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US memo shows EU resisted Chretien’s “legacy” trade negotiations with Canada in 2003

A freshly leaked U.S. memo from its Ottawa embassy shows the European Union had to be pushed and shoved into free trade negotiations with Canada in the early part of the last decade because the European Commission saw little economic value in the project.

“The European Commission did not see an economic/commercial case for a full-fledged FTA, and did not want to risk detracting from multilateral negotiations,” says the unclassified memo posted to Wikileaks today. “There was some difference of opinion regarding the value of a FTA among EU member states, and especially among a few resident missions who have been lobbied by the [Government of Canada]. The EU Trade Policy Body, however, remained unified in their position against a FTA.”

The U.S. memo is from former ambassador to Canada Paul Cellucci, who writes despite “sporadic and unsuccessful” attempts to diversify Canada’s trade away from the United States, an FTA with the EU gained urgency between 2002 and 2003 “presumably due to outgoing Prime Minister Jean Chretien’s well-known desire to leave a policy ‘legacy.'” However, adds Cellucci, “If immediate FTA negotiations were not attainable, the GOC wanted an announcement prior to Chretien’s retirement that Canada and the EU would negotiate an FTA following the conclusion of the Doha Round.”

This too was rebuffed by the EU trade commissioner at the time, and current WTO Director General Pascal Lamy, who was then and still is a devotee of the dead-as-a-doorknob Doha round. So Lamy and Liberal trade minister Pierre Pettigrew struck a compromise. They agreed to a “Trade and Investment Enhancement Agreement” instead of an FTA.

“The FTA-TIEA distinction is meaningful,” writes Cellucci, “indicating that TIEA negotiations will not/not address ‘core trade issues’ on the table in Geneva — specifically, it will not address market access for either agricultural or non-agricultural goods. Areas which a TIEA could address include trade and environment issues, government procurement (in which the EU seeks better access to Canadian markets at all levels), and regulatory cooperation. There are likely to be parallels with recent EU-US liberalization efforts.”

The TIEA negotiations did begin in 2004 but ended two years later as countries saw a possible successful conclusion to the Doha Round at the WTO. The complete failure of Doha, and a persistent pro-EU faction at DFAIT, helped bring Canada and the EU back to the negotiating table in 2009, this time on a full-fledged FTA-plus that will go well beyond past EU and Canadian trade deals.

We don’t know what the current U.S. administration thinks of the CETA negotiations. A U.S. embassy employee showed up to a CETA conference in Ottawa this month, asking a question–on her behalf, not the Obama administration’s, she said–about rules of origin. She wondered how the Canadian government thought it could work out regulatory issues with the EU when we have come so far in NAFTA to harmonize in deeply integrated sectors such as meats. The U.S. will also be very interested in how badly Canada caves in to EU intellectual property requests related to copyright, brand name drugs and seeds (Monsanto, a U.S. firm, is oddly a member of the Canada-EU Roundtable for Business whose raison d’etre is to push transatlantic free trade).

The legacy comment from Cellucci should probably be taken with a grain of salt. The former U.S. ambassador was a continentalist, dead set on keeping Canada-U.S. “deep integration” talks high on the bilateral agenda.