There’s dubious value in Canada-EU trade pact

Free trade with Europe is the centrepiece of Stephen Harper’s time in government.

It is so crucial that the prime minister announces it over and over again.

The latest reannouncement came Friday. This time, it was to celebrate the almost final text of what is officially known as the Comprehensive Economic and Trade Agreement between Canada and the 28-member European Union.

That followed celebrations last year on an agreement in principle. There will undoubtedly be another gala when, after a “legal review,” the final Canada-Europe trade pact text is released.

And there may be 30 more over the next few years if the agreement is successfully ratified by the European Council, the European Parliament and the 28 member nations of the EU.

In ancient times, political rulers marked such victories with human sacrifice and lavish excess.

Harper made do by spending a mere $338,000 to fly a gaggle of visiting European bureaucrats back to Brussels on a Canadian government jet.

The pact is far from a done deal. In Europe, the politics of the trade agreement have become enmeshed in the debate over a similar accord being negotiated between the EU and Washington.

Critics fear that a section in the Canada-EU pact allowing companies to override domestic laws could set a precedent for the Americans to exploit.

There is also dispute within the European Union over whether such trade and investment deals need to be ratified by all 28 member states. But let us assume for a moment that the Canada-Europe deal eventually comes into effect. What can we expect?

At first glance, the answer is not much. The government promises 80,000 new net jobs. But as Jim Stanford, an economist with the labour union Unifor, has pointed out, this is a bogus number based on the assumption that no one can ever be unemployed.

Expect the price of European luxuries to fall as tariffs are removed. But don’t expect a big job uptick here.

Ottawa says Canadian beef and pork producers will gain better access to European markets thanks to the pact. And perhaps they will.

Yet as a recent analysis from the Canadian Centre for Policy Alternatives points out, the European Union is already a net exporter of pork and beef.

This doesn’t mean there is no appetite in Europe for, say, Canadian pork chops. But unless European farmers are singularly inefficient, it does suggest the market would be limited.

Conversely, a deal with Europe promises to be less disruptive than earlier free trade pacts.

The Canada-U.S. Free Trade Agreement of 1989 and the North American Free Trade Agreement of 1993 virtually wiped out entire domestic industries.

This time, it seems job losses would be more limited.

With significant exceptions (particularly in Ontario), the new pact would make it near impossible for governments or government agencies to favour locally owned firms.

That could affect businesses ranging from school bus operators to caterers.

Canadian cheese makers would be hurt as would domestic automakers. But neither is likely to be destroyed.

The application of European drug patent rules would result in Canadians paying more for their pharmaceuticals. Provincial governments, all of which operate public drug plans, were particularly grumpy about this. But Ottawa has appeased them by offering subsidies.

Trade analyst Scott Sinclair says he expects the provinces will quietly pass laws implementing their trade pact obligations.

The real danger in this deal has nothing to do with trade. Rather it is a provision, similar to one en- shrined in NAFTA, that would permit corporations to overturn domestic laws.

In effect, the pact includes an investors’ bill of rights aimed at penalizing government actions that interfere with profitability.

European businesses would be able to challenge such actions before a special dispute-settlement board.

Irish banks, for instance, could challenge regulations designed to safeguard the Canadian financial system.

European firms could also challenge government regulations that “unduly” complicate or delay business activities.

Theoretically, Canadian companies would have reciprocal rights in Europe. But we don’t have a good track record.

Under NAFTA, several U.S. companies have managed to overturn Canadian laws. No Canadian company has ever successfully used that trade pact to override a U.S. law.