CETA is almost a free trade deal, except for a few hundred exceptions.
ANALYSIS
After seven years of negotiations across two Canadian regimes, Prime Minister Justin Trudeau decamped to Brussels over the weekend, finally putting pen to paper on the Comprehensive Economic and Trade Agreement, or CETA, alongside EU President Donald Tusk on Sunday.
The deal now enters a state of provisional application, whereby about 90 per cent comes into force. Next, it will head to the European Parliament for approval, expected some time in early 2017, and will then do the rounds at the legislatures of all 28 EU members, as well as at several regional bodies, which could take years.
Once fully enforceable, CETA will remove 99 per cent of customs duties between Canada and the EU, and Canada will trim duties worth some 400- million euros for goods originating in the EU.
But what about t hat remaining one per cent? A f r ee- t r ade agreement wouldn’t be a free- trade agreement without all sorts of exceptions, ranging from gambling to energy to legal licensing to . . . Christmas trees?
Indeed, if you’re the rare Dutch businessman who wants to take over British Columbia’s Christmas tree market when the hot chocolate starts flowing in December, you’re out of luck. The province, which sees about 900,000 trees harvested per year in Canada’s $ 64.4- million Christmas tree market, filed an exception so that only Canadian citizens, permanent residents or corporations controlled by Canadians can be granted a Christmas tree permit.
In fact, almost 200 “reservations” to CETA were ultimately claimed in the agreement’s text by Canada’s provinces and territories. Scores more were filed on the other side by EU member nations.
Most are what one would expect. For example, Newfoundland and Labrador maintains the right to regulate the exploration and development of hydrocarbons — the province saw $ 4.1 billion in oil production in 2015.
The right to place restrictions on forestry, gambling and natural resource markets stretches across Canada, with most provinces having given themselves room to implement regulations should they so choose. Many EU countries opted for similar rights: foreign companies and persons can’t acquire forest lands outside of municipal areas in Slovakia, where there is a 310- million euro ($ 457- million) forestry industry, for example.
The provincial governments will also maintain their import monopoly on alcohol. Liquor stores, agencies and retail outlets made $21.3 billion in sales of alcoholic beverages in the 2015 fiscal year, up 3.8 per cent from the previous year. But domestic producers will now f ace more competition from their European counterparts in a market where foreign presence is already high: imported red wines made up 75.7 per cent of sales, while i mported white wines accounted for 60.5 per cent, in 2015.
Then there are matters of what some would consider national interest. France will hold restrictions on foreign participation in established companies in news and media, capping it at 20 per cent of the capital or of voting rights in a company.
The French Ministry of Culture and Communication arranged for 820 million euros in aid to support its media industry in 2015. That included 150 million euros in total direct aid to i ts political and general press, including to the satirical newsweekly Charlie Hebdo. In 2013, it gave more than 16 million euros each to major newspaper publishers Groupe Le Monde and Groupe Figaro. Allowing foreign ownership of media raises cultural concerns, but it could also amount to handing over ownership of companies the state has taken extreme measures to support and invest in as media and advertising revenues have been disrupted throughout the world.
Latvia, Hungary and Germany also placed varying restrictions on foreign media.
Another noteworthy exception in France: if you want t o open a department store in that country’s 400- billion- euro retail sector, you’ ll have to pass an Economic Needs Test first.
Beyond these “reservations” noted in the treaty’s Annexes, Canada will recognize what Europe calls “geographical indications” — or recognition that certain products are only authentic if they come from a particular place. That means things like Prosciutto di Parma and Schwarzwalder Schinken, also known as Black Forest Ham, will have to be just what they say they are when put out on shelves in Canadian grocery stores — meaning, not produced somewhere in Ontario, for example. The exception to that will be existing producers of products with those labels, which will be grandfathered in.
That rule affects the other side of the deli counter as well and, going forward, Canadian-made cheeses will have to specify that they are an Asiago, Gorgonzola, Feta, Fontina or Munster “type” cheeses.
(PROVINCES) MAINTAIN THEIR IMPORT MONOPOLY ON ALCOHOL.