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A Cypriot CETA? Trade talks delayed, threatened by Fuel Quality Directive, Toronto conference hears

Whether the Canada-EU trade talks are advancing as normal or mired in difficulties depends on who you’re talking to or what newspaper you’re reading. “EU free-trade talks still on track, minister says,” declared a Montreal Gazette headline after Tuesday’s federal-provincial-territorial trade ministers’ press conference in Ottawa. “Canada says EU free trade talks may drag on,” claimed a National Post story on the same event. Clear as mud. But what more should we expect from from the current government?

Then yesterday, at a conference on the CETA negotiations organized by York University and the European Union Chamber of Commerce in Toronto, Danish Head of Mission to Canada Morten Siem expressed his country’s regrets that the deal won’t be Danish, meaning it won’t be ready before the Danish presidency of the EU expires this summer. He said August or September is more likely, putting it in Cyprus’ to-do list. Before you go placing any bets, Milos Barutciski, a partner at Bennett Jones LL.P. who’s “close to the negotiations,” told the same conference “2012 might be a bit ambitious.” More on his interesting presentation in a second…

I presented at the conference on a panel with Kirsten Mikadze, a JD candidate at Osgood Law School, and University of Toronto law professor David Schneiderman, about investment and public procurement in the CETA. My power point’s available here. Other panels looked at how the deal could affect agriculture, food policy and the environment, industrial policy and labour. Jim Stanford, CAW economist, gave what one audience member called a “barn burner” of an attack on the economic case for the CETA in which he picked apart the numbers as he did in his CCPA report “Out of Equilibrium.”

Business participation in the discussion was low but not from lack of trying by the organizers, I’m told. Several potential pro-CETA voices backed out or refused to participate. It made Kathleen Sullivan’s presentation on behalf of the Canadian Agri-Food Trade Alliance all the more interesting, and even CAFTA’s support for the deal is conditional on real access for beef and pork. Without substantially lowered barriers in the EU to Canadian beef exports, Sullivan will recommend no deal. Does she have any real power over the matter? Who knows. She’s certainly connected, telling the audience at the end of the agriculture panel how transparent the CETA talks have been, based entirely on her own experiences reaching negotiators and trade reps across Canada and Europe. (Not everyone has CAFTA’s budget for this sort of thing.)

Let’s go back to Barutciski, who prefaced his comments early on in the day by warning he was not bound by government rules to give as rosy a picture. The Canadian lawyer said from his perspective the number of bracketed clauses (where Canada and the EU disagree on language in the CETA text) is “quite extensive and they are important,” as in entire portions and not just paragraphs. He said he’s surprised the negotiations got this far and is “optimistic” they will have a deal if a little later than both sides had hoped.

FUEL QUALITY DIRECTIVE WILL HAVE BIG IMPACT

But he warned the EU’s “symbolic” climate policy, the Fuel Quality Directive, jeopardizes the Canada-EU trade deal. There is “no way it doesn’t impact on the negotiations and the political engagement,” in particular with this current Harper government. Among Barutciski’s other comments:

– Unlike NAFTA, he says there has not been sufficient political engagement over the past two years of negotiations. Difficult issues are being “parked” for politicians to deal with once the trade negotiators can’t get any further on their mandates. He thinks this is going to make it difficult to expend political capital on the deal when it’s needed.

– Canada’s procurement and services offers have been “substantial” but they’re not the end of the story. Canada will have to put more on the table but is waiting for the EU to show a better deal on services where he feels Canada has the most to gain (as an economy that is at least 70 per cent based on services).

– He said Canada’s view of procurement is “parochial and defensive.” Showing his bias, he called warnings about local development a “shell game,” and that politicians were mostly concerned about losing a political lever for getting votes. The lowest cost bid is always the best deal for municipal governments, he said.

– Canada considers investment protection and services opening very important in the EU. Investment protection has not been attacked yet because the EU has not figured out a way ahead given ongoing frictions between EU and member states on investment.

– The “place to watch” on intellectual property rules is the health sector and pharmaceuticals. “Some of the changes will raise health costs,” he said, so it’s “not insignificant and we need to pay attention.” Whether we get the “bang for buck from research,” as the brand name drug companies are promising, is tough to believe when the companies are based in Switzerland or the United States.

On this last point, Stefan Oeter, a law professor at the University of Hamburg, added that if EU civil society groups fighting the European ratification of the Anti-Counterfeiting Trade Agreement (ACTA) realize how closely it resembles the CETA intellectual property chapter, it could make it even more difficult to pass the CETA through the European Parliament.

WHAT’S IN IT FOR ONTARIO?

Hopping backwards a few days, on Monday the Canadian International Council – Toronto Branch organized its own CETA event on the 58th floor of the Scotiabank building at King and Yonge streets. The guest speakers were Gordon Jansen, acting manager in the trade policy branch of Ontario’s Ministry of Economic Development and Innovation, and Jason Langrish, executive director of the Canada-Europe Roundtable for Business (CERT), the main business lobby group supporting the EU negotiations on both sides of the Atlantic. CERT also organized the Energy Roundtable, whose “high-level, thematic conferences” are meant to:

– Promote Canada as a secure, stable and growing supplier of energy in a resource constrained world.

– Explore the commercial opportunities that this presents to foreign investors and service providers.

– Spur independent thinking and debate amongst the key industry players on how to meet Canada’s ambition to become a clean energy powerhouse.

(But remember, CETA has nothing to do with the tar sands or the Fuel Quality Directive. Nothing at all, say negotiators.)

I was mostly interested in what Jansen had to say, though there was little new information to come out of the event. A few things I jotted down from Jansen’s presentation:

– This is the first “and possibly the last” time the provinces will be at the table in a trade negotiation. (A bit cryptic. Possibly the federal government didn’t appreciate the dynamic, which was forced on them by the EU as a requirement of negotiating.)

– The EU has been taken aback by the persistence of the provinces (tougher than past EU trade talks, he said).

– The Bulgarian language is a trade barrier to Ontario firms. (As an example of the non-tariff barriers to Ontario’s service companies in the EU was having to abide by member state laws, which in Bulgaria would be written in Bulgarian.)

– Canada is the first industrialized country to negotiate a trade deal with the EU (which will surprise the South Koreans who signed a comprehensive FTA with the EU in 2010 and who produced the second best selling car in Canada last month).

– Ontario fully supports equal investment protections to what’s in NAFTA, despite Ontario’s uniformly negative experience with recent investor lawsuits against environmental and resource conservation measures.

– Ontario and the other provinces will not put procurement by utilities on the table until Quebec does. If Quebec gives way, we could see major new concessions across Canada further affecting municipal governments.

– Ontario will judge a good or balanced deal in large measure based on the intellectual property rules, rules of origin for auto, and services opening (ex. work permits easier to get for Canadian professionals in Europe).

A next round of CETA negotiations — and it is a full round in everything but name, according to Barutciski yesterday, as was the February round in Ottawa — takes place the weeks of March 12 and March 19 in Brussels. That will be Round Number 11 for those still counting. We’ll keep you posted.