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Caution needed on EU free trade

Times Colonist, Victoria, Canada

Caution needed on EU free trade

24 July 2011

Free trade talks between Canada and the European Union are well on the way to a successful outcome, according to officials in Ottawa. There are still points of disagreement that could derail the process, but it seems probable that in the next 24 months, a deal will be done.

Despite the huge issues involved, most Canadians have no idea what’s at stake. The talks have been conducted with limited publicity. That’s in contrast to the close attention paid to the Canada-U.S. free trade negotiations when Brian Mulroney was prime minister. Yet in many respects, a deal with Europe looks riskier.

On the positive side, there will be a significant economic payoff. The EU is our second largest trading partner (after the United States). By some estimates, Canada’s economy will benefit to the tune of $12 billion and a hefty increase in employment.

Yet there are reasons for concern. For a start, while the EU is an important market for us, the reverse is not true.

We send 11 per cent of our exports to Europe: They send just over one per cent of their exports to us. That makes the talks one-sided. We need a deal far more than they do.

Next, the topics covered in the negotiations extend well beyond trade issues. Government procurement is included. That means European firms may get the right to bid on goods or services purchased by government agencies in Canada. This is a serious matter in many smaller centres, where federal or provincial ministries are often the main source of business.

Sustainable development is also part of the package. Conceivably, that means Canadian industry will be subject to environmental regulations designed in Brussels. It’s not hard to see where this could lead. There is already talk in Europe of banning oil from Alberta’s oilsands. That would be devastating to our economy.

It’s true we share many of Europe’s environmental values. Yet theirs is a small, densely populated continent.

Restrictions that make sense for Denmark or the Netherlands may not fit Canada’s needs.

Finally, though the deal is being negotiated by the federal government, it will legally commit the provinces. And that could get ugly. Consider agricultural tariffs. The prairie provinces want tariffs on grain removed, because they are low-cost producers. But Ontario and Quebec want tariffs retained to protect their dairy industry. Good luck finding a middle ground there.

Supporters point out that most of the risks already exist. Europe already has a history of trying to ban Canadian products on philosophical grounds, such as seal skins and genetically modified grains. Arguably, a comprehensive agreement will restrain such behaviour and make it easier for us to plead our case.

That, really, is the crux of the matter. With an agreement come rules and a process for resolving disputes.

But this is still a dangerous course to follow. The Europeans may prove disagreeable bedfellows. The EU has a habit of ignoring agreements it finds inconvenient. Member nations supposedly have a veto, but countries that exercise it, like Eire, are bullied into compliance.

And the bureaucracy in Brussels has grand designs. It dreams of a unified Europe, in which national parliaments surrender power to a central government.

Ironically, this is a more expansive agenda than anything the United States had in mind when we signed the North American Free Trade Agreement.

Ottawa is right to explore all the options. A trade deal in itself is nothing to fear.

But we need a clear line in the sand when it comes to Canada’s national sovereignty. That is not something to be bargained away.

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