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Opinion

The Canada-Europe CETA: What's Behind the Curtain?

Five reasons against celebrating our (still virtually secret) trade deal with the EU.

By Gus Van Harten 30 Oct 2013 | TheTyee.ca

Gus Van Harten is a professor at Osgoode Hall Law School of York University where he researches international trade and investment law. His latest academic book is Sovereign Choices and Sovereign Constraints: Judicial Restraint in Investment Treaty Arbitration (Oxford University Press, 2013). Much of his research is freely available at www.iiapp.org and http://ssrn.com/author=638855.

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Euro ok, we're ok? Harper wanted treaty far more, a bad bargaining position.

Is it a hard-fought win for Canada or a political decoy? So far, the Canada-EU trade agreement (or CETA) looks more the latter than the former.

I support the ideals of liberty and efficiency behind free trade. Yet the real question about the CETA, in a world of intense international competition, is whether the Harper government negotiated a good deal for Canada.

On this, the government's closed approach to the deal is a big problem. When the government announced the CETA on Oct. 18, it did not provide any text and, after much trumpeting of the deal, still has not done so. Thus, we are left to judge the deal by examining the circumstances of its negotiation. From this perspective, there is cause for concern.

First, the government negotiated with a partner who cared far less about the deal. Last summer, I met with a European official who reported frankly that, in Europe, hardly anyone had heard of the Canada-Europe negotiations. For the Europeans, the political downside of walking away was minimal.

In contrast, the Harper government broadcast from an early stage its anxiousness for a deal and, presumably, for the political points it would garner. Who would you prefer to negotiate on your behalf: an openly desperate suitor or the disinterested subject of affectation?

Second, the Europeans played this negotiating advantage aggressively against Canada. Last June, they attacked the government openly at a G-8 meeting, claiming that a deal could be done but that the Canadians were not playing ball.

This was clearly a pressure tactic designed to up the political ante for the Harper government. The Europeans would not take this undiplomatic step if they did not think the prime minister was vulnerable to public pressure and inclined to make concessions behind the scenes. It was also a dubious attack considering the many concessions already made by Canada.

For example, it was evident before last summer that the Harper government was open to a CETA that facilitated European takeovers of Canadian companies, removed protections for financial stability in Canada, exposed municipalities to costly investor-state litigation and allowed higher drug prices to please European pharmaceutical companies.

With the pressure tactic, the Europeans appeared to be squeezing the last drops from a well-pumped lemon. Oddly, many Canadian commentators played along by painting the CETA as a lost opportunity for Canada, seemingly regardless of its terms.

Third, the announcement of the CETA on Oct. 18 was well-timed to divert attention from the prime minister's political woes. Canadians were told of the deal on the last Friday before the House of Commons was allowed to return from its summer hiatus. For a few days, this stole the headlines, although it was soon swamped by the explosive Senate scandal. Since then, the CETA is mentioned often as a way for the government to eventually change the channel.

We should ask what happened this past September when Prime Minister Harper initiated bell-lap discussions with the European Commission president and was described by European officials as having become more "conciliatory"? Is it more likely that the prime minister wrung extra concessions from the Europeans or that he came ready to concede more in order to buy a political decoy? One hopes it was the former; timing suggests otherwise.

Fourth, the government announced the CETA without disclosing any text, either draft or final. Instead, the government released a summary that was clearly massaged for government spin. It was as if the government was pointing Canadians to a supposed miracle machine "behind curtain number one" without showing us the goods or allowing independent study.

This public relations strategy has allowed for close government control of information about the CETA and made the ensuing public debate a bit absurd. How can anyone judge whether the deal is good for Canada -- as many pundits quickly pronounced -- without a text? At a certain point, we descend into the La-La Land of Free Trade, at the government's self-serving invitation.

For example, one silly misrepresentation was a comment by Trade Minister Ed Fast that the CETA would give Canada access to "huge markets… that have for the most part been closed to Canadian businesses, to Canadian investors."

As the minister must know, Canadians have been trading quite freely with Europe for decades based on the GATT and World Trade Organization. Canadian businesses can also set up subsidiaries in Europe for full access to the European common market. Changes envisioned by the CETA are important but do relatively little to change the overall equation. Certainly, they do not open up a "closed" European market.

In the case of NAFTA, a draft text was available partway through the negotiations to allow informed evaluation and debate. For the CETA, there have been occasional leaked texts, which the federal government panned as unreliable.

This has left us unable to assess the government spin. Indeed, the lack of a text suggests that the government has something to hide or is exaggerating the extent of agreement. If it is the latter, then Canada's negotiating position has been further eroded behind the scenes.

Finally, there is reason to doubt the government's negotiation in substance. As an illustration, last June the government made a major concession to the Europeans by offering to raise the threshold for Investment Canada review of European takeovers of Canadian companies from $1 billion to $1.5 billion. Remarkably, this concession came shortly after the government unilaterally decided to raise the same threshold from $344 million to $1 billion.

If the Investment Canada threshold was meant as a carrot in trade negotiations, why would the Harper government give it up twice and, in the first instance, for nothing in exchange from the Europeans? Not a good sign. I also do not see how the government can avoid giving the same lenient treatment to American takeovers of Canadian companies -- again for nothing in exchange -- based on a NAFTA clause that bars sweetheart deals for other trade partners.

The result is that future Canadian governments will have less flexibility to negotiate with both European and probably American companies that buy up Canadian competitors. Thus, future governments will have less room to protect jobs, research and development, or head offices in Canada. Future governments also will be unable to lower the threshold without violating the CETA and assuming potentially massive liability.

How will this feature of the deal weigh against others? Was the CETA used here to justify changes the Prime Minister wanted to impose on Canadians through the trade backdoor?

The deal's secrecy makes it impossible to answer these questions, leaving us dependent on the government's drip-drip of information. Also, unlike NAFTA, it appears that the CETA will be irreversible by any future government, federal or provincial, for decades to come.

The immediate question about the CETA, then, is why it was announced in a way that precluded any serious scrutiny of the government's self-promotion and spin. Canadians deserve more than the supposed miracle machine behind the curtain.  [Tyee]

Read more: Federal Politics

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