Trade deal a gamble for municipalities

ChronicleHerald, Halifax, Canada

Trade deal a gamble for municipalities

By Angela Giles

9 June 2011

Last weekend, municipal councillors from across Canada met in Halifax for the annual Federation of Canadian Municipalities convention. On the agenda were infrastructure renewal, how to best deliver social services, and how cities should confront climate change. But if you were following the FCM’s Twitter hashtag Saturday morning, you’ll have seen that trade was perhaps the most controversial topic of discussion, namely the Canada-EU free trade agreement.

This is not surprising considering how deeply the Comprehensive Economic and Trade Agreement (CETA) will affect how municipalities offer services, build infrastructure, or pay for the goods and services they need to operate. There’s little to no payoff for municipal governments from the proposed pact, just restrictions on their ability to write public policy.

In fact, Canada’s cities and towns are merely bargaining chips for the Harper government and provinces in the ongoing CETA negotiations.

Municipalities in Canada spend over $100 billion annually on goods, services and construction projects. EU trade negotiators see a generous procurement chapter in the Canada-EU trade deal as a way to win more public tenders for large, highly competitive EU-based firms.

From water, transit and energy to construction, environmental, architecture and catering, there are thousands of opportunities for these firms to undercut the smaller Canadian competition. Buy-local policies will be banned under CETA. The deal will also compromise ethical or sustainable purchasing strategies by municipalities, school boards, hospitals or Crown corporations. Additional investment commitments on services, in combination with these procurement rules, will make it difficult to ensure services such as drinking water and wastewater treatment remain in public hands.

These were among the findings of a legal opinion of CETA for the Centre for Civic Governance, which the Council of Canadians has been sharing with councillors and school trustees in Canada. The findings were enough to convince the Union of British Columbian Municipalities to pass a resolution last year asking the provincial government to seek a permanent exclusion for municipalities in CETA. A sustainability impact assessment of the proposed agreement, done by a private firm for the European Commission, has backed up much of what we have been talking about.

CETA "will clearly reduce regulatory flexibility in Canada, some of which will also constitute reductions in economic and social, and potentially environmental, policy space," says the assessment. "CETA will likely allow EU firms to gain some [government procurement] market share where they could not before, e.g. in some utilities," but Canadian gains in Europe will be "comparatively minor."

The assessment says the CETA ban on offsets (investment conditions related to local economic development), or set-asides for aboriginal and minority businesses, "would appear to have some negative effects on employment (and culture) … on those currently benefiting from such preferences."

You would think there would be a payoff in terms of better service or environmental protection, but that isn’t the case. According to the EU assessment, "neutral impacts are expected on the quality of government-procured goods and services," and "if CETA restricts initiatives on green procurement, it would have a significant negative impact in Canada and the EU …"

CETA will have such a big impact on municipal governments, the sustainability assessment recommends the procurement chapter be significantly reworded to allow for local development policy and, in some cases, local preferences. These amendments appear to jibe with the FCM strategy, outlined in its Halifax convention policy document, to "continue to voice the concerns and opportunities of the municipal sector with respect to new and existing international trade agreements, including the … CETA agreement."

The question is: Will Stephen Harper and the provinces listen? The Canada-U.S. procurement agreement, signed last February without any public debate, pries open local spending by most provincial government agencies, as well as municipal spending on construction projects. There were no amendments to give cities and towns space to use public spending for other development or environmental purposes.

Canadians want their communities governed in the public interest. Municipal action supporting local jobs and community businesses is crucial, especially in uncertain economic times. With Canadian provinces and EU member states set to exchange offers on procurement in a matter of weeks, and a critical eighth negotiating round this July, the Council of Canadians strongly feels excluding municipalities from the procurement chapter is the only effective way to protect their local autonomy.

Canada’s cities, towns and school boards may need to speak up now or forever lose an important economic tool in Harper’s free-trade gamble with the EU.

Angela Giles is the Council of Canadians’ Atlantic regional organizer.

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