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Corporate lobbying, good luck and Quebec diplomacy kickstarted Canada-EU trade negotiations, according to new article in L’Actualité

Charest and Barroso - dealmakers on the Canada-EU Comprehensive Economic and Trade Agreement

Charest and Barroso – dealmakers on the Canada-EU Comprehensive Economic and Trade Agreement

According to Quebec Premier Jean Charest, the current Canada-European Union negotiations toward a Comprehensive Economic and Trade Agreement (free trade plus) wouldn’t be starting in Ottawa next week (October 19 to 23) if it weren’t for Quebec’s expert diplomacy, a little good luck, and a lot of private suppers with some of Canada’s and Europe’s wealthiest CEOs over the past three years. The details come together in this month’s issue of l’Actualité magazine, which I’ve roughly translated here.

So here we go… as reported by Jean-Benoit Nadeau in this month’s l’Actualité magazine:

Jean Charest scored way more than expected when he convinced Europe to think about free trade talks with Canada in January 2007. He’s also the reason Ottawa agreed to let the premiers be part of the negotiations.

Charest sees several benefits to the deal, namely that Quebec companies will supposedly get better access to the EU market, which is still very protectionist but 50 per cent bigger than the American market.

The article is then split up into five stages. I call Stage 1 “the corporate campaign” but those are my words, not l’Actualité’s.

Christos Sirros, Quebec’s delegate in Brussels and a former Liberal minister under Bourassa was at a corporate dinner August 2006 at the Canadian embassy where Canadian and European CEOs were complaining about the inability of the cross-Atlantic dialogue to make progress on boosting commerce.

Sirros noted that for the past four years Europe had been talking about access to provincial procurement and he thought, I know a premier who these companies can talk to to get things done – Jean Charest.

There was a dinner three months later in Quebec with about fifteen people, half a dozen of which were intergovernmental affairs VPs with major companies like Bombardier, Alcan, BCE, etc. Their interest in a bilateral was clear, and Charest expanded his discussion with corporations at the World Economic Forum in Davos in January 2007, where he dined with numerous Canadian and European companies, including Jacques Lamarre of SNC Lavalin, who complained about EU engineers not being able to have their diplomas recognized in Canada and vice-versa.

Outgoing CCCE President Tom d’Aquino promised Charest his corporate lobbyists would do a big provincial campaign in support of the Can-EU proposal.

STAGE 2 – The provinces

Charest knew from confidential discussions with other premiers that their focus was elsewhere – on Brazil, China and emerging countries. But Europe is much more accepting of foreign investment than Asian countries, who impose too many conditions.

Charest’s allies ended up being outgoing Manitoba Premier Gary Doer and Ontario Premier Dalton McGuinty, who saw a way to reduce dependence on the American market. Charest sold it to other provinces as a way to boost their international powers and responsibilities.

In June 2007, Quebec economic development minister, Raymond Bachand, and Ontario counterpart Sandra Pupatello went to Brussels with a few CEOs to let the EU Commission know that Canada’s two largest provinces want a free trade agreement. Benoit Pelletier, Quebec’s minister of intergovernmental affairs, tells Actualité the other provinces joined the effort for risk of being left out.

In January 2008, the premiers had dinner with Prime Minister Harper and let him know how badly they want a deal with Europe to be a priority.

STAGE 3 – Canada

According to Actualité, when Charest discussed the idea of a European deal with Harper in December 2006, Harper was tepid. This was six months after Europe and Canada decided to shelve their plans for a closer Atlantic alliance. It was Quebec’s labour mobility agreement proposal with France that woke people up in Ottawa, according to former international trade minister David Emerson. Bureaucrats wondered if Canada could or should let a province do this on its own.

That month, the Canadian government made a priority of Charest’s plans. Canadian ambassadors in Europe were given orders to push the idea of free trade in European countries.

STAGE 4 – Europe

With the French, English, Italians, Polish and Germans, Charest was relentless in his pursuit of a next generation trade agreement that would affect culture, environment and labour mobility. Charest says Europe had been dreaming of a similar deal with the Americans, which was complicated. “Why not establish a precedent with Canada,” he says.

But how to convince Europe when we are only their 11th most important market?

Quebec used its delegation in Brussells. Christos Sorros knocked on every door of the EU Commission. Charest got an informal meeting with Peter Mandelson, then Trade Commissioner for the EU. Europe was focused on the Doha negotiations, which eventually failed.

Mandelson asked Charest if he thought he could get the provinces on board.

Charest thought Sarkozy would be his champion in Europe but the problem was he wasn’t elected president yet. He met with Sarkozy, then interior minister, about the 400th birthday of Quebec and France’s participation. As luck would have it, Sarkozy was elected a few months later as president.

Then the planets aligned, says Charest in the article, as Sarkozy was elected head of the EU in July 2008 just as the Quebec premier took the head of the Council of the Federation. This was three months before the 400th anniversary celebrations coincided with the Canada-EU summit in Quebec.

David Emerson wasn’t wasting time either. In June 2007, at the G8 meeting, he secured a joint study with the EU on the costs and benefits of a transatlantic agreement. But Quebec didn’t want the study to end up in a drawer, so they postponed its release until France was to take the presidency of the EU in July 2008.

In October 2008, Harper, Sarkozy and Manuel Barroso (president of the EU Commission) announced they’d go on to the final stage to determine negotiating points: transport, energy, labour mobility, technical standards, etc.

Charest is convinced that the EU demands will reform the Canadian federation, giving provinces new powers to negotiate international agreements in their areas of competence. At the end of 2008, Canada was taken by surprise by the EU insistence the provinces approve the terms of negotiations but granted this request.

Then the government was even more surprised in early 2009 when the Europeans wanted the provinces to participate in the negotiations. Harper asked Charest to obtain assurances from the premiers that they will participate and all but Newfoundland’s Danny Williams agreed.

Another trip by Charest to Brussels to meet Barros and Catherine Ashton, current Trade Commissioner for the EU, who are not concerned about Newfoundland’s refusal to participate. Stockwell Day says there are numerous areas, like fisheries, where the feds can negotiate for them so it’s basically Williams’ tough luck.

They announced formally the beginning of negotiations in May 2009, at the Canada-EU Summit in Prague, and started to work on modalities.

Where we’re at now

According to l’Actualité, the success of the EU negotiations to date is a matter of pride for Quebec, proof of its diplomatic prowess, says Benoit Pelletier in the article. Stockwell Day says there’s a new era of federal-provincial cooperation, which he says is proven by the fact it took only two days for the provinces to agree to let the feds negotiate on their behalf on subnational procurement with the U.S.

Day says he expects Europe to play hard ball on Day One of next week’s negotiations in Ottawa (Oct. 19) about provincial jurisdictions and access to local procurement. The Europeans will certainly push a national labour standards council (which Ontario and Europe like but Quebec and Alberta don’t), respect for Kyoto, and the end of supply management in Canada, says the article.

Marc Johnson, Quebec’s negotiator, has already consulted about 30 companies, unions and industrial associations. He says it’s like a game of monopoly where if they demand access to public contracts we can demand the relaxation of phytosanitary standards. (Wow, Canadian provinces relinquish their power to spend locally and Europeans get weaker health standards — talk about win-win! — my comments.)

Charest will be mobilizing public opinion in favour of the deal with universities, unions, etc, concludes the l’Actualité article.