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Canada-EU Leak: CETA will be a “fire sale” for Canada with Quebec sitting idle, says RQIC network

The Réseau québécois sur l’intégration continentale (RQIC) has obtained confidential new information related to ongoing Canada-European Union free trade negotiations, including an update on Quebec’s procurement offer which includes coverage of Hydro-Quebec.

Quebec negotiator Pierre-Marc Johnson has always said that Hydro-Quebec will be excluded from procurement rules in the Comprehensive Economic and Trade Agreement that ban local preferences on public spending. But according to RQIC’s reading of a new CETA leak, more than 35% of contracts by the energy utility, equivalent to $390 million in public spending annually, are actually covered.

“Hydro-Quebec is an important lever for our economy,” says RQIC spokesperson in a release today (translation). “Not only does it generate significant revenues for the Quebec government, but it contributes to local and regional economic development, and the maintenance and creation of quality jobs by favouring local companies. The Marois government is abandoning its ability to direct investments and to obtain benefits for the economy of Quebec. This is a huge and unacceptable concession.”

RQIC is also concerned by statements in the new CETA leak that Canada and the EU have agreed to language in the investment protection chapter on “fair and equitable treatment” and “expropriation of investment” which will create more opportunities for EU companies to sue Canada when government policies, including environmental or other rules, reduce profitability. (More on this here.)

The same concerns have stalled ratification of a Foreign Investment Protection and Promotion Agreement (FIPA) with China because of the possible pro-corporate bias the threat of a lawsuit will put on government decisions related to mines, energy and pipelines. CETA’s investment protections will be much more generous for European firms, which are heavily invested in Canadian energy and resources.

Serinet also points out where the EU says it has achieved an “Ambitious outcome, whereby Canada takes full responsibility for provincial measures and agrees to take ‘all necessary measures’ to ensure respect of CETA.”

This is a promise that Canada would have a hard time keeping unless the provinces voluntarily bind themselves to any rules in CETA affecting their constitutionally protected areas of policy jurisdiction, including public procurement and resources. But the provinces seem willing to give up the ghost for marginal trade returns with Europe. Also, Prime Minister Harper has warned that where an investor lawsuit attacks provincial policy, as often happens in NAFTA, and a tribunal sides with the investor, the government may want to claw back any costs, which can reach into the hundreds of millions of dollars, from that province.

The PM told media today in London that there has been “a lot of progress” on the Canada-EU CETA talks, which continue in Brussels, but that “we are not going to set a timeline or a fixed date on which we are going to have an agreement because it is essential that we be driven by the contents of the discussions.” The media is piling pressure on Harper to finish a deal before the G8 Summit in Northern Ireland where it is expected that the U.S. and EU will announce the beginning of their own CETA-like trade and investment negotiations.

“We will not arrive at an accord until such time as we think we have the best accord we can get for the Canadian people,” said Harper today. “And that will be what drives us – the contents, not some artificial time limit.”

The RQIC leak suggests Quebec will not get the best deal for its people. It raises questions about other provinces, too.

According to the documents, “more than 70% of the [energy] sector is now covered” by CETA’s ban on local preferences, so provincial and municipal energy utilities will lose the right to “buy Canadian” or otherwise use public spending to encourage local development and job creation. Will the Federation of Canadian Municipalities accept this seeing that one of its seven principles on trade is that “Canadian content for strategic industries or sensitive projects… should be allowed, within reason.”

The RQIC leak tells me we can’t trust Harper to get a good deal with Europe and that the provinces might not be doing so hot either. Speaking of hot, this Hydro-Quebec thing could be explosive in the province. We should use it to demand some accountability from the provinces if and when they have to make their next decisions about whether or not to support CETA. It’s unfortunate that we can’t expect much real democracy from the federal government but the provinces have no excuse considering all that’s in play here.