Big stakes in Canada-Europe trade talks, but little attention

OTTAWA - It may well be the biggest and most important trade negotiation that most Canadians have never heard of.

While most of the news out of Europe of late has had to do with the Greek debt crisis and an ash-spewing volcano in Iceland, about 60 Canadian officials have been huddled in contentious trade talks with their European counterparts - or at least video images of them - in what used to be Ottawa's city hall by the Rideau.

There have been no demonstrators in front of the building denouncing a sell-off of Canadian sovereignty, and hardly a mention in the media or the House of Commons.

But if you listen to the critics, what is at stake is in some ways more troubling than the Canada-U.S. free trade talks of the late 1980s - over which an election was fought - or the NAFTA deal that followed.

"What we want is the most ambitious trade agreement we've ever had," federal Trade Minister Peter van Loan said in an interview with The Canadian Press.

"We're looking for something that is deeper and broader than even NAFTA, and this is with the world's largest economy."

The two sides are now in the third round of talks, with two more planned. If all goes well, Van Loan hopes to see ink on the Comprehensive Economic and Trade Agreement or CETA by late next year.

Last week, Canadian and European negotiators largely communicated via video screens as all but five of the Europeans were unable to fly to Canada because of the Icelandic volcano. And, because of the time difference, talks were restricted to half-days, and hence have been held over another week.

"It's worked fairly well, partly because everybody knows each other. We've made quite a bit of progress," said Steve Verheul, Canada's chief negotiator.

Another unusual aspect of the talks is that, for the first time, the provinces are represented as full partners. That is at the insistence of Europe, which wants a provincial buy-in or no deal at all.

The talks involve practically everything it is possible for the two sides to put on the table - not just the usual stuff of tariffs and duties, but services, investment, agricultural subsidies, government procurement at the national and subnational levels, intellectual property, regulatory rules and labour mobility.

Given the size of the European Union market - 27 countries, 500 million people and $19 trillion in gross national product - Canada has been eager to get a deal done for years. The Europeans, not so much.

And that's the problem, according to critics, who say Canada has appeared too eager in dealing with a savvy economic superpower.

"The Europeans could walk away without any negative political repercussions, whereas for our government, it has become a centrepiece of their foreign policy," said Scott Sinclair, a researcher for the Canadian Centre for Policy Alternatives, who recently wrote a report on the negotiations.

Sinclair says the talks are not so much about freeing up trade, noting that tariffs on the more heavily traded items are already under three per cent, but about weakening the ability of governments on both sides of the Atlantic to regulate how multinationals operate.

The Europeans, he says, want to do away with Canada's supply management system in dairy and poultry, along with the Wheat Board and the ability of provincial and municipal governments to favour local suppliers in their procurements. One big prize Europe covets is Ontario's green technology initiative, he says.

In return, he believes, Canada would get to send more raw materials to Europe.

Not so, says former Liberal finance minister John Manley, who now heads the Canadian Council of Chief Executives, the country's most influential business lobby group.

Manley argues that with the U.S. economic star fading, Canada needs to diversity its trade and Europe, a prosperous and in many ways similar economy to Canada's, could bring major benefits.

The government estimates Canada could gain a $12-billion boost to its gross domestic product by 2014 if a satisfactory deal is struck. Canadian exports to the continent were $52 billion in 2008, modest given the size of the market.

More important in today's global economy, said Manley, is an opportunity for Canadian firms to break down the non-tariff and regulatory barriers that have kept them from integrating with European supply chains.

The Europeans will want something in return, including the ability to compete for government procurement projects, and freer trade in agriculture. Canada also wants access to European agriculture, in particular ending barriers to genetically modified foods.

"The market we're looking at is much bigger than the market we're giving up," argues Manley. "Shouldn't we be thinking more about how we access markets than how we protect our little market?"

With so much at stake, both boosters and critics are a little surprised there hasn't been more attention paid.

One reason may be that Canadians have become accustomed to free trade deals, and Europe, with its more socially-democratic societies, isn't as scary to Canadians.

But they should be paying attention, says Stewart Trew, a trade specialist with the Council of Canadians, which has opposed most trade deals. He says criticism from civil society groups and labour will become louder and more intense as more Canadians learn what they could lose.

He and Sinclair believe a deal will significantly erode the ability of Canadian governments to make decisions based on domestic needs for jobs and environmental protection, and with few gains to show for it.

"Over the next few months you are going to see quite a few groups coming out over various issues," Trew said.