are still seeking exemptions for local content requirements in public transit, control over energy generation and regional economic development measures, EU negotiators state that they expect to see these exemptions removed from the final agreement.

According to the leaked documents, the official EU position is that Quebec, Ontario and other Canadian jurisdictions "must provide full access and in particular eliminate all local content requirements" in public transit procurement and "grant full and unrestricted access" to Canada's energy generation sector. The EU documents also state that Regional Economic Development exemptions (for example using procurement to stimulate employment in northern or disadvantaged regions) requested by "some smaller provinces" are not "acceptable" and that Canada "has promised to redraft such clauses" to satisfy EU negotiators.

Moreover, the EU negotiators indicate that they interpret exemption requests in the current Canadian CETA offer merely as bargaining chips that the Canadian federal and provincial governments will in the end be willing to trade for "additional market access in agricultural goods" for Canadian producers. In short, the EU appears quite confident that the Canadian government will give in to all key EU demands regarding access to public procurement.

Undermining labour, environmental standards

A revealing section in the leaked EU documents gives some sense of how low a priority labour rights and the environment are for the federal government.

According to the EU, Canada is reluctant to include "the ILO (International Labour Organization) core conventions and their specific rights and obligations as the relevant framework of rules" and instead only wants "a vague reference to the ILO principles and norms."

Similarly, the EU document notes that Canada is "defensive on environmental issues," and that negotiations for sustainable development clause in CETA have been lagging for this reason.

Some utilities, core water services off table

The content of a second set of leaked CETA documents was made public later in the week by CUPE and the Council of Canadians.

According to these organizations, this second round of documents contains text from Canada's most recent CETA offer to the EU While the Canadian documents confirm the problems identified in the EU internal report, there was also some positive news for concerned municipal governments across Canada.

First, it appears that Canada is now proposing to exclude the "Collection, Purification and Distribution of Water" from market access rules in the CETA investment and services chapter. This removes some of the direct pressure to privatize water systems that was inherent in earlier CETA drafts, and is a testament to the effectiveness of pressure brought to bear by local governments, environmental organisations and others concerned about threats to public control of water. While this is indeed a victory for those campaigners, it remains probable that water utilities will still be required to open up construction and other procurement to EU-based companies under CETA.

Second, it appears that public utilities may be largely exempt from the final CETA deal. However, EU documents suggest that this is primarily because European governments are requesting a utilities exemption. The Canadian government has shown little interest in protecting public utilities in CETA negotiations, but many EU governments are apparently responding to concerns raised by citizens and social movements on that side of the Atlantic.

What next?

With a number of issues unresolved, it looks unlikely that CETA will be finalized by the end of 2012, as originally planned. This means that local governments and other concerned Canadians still have time to influence negotiations. The leaked documents suggest that while the provincial governments are broadly in favour of CETA, some are concerned about the potential impact of the deal on publicly-owned electricity generation, regional economic development, cultural industries and other sectors.

The Centre for Civic Governance will continue to provide CETA research updates as information becomes available, and important information on negotiations can also be found on the Centre for Civic Governance website.