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CETA update: Harper’s Mulroney moment or another false alarm?

I’ve been away from my desk for a few weeks (late vacation) and in that time we’ve seen several reports of an impending conclusion to the four-year-old Canada-European Union negotiations on that thing called CETA.* One said there had been a breakthrough on beef. Another that our Prime Minister has taken the project out of the hands of his trade minister, Ed Fast, and is now dealing with European Commission President Jose Barroso directly.

So things are going so well in the CETA negotiations that Harper has had to step in, Mulroney-style (as requested by the leader of his party’s corporate base in July and again in September), to avoid catastrophe! Do you see the contradiction? As a friend suggested during a Trade Justice Network meeting yesterday, maybe we should pay more attention to the Italian Prime Minister Enrico Letta who told a press conference in Ottawa this week he hopes the CETA negotiations should be wrapped up this year or next.

Following all of this was a Wall Street Journal blog citing unnamable “people familiar with the plan” that at least there has been progress on the beef and pork access issue. Canadian meat producers are fighting for a higher tariff-free quota on imports of beef into Europe that they might never be able to realize (it will have to be hormone-free), or that Europe might limit to low-quality cuts, or that cheaper Brazilian competition might make uncompetitive on the European market. No matter what Harper pulls off here it’s going to be more rhetoric than reality – a pseudo-victory for Canadian farmers.

Behind the scenes, beef is just one of a number of problem areas in the CETA negotiations as they race against the beginning of more important (for European corporations) Transatlantic Trade and Investment Partnership talks with the U.S.

For example, the federal government is still fighting the Commission’s insistence that financial regulations be subject to investor-state dispute settlement so that Canada could be sued by European banks, insurance companies, etc for intervening to protect the stability of our economy or even avert a major crash.

Meanwhile in Europe, member states and the Commission continue to debate who is constitutionally responsible for awards handed down by investment arbitration panels in cases against local or state-level policies. According to Gus Van Harten of Osgoode Hall Law School, writing in the Hamilton Spectator, the Commission has even promised member states, “it will not complete the investment negotiations with Canada until an agreement is reached within Europe about the division of legal and financial responsibility for investor-state arbitration.”

Van Harten continues, “It is vexing that, while commentators have flagged the same issues in Canada since NAFTA, our governments have done virtually nothing to resolve them, at least publicly. Likewise, it remains a mystery why Canada, having fared far worse than the U.S. in investor-state arbitration under NAFTA, reportedly asked to include investor-state arbitration in the Europe trade deal.”

Much worse indeed.

This month, Eli Lilly moved its $500-million NAFTA lawsuit forward against nothing less than the independence of Canadian courts! In an outrageous example of how far investor “rights” deals like CETA go to empower corporations by disempowering democratically elected governments, the drug company is arguing that Canada’s Patent Act is illegal because it does not exactly mirror the European or U.S. patent protection model, which Eli Lilly claims to be the internationally recognized standard in NAFTA and the WTO.

It’s the first time Big Pharma has used an international investment treaty to sue for longer patents it is not entitled to under national law. It won’t be the last if this case is settled early or Canada loses. And it’s worrying Members of the European Parliament, many of whom have decided neither the U.S. nor Canadian deals should include investor-state dispute settlement. What a bummer for Canada. This was one of the few areas where Harper’s negotiators were making demands of the EU and not the other way around. Now Harper may conclude a “deal in principle” without an investor “rights” chapter.

Back to longer patents… it’s inevitable that Harper will have to give these to Barroso in the intellectual property rights chapter to get the CETA deal done. Federal studies (that the government tried to suppress) show the costs of extending patent terms in Canada to align our regime with Europe will be in the hundreds of millions of dollars annually to the provinces and other buyers of prescription drugs.

An Ipsos poll conducted a year ago for the Council of Canadians and Canadian Health Coalition showed that support for CETA “dwindles to one-third (31%) when factoring in extended drug patents.” And provinces like Ontario have written to the federal government as late as this May asking Harper not to make these concessions. No wonder it is taking so long to finish the CETA negotiations. Harper will take a huge political hit from concessions on patents.

There’s also the procurement issue. At its 2013 annual convention, the Union of British Columbia Municipalities (UBCM) once more voted for a motion asking the provincial government not to bind local governments to public spending rules in CETA that forbid local preferences and other conditions that support local development. And it’s the same outside of B.C. Municipalities across Canada have voted NO to any procurement changes.

But we know from leaks that cities will be covered by the new restrictions on public spending, which favour larger multinational companies over local small- and medium-sized businesses. “Buy local” food policies will also be threatened by CETA.

The only procurement holdouts seem to be for some transit and some hydro spending in some provinces (e.g. Ontario’s 25% local content rule for subway car purchases). But even these might disappear in the final arm wrestle between Harper and Barroso. The Ontario government would then have the unenviable job of selling a deal that could increase its health costs by hundreds of millions annually and threaten manufacturing jobs that benefit from the local preferences on transit and energy projects.

Trade justice activists have argued in letters to Ontario and the other provinces/territories that the premiers should not be allowed to make that decision on their own, without a public review. The odds seem against it, but if Harper does announce he has a “deal in principle” with the EU, perhaps as early as the Throne Speech on October 16 according to one commentator (behind a paywall), we’re going to have to loudly demand a public debate on CETA at the provincial level.

Those reviews will take time, further pushing back a possible conclusion of CETA negotiations. If the public reviews don’t happen, it will be harder for Harper or the provinces to convince anyone the deal is in Canada’s best interests. Or, if you’re convinced like we are that’s not possible, you can ask Harper to Walk Away from CETA by clicking here.

* CETA can’t and isn’t expected (by its promoters) to create much more trade between Canada and the EU, so we can hardly call it a trade deal. The government figures showing a $12-billion phased in (over about a decade) increase to GDP are exaggerated and not impressive even if you do take them seriously (which we shouldn’t). CETA is a list of public policy objectives sought by multinational capital based in Europe and Canada that would less easily pass into law if introduced as legislation, so they are snuck through a closed-door trade negotiation.