A Canada - European Union Trade Deal?
Progressive Economics Forum September 18, 2008
The Globe and Mail is carrying a report today on a possible Canada-EU trade deal, suggesting that negotiations will be launched shortly after the election.
http://www.theglobeandmail.com/servlet/story/RTGAM.20080918.wtrade18/BNStory/International/home
Described as a negotiation of deep economic integration, “the proposed pact would far exceed the scope of older agreements such as NAFTA by encompassing not only unrestricted trade in goods, services and investment and the removal of tariffs, but also the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.”
The prospect of a NAFTA on steroids is disturbing, but not very surprising given the ideological orientation of European Trade Commissioner Peter Mandelson and his Canadian counterpart Michael Fortier. Talks to this stage also profoundly reflect ongoing lobbying for a pact with the EU by the Canadian Council of Chief Executives, and the strong bilateral relationship between Quebec Premier Jean Charest and French President Sarkozy.
We can expect the incorporation of the investor rights provisions of NAFTA, which allow investors to sue governments for losses due to regulatory and other measures, and major restrictions on the ability of governments to regulate to protect jobs and to maintain strong standards. It remains to be seen if all provinces will fall in line with the apparent EU demand to drop local content requirements in sub federal government procurement (but Danny Williams and, perhaps, Dalton McGuinty seem unlikely to agree.)
All of this is especially disappointing given that we could imagine quite a different deal with the EU. It would, in principle, not be a bad thing for Canada to broaden its trade in both goods and services away from heavy dependence upon the troubled US economy.
Moreover, what one might term social democratic Europe would be a great partner with whom to negotiate a different kind of trade deal than the NAFTA model. The EU itself and many member governments have defended the precautionary principle in terms of setting environmental and product standards, as opposed to lowest common denominator standards supposedly reflecting hard science. Imports of GMO products are heavily restricted, for example. The EU has set far more ambitious targets for greenhouse gas reductions, and one could imagine setting some common standards. And, last but not least, almost all EU countries respect core labour rights and maintain good labour standards. Indeed, the EU itself sets some common standards for working hours, health and safety, and the rights of temporary and part-time workers which could be folded into a trade deal.
Moreover, while not reflected in the neo liberal pronouncements of Mandelson, many EU countries - perhaps most notably France - do still intervene in the economy to regulate foreign ownership and to require foreign investors to maintain and create jobs.
In short, one could imagine a non NAFTA type deal which promoted more trade, but restricted social dumping and recognized a legitimate government role in managing the economy. That’s not what Mandelson and Fortier have in mind, but is worth promoting, especially at a time when NAFTA itself may be open to change if (I should say when) Obama wins.
(Thanks to Scott Sinclair for sharing his thoughts on this.)