The Globe and Mail Tuesday, Jun. 10 2014
Within last week’s G-7 communiqué was a commitment to conclude outstanding trade agreements. Topping this list was the Canada-EU agreement. We need to close this deal.
Leaders also promised to strengthen the rules-based international trading system and to fight protectionism, and underlined the role of trade and investment as “key engines for jobs and growth.”
In the architecture of post-World War II institutions, the multilateral trade arena – first through the GATT and now the World Trade Organization (WTO) – raises global incomes and contributes to poverty reduction.
Trade negotiations, once the preserve of the trade-policy cognoscenti operating behind closed doors, are today highly public, very political and polarized on various fault lines: rich vs. poor, developed vs. newly developed nations.
Ambition is returning to the WTO, but negotiations among 160 members will be slower, and with more compromises, than focused initiatives among like-minded nations. Last year’s WTO ministerial meeting in Bali resulted in a Trade Facilitation Agreement that G-7 leaders have promised to swiftly implement.
Ultimately, in an era where goods are “made in the world” of supply chains, and of trade largely intra-firm or connected to global value chains (by some estimates, 80 per cent of all trade), business itself will demand one set of rules and the WTO likely will reassert its primacy as the main table.
For now, serious trade negotiations are conducted either bilaterally or regionally that increasingly head into “beyond the border” domestic regulations, public policy choices on investment (and dispute settlement) and innovation (intellectual property) and, for Asia, state capitalism.
The result is a ‘spaghetti bowl’ of different agreements. Companies parse the different agreements for advantages relating to differing rules of origin or intellectual property protection.
For Canada, trade and investment is vital to our continued prosperity. We rank 12th in the WTO table of leading exporters and importers and 17th in trade in commercial services. Half of what we produce is exported.
Include inter-provincial commerce and 80 per cent of our economy depends on trade. If we could bust barriers between provinces it could be even higher, with commensurate gains to consumers and provincial coffers.
Opening doors to trade involves the short-term pain of adjustment (eased through training in new skills). Better market access and improved productivity result in long-term gains, as demonstrated after implementation of the Canada-US FTA and NAFTA.
The Harper government boasts that it is creating the conditions for trade through an activist global markets plan – now 15 trade offices in China – and building infrastructure at home in the form of roads, rail, bridges, ports and pipelines.
Progress on our major trade negotiations can be grouped into three baskets:
- What is done: Canada-Korea Free Trade Agreement is undergoing its ‘legal scrub.’ The Canada-China Foreign Investment Protection Agreement sits in parliamentary limbo. The Chinese offered to negotiate a free trade agreement but now doubt our openness, especially on their investment.
- What is important but won’t move fast: TRans Pacific Partnership is effectively stalled until the United States can secure Trade Promotion Authority from Congress. The Canada-Japan Economic Partnership plays a distant second fiddle to the TPP. Before the Japanese seriously engage they want assurance of pipelines to our Pacific coast with LNG terminals.
- What is important but movement is dictated by partner: The Canada-India Economic Partnership awaits reinvigoration from the new Modi government.
Then there is the Canada-EU Comprehensive Economic and Trade Agreement (CETA).
Announced triumphantly last October, CETA is not wrapped up. International Trade Minister Ed Fast says the issues are technicalities. Others suggest there remain hurdles around issues like investor-state dispute settlement, intellectual property and financial regulations. EU Ambassador Marie-Anne Coninsx recently warned that “if it drags on too long then …momentum might get lost.”
For the EU and USA, CETA serves as a guide for their own negotiations.
Canadian provinces, initially divided on CETA’s efficacy, are now invested in the agreement. Provincial participation at the negotiating table changes permanently, for the better, the future conduct of trade negotiations.
CETA symbolizes the Harper government’s trade agenda with ministers and MPs criss-crossed the country its case. In Brussels last week, Prime Minister Harper linked hands with EU Commission President Jose Barrosso.
But Mr. Harper did not bring home the bacon.
In trade negotiations, perfection is the enemy of the good. To get a lot, you have to give a little. Nor does delay make for a better deal. It can make for a lost deal.