The Canada-EU Comprehensive Economic and Trade Agreement, or CETA for short, is far from being complete as Prime Minister Harper reminded us last month.

CETA, quite possible the biggest trade deal in Canadian history should it go through, will create a significantly broad flow of free trade between Canada and its second largest trading partner.  The Canadian government claims the agreement would not only reduce barriers in several unique markets including renewable energy, IT, and medicine but also usher in closer cooperation and integration in areas such as science & tech and copyright regulation.  Furthermore, free trade with Canada’s second-largest investor is expected to result in a “$12-billion boost to Canada’s annual income” or the equivalent of “creating 80,000 new jobs or increasing the average of a Canadian family’s income by $1,000.”

Read more about the Canadian government’s projected benefits for Canadians here

And no, as we all learned in ECON101, Canadians won’t be the only ones who benefit from increased trade.  The EU is predicting its total exports to Canada will increase by almost 25% with €11.6 billion in annual income gains within seven years of implementation.

Here’s more information about how the Europeans are seeing CETA

So then, what’s the matter?  Why hasn’t the deal gone through yet?

With negotiations originally beginning in 2009 (and several years earlier if you count the TIEA) followed by Harper’s promise to conclude negotiations by 2012, CETA looks like it’ll be entering 2014 still with some major stumbling blocks that have yet to be resolved.

The National’s Jason Fekete has narrowed it down to three persistent issues that are bogging down the CETA negotiations.  Read Mr. Fekete’s article here

According to Mr. Fekete’s sources, all three issues involve the demands of provincial governments.  Alberta’s beef producers have pressured the government into getting the Europeans to allow more than 40,000 tons of Canadian beef into their markets.  Ok, that’s fair…the removal of trade barriers such as import quotas is a reasonable demand for a deal like this one.

But on the other hand, Quebec’s cheese and dairy industries fear trouble ahead should their cozy markets become accessible for EU competitors like France and want to limit EU access.  And Newfoundland and Labrador are demanding that fish caught in their province be processed in their province.  Really guys?  How can the Canadian government expect the EU to acquiesce on allowing in more beef if our provinces are imposing restrictions of their own kind?

The essence of free trade requires the removal of such restrictions that these provinces are in fact demanding.  This includes, yes, the removal of our own import quotas, subsidies, tariffs, and distortive policies (like what Newfoundland is proposing).  Failure to do so will in the worst case scenario continue to severely impede negotiations to the point of derailment and in the best case scenario, open the door to endless rounds of future trade disputes (soft wood lumber anyone?).  It’s no surprise that these agriculture related industries are nervous of any deal and are posing problems, as has traditionally been the case with previous free trade negotiations.  But the Canadian government cannot afford to let such an important trade deal become bogged down by protectionist demands and unresolved disputes.  The EU, having already initiating free trade talks with the US, may lose patience and overlook this deal with Canada as it’s very clear that Canada and not the EU will benefit more from this free trade deal.

So with a grim outlook the question remains: has CETA reached its final bargaining impasse?  Will provincial pressures and what essentially sounds like ‘free trade cold feet’ stall the negotiation process or worse, derail it?

All we can do is wait and see…

 

 

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