In his recent article, Jock Finlayson of the Business Council of British Columbia listed five reasons why he thinks the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, should be ratified as soon as possible.
But there are at least as many reasons why prime minister Stephen Harper should walk away from the CETA negotiations, even at this late stage.
Most of those reasons relate to the ways that CETA is not about trade at all but about making questionable policy reforms that constrain our economic, social and environmental policy options in the future.
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First of all, a procurement chapter in the Canada-EU deal would forbid the provinces, cities, crown corporations and hospitals from favouring local goods and services on large purchases. Say goodbye to the 25 percent local content rule on subway purchases in Toronto or Montreal, which creates spin-off benefits for local manufacturing.
Buy local food policies in public buildings and cafeterias could also be banned, which hurts Canadian farmers.
More than 50 Canadian municipalities, municipal associations and school boards have asked to be excluded from CETA for these reasons. The backlash is not about favouring Canadian over European companies, but about giving up the ability to use public spending to achieve local or sustainable development objectives.
The losers will be small- and medium-sized companies that benefit from this kind of strategic procurement.
Second, we know that Canada is trading more beef and pork access to the European market for costly changes to our pharmaceutical patent regime. Even the federal government estimates the changes could increase drug costs in Canada by up to $2 billion annually by keeping cheaper generics off the market for longer.
Third, there is the Canadian and European desire to include a NAFTA-like investor-state dispute settlement process in CETA. Canada is the sixth most-sued country in the world under this system, which lets foreign firms sue Canada when environmental, public health and other policies have the indirect effect of lowering profits.
The Australian government, hit by a similar lawsuit against plain packaging rules for cigarettes, has stopped negotiating these kinds of investment protections in its trade deals.
Based on a leaked copy of CETA’s investment chapter (available at tradejustice.ca) we know the Canada-EU deal will create even more opportunities for European firms to demand compensation when regulations interfere with profits, even if those regulations do not discriminate between Canadian and European firms.
Fourth, we learned recently that CETA could undermine Canada’s banking rules. The EU wants its banks and other financial companies to be able to sue Canada for regulations that lower their market access or profit-making opportunities. This could include a ban or stricter regulations on selling certain types of derivatives or other risky financial products in Canada.
Canada’s banking rules are almost universally praised for protecting the Canadian economy from the worst of the recent financial crisis. Typically, Canada would negotiate a carve-out or exception in its trade deals for banking rules but European negotiators are resisting.
If the EU gets its way, CETA will create a chill on government policies designed to stabilize Canada’s financial sector, making us much more vulnerable to crises in the future.
Finally, there is the poor economic case for the Canada-EU deal. According to a Canada-EU joint study on CETA, the deal will increase Canada’s already high trade deficit with Europe by $8 billion annually. Jim Stanford, economist for the Unifor union, predicts CETA could reduce Canada’s GDP by between 0.5 and three percent.
Canada does not need CETA. The agreement as proposed will trade away basic notions of democratic governance for limited gains for a handful of Canadian export sectors. The best case scenario is for the negotiations to fall apart.
Stuart Trew is trade campaigner for the Council of Canadians. This article was distributed by www.troymedia.com and has been edited for length.
