Major leak from Canada-EU trade talks; municipalities fully covered by procurement restrictions

On Saturday, La Presse reported a major leak from the Canada-EU trade and investment talks. Documents obtained by the Coalition Avenir Québec (CAQ) describe in detail the state of play of the CETA negotiations, as well as the so-called landing zones, or expected compromises on contentious issues from pharmaceuticals to supply management to how much non-Canadian content (Rules of Origin) in automobiles the EU is willing to live with in order to grant Canadian car exports duty-free status.

The leak will be extremely embarrassing for the Canadian government, and the documents will now be combed over by trade justice activists among others. Macleans' columnst Paul Wells has already given it a shot on his blog today. But one thing leaps out as demanding our immediate attention and that is how completely Canada has caved in to European requests on procurement.

Based on the landing zone document, we can assume that almost everything is on the table, despite Canada's largest cities asking to be excluded from procurement rules in CETA that will ban local or Canadian preferences on big contracts and other public spending, and limit what municipalities can do to foster sustainable development. There's no way these cities or any of us should have to live with that. It's time to up our game.

EU "HIGHLY SATISFIED" WITH CANADA'S PROCUREMENT OFFER

The landing zone document, which is marked "restricted," says the following about Canada's public procurement offer, which will put new restrictions on public spending on goods, services or construction projects by public bodies such as cities, hospitals, school boards, Crown corporations or other provincial agencies:

- It is "the most ambitious and comprehensive offer Canada and its Provinces have made to any partner, including the US."

Remember the Canada-US procurement deal excluded municipalities for everything but construction, and the construction commitments were only temporary (about two years) for large cities. Those commitments have expired now. Importantly, the 2009-2010 procurement negotiations with the US showed how the Harper government negotiates trade deals. It was a sham, to say the least.

The US made no municipal procurement commitments at all, and Canada only received a temporary (about two weeks) waiver from a limited number of "Buy American" conditions on US stimulus spending. The new European documents prove that Harper and the provinces have learned nothing from that unbalanced deal. US municipalities will continue to be able to prefer local products and services but their Canadian counterparts, sometimes mere kilometres away across the border, will not.

- The Canadian procurement offer "also outreaches the mutual commitments between the different Canadian Provinces in the Agreement on Internal Trade (AIT). The outcome regarding the inclusion of regional and local government entities, including agencies, crown corporations, and the MASH sector (municipalities, academia, schools, and hospitals) is highly satisfactory. Thus the offer fulfills our expectations, including regarding the expansion of procurement to the sub-central level (Provinces and Territories) and to Canadian Crown Corporations and already now provides for very considerable added value with regard to the existing situation."

This directly contradicts assurances from the federal and provincial governments to municipalities that the CETA procurement rules will not add any new restraints that don't already exist in the AIT. This is plainly not true, as the EU recognizes in the above passage. CETA "outreaches" the AIT -- something we have been saying for a while, and one of the main reasons municipal governments are opposed to CETA.

The Agreement on Internal Trade has a clear allowance for Canadian content rules as long as they don't discriminate against the goods or services from another province. EU-based firms with investments in Canada already benefit from these AIT rules. In other words, an Ontario agency or municipality could not discriminate against a European firm established in Alberta in favour of an Ontario-based firm. The AIT also allows for exceptions to the rules where a municipality can demonstrate local development priorities, for example to offer a lifeline to depressed regions.

CETA, on the other hand and like the WTO Government Procurement Agreement, forbids "Buy Canadian" policies on any covered procurement. That same Ontario agency or municipality will not be able to favour a locally based firm (European or otherwise) over a European-based firm with no investment in the province (or anywhere in Canada). Furthermore, CETA states that "a Party, including its procuring entities, shall not seek, take account of, impose or enforce any offset," where "offset" is defined in the text as:

any condition or undertaking that encourages local development or improves a Party's balance-of-payments accounts, such as the use of domestic content, the licensing of technology, investment, counter-trade and similar action or requirement;

The Harper government is purposely misleading Canadian cities and towns about the newness of these procurement commitments. Again, US cities are not bound by these rules and neither are most countries even parties to such agreements at the WTO or in bilateral trade deals. Canadian cities are simply guinea pigs in an ideological agenda where multinational corporations, not democratically elected governments, should set the rules of global governance. CETA helps those multinationals punish local governments that want to take a more hands-on approach to managing their local economies.

- As if this weren't enough for the EU, the "landing zone" document says "there do remain some important gaps in areas of EU interest, and Canada is keeping for the end game certain additional concessions, especially at the provincial level." It then says the EU "should insist, at a minimum," on:

(1) On Public Urban Transport, Canada must provide full access and in particular eliminate all local content requirements for EU operators.

(2) On Energy, Canada must provide a significant overall improvement to its coverage, in particular in Quebec, Ontario and Newfoundland.

(3) Provincial and Regional Development Clauses must be either eliminate or redrafted so as not to undermine Canadian Province's market access commitments.

All the bolding and underlining in there comes from the EU documents. Notice the confidence that the EU will eventually get everything it wants, and that Canada is just waiting until the end to give it to them. Though shipbuilding is exempted in Canada's offers, the EU laughs this off, saying "Canadian shipyards are not likely to have the capacity to fulfill possible additional orders, thereby opening a space for competitive European shipbuilders. Thus the EU should not pay for de facto valueless concessions in this area."

Ouch that smarts. Even Canada's big bargaining chips like shipbuilding are useless, according to the EU, because we'll be buying European anyway. It sheds an interesting light on the meeting between Prime Minister Harper and German Chancellor Angela Merkel this year, which ThyssenKrupp executives joined because of the European firm's interest in providing designs for Canada's new navy fleet, as well as future defence contract opportunities.

TAKE ACTION

Citizens and trade justice activists who have spoken to their local councillors to warn them about CETA should share these new leaks widely in their communities. It's especially important in communities that have passed anti-CETA motions. Toronto, Mississauga, Victoria and the 40+ other municipalities that have asked to be exempted from these new procurement rules will probably find it interesting, to say the least, that their provinces ignored them.

There will be more to say about these leaks in the coming days and weeks. For more information on how CETA will affect municipal governments, and how to pass a CETA motion in your own community, see our action kit here.