Think EU trade negotiations took forever? China and India will take longer

The truly difficult talks are yet to come

 
(Herbert Spichtinger/Image Source/Corbis)
(Herbert Spichtinger/Image Source/Corbis)

Nobody likes a party-pooper, particularly when the celebration has been highly anticipated and long delayed. When Canada launched free trade talks with the European Union in May 2009, the government predicted it would have a deal in less than three years. It took more than four. But it was worth the wait: the Comprehensive Economic and Trade Agreement, when ratified, could boost Canada-EU trade by 20% and create 80,000 new Canadian jobs. It’s a praiseworthy accomplishment and the seventh trade deal signed by the Conservatives since 2006.

But here’s the comedown after the party: this deal took too long, left too many trade barriers in place and stalled on minor matters like cheese quotas.

Here’s the real bummer: this was the easy deal. Unless Canada makes substantial changes, negotiating agreements with countries like India and China won’t only prove tedious, but effectively impossible.

Not even CETA is guaranteed at this point. As the federal government moves toward ratification, its provincial counterparts are busily undermining it. Ontario’s government has introduced a provision in its tendering process for infrastructure projects that would require bidders to demonstrate “local knowledge,” a vague stipulation designed to give local firms an edge over foreign competitors. The notion is farcical. Will the bidders demonstrate local knowledge through a quiz on native flowers, or perhaps popular local sushi restaurants? Premier Kathleen Wynne has said the trade agreement represents a “very good deal,” yet her government is pushing measures that are as protectionist as they are silly.

Which is unfortunate, given Canada will need all of its governments working together to push forward on free trade. As much as the EU talks were a slog, the two sides started with some common ground. They were already well-established trading partners; the EU is Canada’s largest market after the U.S. And each party walked into the talks with roughly the same goals—new markets for their goods.

Compare that with India, with whom Canada completed its eighth round of talks this summer. Our existing economic relationship is non-existent—India represented just 0.6% of Canada’s exports in 2011, with a substantial portion of those shipments composed of three products: potassium, newsprint and peas. Further, the two countries don’t have matching interests, as the University of Calgary’s Eugene Beaulieu noted in an article last year. Canada wants to move goods, but India has apparently had enough peas and is more interested in labour mobility. The government aspires to complete the deal by the end of this year or early 2014, the Canadian high commissioner to India told reporters this spring, but given how long CETA dragged on, that seems wildly unlikely.

Beyond the Indian negotiations lie increasingly tougher battles. Canada has taken wee steps toward a free trade deal with China, including a joint study this summer proclaiming huge opportunities for the resource and agricultural sectors. At the same time, the Conservatives’ decision to hike tariffs on a slew of Chinese products in their last budget only created more headaches to soothe later.

So too will the government’s perplexing ongoing support for supply management of eggs, poultry and dairy products. Allowing these sectors to be governed by cartels, and imposing tariffs of up to 300% on imports, stalled Canada’s entry into negotiations for the Trans-Pacific Partnership, a monster free trade agreement between 12 countries, including Australia, Chile and Japan. It seems probable the regime—which already stalled CETA—will block Canada from enjoying the full benefit of the TPP when it’s concluded.

There are clear measures to speed future negotiations: the elimination of supply management, lowering tariffs rather than hiking them and resisting new protectionist measures like “local knowledge” clauses. Yes, a trade deal with Europe is worth celebrating. But there are ways to ensure we don’t need to wait so long for the party next time.

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