Trans-Atlantic Free Trade: light at the end of the tunnel?

  • National Newswatch

By Peter Clark | July 09, 2013Prime Minister Harper has been taking a lot of criticism in certain quarters for returning from his recent G-8 meetings without signing the much-ballyhooed Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU). That the PM never tied closure of CETA to his G-8 visit does not seem to matter to his critics.Leaping on a perceived opportunity to criticize the Harper Government, the Council of Canadians issued a self-congratulatory press release over this missed photo-op. With such a seemingly desperate need to claim victory, one wonders whether Maude Barlow and her group are grasping at straws in an effort to raise funds for yet another quixotic charge at the CETA. It is too late Maude – this one has progressed so far that failure is not an option.Would the Prime Minister not take – and deserve – more heat if he signed on to a bad deal? You betcha. No doubt, the nattering nabobs of negativism of the Mulroney era would be dancing in glee if a bum deal had been signed just to meet a target date.Clearly, concluding the Canada-EU CETA has taken longer than expected – and it will take a bit longer. How much more time depends on when the participants tire of the ritual stork dance and decide they have extracted as much as they can from the other side.The EU's increasing impatience was recently expressed by EU trade spokesperson John Clancy (as quoted by the Globe and Mail's Steve Chase):“The EU has shown pragmatism and flexibility and is ready to take the last steps to achieve a political breakthrough in the negotiations…We have been awaiting a similar message from Canada since the trade and agriculture ministers met in Ottawa in early February.”Clancy is a spin-doctor by trade and a good one. His statement was designed to suggest all blame for the slow progress rested with Canada. Did we really expect him to admit that the EU is backsliding and vacillating, or even that blame for the delay should be shared? It would be useful to have a blarney tester on hand to help us identify the depth of the commodity (aka organic bovine fertilizer) clinging to Clancy's comments -- a substance, by the way, that is never in short supply in trade negotiations. However, I recall that Clancy prefaced his blame casting by admitting the deal was nearly done – and it is – even on autos.In the CETA negotiations, Ottawa is saddled with coordinating the interests and safeguarding the sensitivities of ten provinces and three territories. Meanwhile, the EU has 28 member states – Croatia became the newest EU member on July 1, 2013. A champion border collie might be able to herd this group if they were sheep – or even geese. But they are cats, not sheep – and very ornery cats. They are simply not herdable or manageable, whether in a group of 13 or 28.Such wide-ranging negotiations, albeit in a WTO Doha Round context, were described by Don Stephenson – a very astute Canadian WTO Ambassador and a truly canny negotiator – as “a multi-dimensional chess game”. In trade negotiations, nothing is done until everything is done – until then the various players will act like Oliver Twist, always asking for more.In a recent Ottawa Citizen op-ed, Gordon Ritchie, a key architect of the Canada-US Free Trade Agreement explained very well why negotiating with the EU is not a picnic.Canada's chief negotiator Steve Verheul knows first hand what it is like to be nibbled to death (OK, nearly) by ducks. While the process has been painfully slow, the negotiations are nearly concluded. An EU report on the state of play at the beginning of June identifies outstanding issues while revealing impressive progress. Read this report with care. It is the EU view – it is not balanced but even this one-sided report speaks volumes on the importance of CETA.Another EU publication that puts these negotiations in context is an overview report that outlines the status of trade relations between the EU and various countries and regions – it is sobering to note that in this 5-page document the CETA discussions with Canada merit a mere six lines.Though CETA is taking longer to conclude than advertised, I am hard-pressed to identify major trade negotiations which have finished even close to on time. FTA promoters at the political level typically promise a fast track to new trade riches. This suggests they are really quite clueless about the complexities of trade negotiations – and how the early enthusiasm often crashes on the rocks of political and economic reality and – in the case of cultural industries – national pride and identity.It was reported that EU negotiators would be back in Ottawa this week. If they are, they are phantoms, invisible and untrackable. If there are discussions, we are advised that they will most likely be by trans-Atlantic video conference. The chief negotiator responsible for the EU's negotiations with both Canada and Japan has only recently returned to Brussels from Asia. Meanwhile, the EU's negotiations with the US have begun this week, in Washington, which takes some key EU negotiators (who are also working on CETA) out of play. We are told there has not been much progress over the last few weeks. Indeed, documents and statements leaking from European capitals suggest that the crunch point has not yet been reached. We keep hoping that any light at the end of this tunnel is real hope and not a freight train.The CETA negotiators have encountered challenges over the issue of preserving culture and national identities. Canada is not the biggest dog in the manger on protecting cultural industries – France is. France is clearly more concerned about Hollywood than it is about Canada – but is determined not to create a precedent for negotiations with the Americans.To be fair to France, culture ministers from a dozen other EU member states have also called for cultural exemptions. But culture is not the only problem. It is difficult to imagine that provinces will not want to reserve positions on sensitive issues. The same applies to EU member states. (Come on down, EU pork and beef producers.)The EU pounding on Canada's door for dairy access has already made it clear it will not open its dairy market to the United States. It takes a deep-pocketed subsidizer to recognize another one. The bottom line: if subsidies are maintained or sheltered, tariff-free trade is not equivalent to free trade. It is a distorted world where finding balance is impossible.Canada will do a deal with Europe when all the remaining issues are either settled or set aside for future attention. And we are not far off. EU Ambassador to Canada, Matthias Brinkmann, admitted that the negotiations have gone too far not to be concluded. CETA's pace and problems are not unique.Now that the EU-US Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations are real and in the starting blocks, the outstanding issues in CETA take on a different context. It is clear that Europe has been carefully assessing what accepting Canadian demands would mean to their position and strategies in TTIP.It is reasonable to hope (and expect) that TTIP will resolve issues for Canada which Europe is not prepared to consider in the context of CETA. It is very likely, for example, that Canada's rules of origin problems on autos and some foods (aka processed agricultural products) – a function of our dependence on an integration with the United States – will disappear once the TTIP is done and cumulative rules of origin apply to North American exports to Europe.In recent weeks, Inside U.S. Trade has identified a number of sensitive issues that will be addressed between the US and EU negotiators. The resolution of these issues will be of interest to Canada's CETA team:• Audiovisual issues will be excluded from the Services chapter – but foreign investment is nonetheless welcome in that sector. • The EU has an interest in maritime transportation and is targeting the Jones Act, an ancient and discriminatory piece of US legislation. • Europe does not want a NAFTA-type investor-state dispute settlement mechanism. • The EU will not permit criminal sanctions for Intellectual Property offences – as found in the Anti-Counterfeiting Trade Agreements (ACTA) – to be brought in through the back door.While Canada has made major concessions on geographical indicators outside the wines and spirits sectors – don't expect the US to follow suit.Neither the TTIP nor the CETA (nor the TPP – a similar Pacific trade initiative) -- will be comprehensive or feature universal coverage. But, in the TTIP, the EU – through its mandate process – is making clear from the outset what is and what is not on the table.Trade ministers took a long time to become directly involved in CETA. Newly minted USTR Mike Froman has made clear that he and EU Trade Commissioner De Gucht will be personally involved in moving TTIP. I expect that Froman will be a breath of fresh air in US trade liberalization efforts and that the pot of gold at the end of the TTIP rainbow will help to generate the elusive political will need to close these deals more quickly. Unfortunately in this case will take 29 countries and the EU circus ringmaster to tango. Peter Clark, a former Canadian trade negotiator, is president of Grey, Clark, Shih and Associates Ltd., an Ottawa-based international trade consultancy. He is a frequent media commentator and appears regularly before Parliamentary Committees, analyzing trade and commercial policy issues.