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Canada needs more trade deals

Montreal Gazette, Canada

Canada needs more trade deals

11 June 2007

Free trade with Iceland and Liechtenstein is not exactly a hot political topic in Canada. But last week, Canada announced a deal with those two little countries along with Norway and Sweden - together they refer to themselves, rather grandly, as the European Free Trade Association. It’s not much, but it’s more than this country has accomplished in the trade arena is some time. Trade Minister David Emerson says there’s more to come, to which Canadian exporters and consumers can only say: "It’s about time."

The four EFTA countries mentioned are not members of the European Union, and so have been seeking to expand their trade in other directions. Canada’s total trade with all four comes to only about $11 billion a year, sofa-cushion change by the standard of, say, our trade with the United States, which amounts to about $1.7 billion per day.

The EFTA pact, now settled in principle but still some months from signing, will be Canada’s first free-trade agreement with anybody in six long years. Talks with Singapore are moribund; with South Korea we’re talking actively but evidently not agreeing. Desultory negotiations with a group of four Central American countries have become more theory than practice. Emerson has now announced talks will begin soon with Colombia, Peru and the Dominican Republic. But we have few irons in any other fires. Besides the NAFTA deal with the United States and Mexico, Canada has comprehensive bilateral free-trade deals only with only Chile, Israel and Costa Rica.

In one sense, it’s a pity that we need to have any. The best way to stimulate greater world trade, with all the benefits it brings, is through multilateral deals via the World Trade Organization. But the latest "Doha round" of WTO talks is apparently due to be taken off life support and allowed to die anytime now, smothered by European and U.S. agricultural protectionism.

Emerson, intriguingly, hinted last week there might still be hope for some Doha progress. We’ll believe that when we see it.

The so-far-disappointing Doha result is a defeat not only for "rich world" consumers and taxpayers but also for agricultural producers, large and small, in poor countries. But as with many issues that are truly global, Canada has little leverage. U.S. agribusiness and European farm lobbies have the whip hand. That means the best Canada can do, for now, is to identify and pursue as many bilateral freer-trade deals as we can. That’s what the United States, the European Union and China are all doing.

Few people anywhere still try to deny the benefits of more open trade, which have manifested themselves mightily in Europe, in North America, in China, and elsewhere. The world is a far wealthier place than it was, and expanded trade is one major reason. There have, to be sure, been dislocations, collateral damage, environmental challenges and other difficulties. But the globe’s net gains from more open trade cannot seriously be denied any longer.

So why don’t we have even more of it? Globally, the answer is that in many countries protectionism is a rewarding form of petty politics. For Canada, the first answer is that our government put all its eggs in the Doha basket. But a House of Commons committee that dug into the question also found some other reasons, and proposed remedies.

The trade committee’s whole paper ( is of interest, not least for its heartfelt recommendation that committee members be sent on more foreign trips. But some of the more substantive recommendations are a healthy recipe for progress.

A quick 50-per-cent increase in government resources for trade negotiation, because "our trade negotiators are being run off their feet." A greater sense of urgency in seeking out more deals, with Brazil for example. Better consultation with Canadian business on what our trade priorities should be. Special emphasis on China and India. Speedy progress on tax treaties, air-transport agreements and other legal-infrastructure-of-trade areas. Removal of barriers to Canada-U.S. trade, to strengthen our competitiveness. Better access to Canada for foreign investment. Rationalization and true integration of the tangle of federal agencies involved in trade policy.

Some of these proposals are self-evident, some controversial, some difficult. But taken together they do communicate a sense of urgency. That’s more than Canadians have had from our trade minister.

We’ve been told repeatedly, by prime ministers of two parties, that Emerson is wonderfully qualified to be trade minister. But then why is Canada losing market share in the globalized economy?

In fairness, Emerson’s first months in office were dominated by the fuss over his party-switching, and then by the softwood-lumber issue, which was handled reasonably well. But what, Canadians are allowed to ask, has he done for us lately? A trade pact with Iceland et al is fine as far as it goes, but it doesn’t go very far.

If bilateral trade deals are the best we can get, then let us at least get on with some of those.