Canada and the EU NAFTA Like Deal in the Making

Canadian government officials are in Prague seeking to open talks on a wide-ranging agreement with the EU. While labeled a trade agreement by many, it is in fact much broader. We will wait to see just what the EU will agree to, but make no mistake: it is a significant agreement.

What it will seek to do is more closely align Canada with some of the work of the EU, especially as it relates to sustainable development, the movement of people and intellectual property. Though trade is a strong focus – the EU is Canada’s second largest trading partner after the US, with a total of $109.4 billion (€70.3 billion) in trade in 2007 making Canada the EU’s eleventh largest trading partner – the “soft” agreements on sustainability and labour mobility may be of most interest.

Changing trade arrangements to remove barriers, especially in services, could be mutually beneficial. A study commissioned by the Government of Canada suggests that changed rules could yield $18.26 billion (€11.6 billion) for the EU and $12.9 billion (€8.2 billion) for Canada in terms of additional GDP contributions, with services leading the way. This would require the elimination on tariffs on bilaterally traded goods, easing restrictions on services and opening up competitive bidding on government contracts to EU companies and giving equal access to such contracts for Canadian companies bidding in the twenty seven countries of the EU.

Behind this focus on trade is a desire to strengthen intellectual property protection, a more effective enforcement of labour laws and the focused enforcement of the environmental protection legislation and the freer movement of labour. In particular, there is a desire to make it easier for Canadians to serve as executives for European companies, for there to be much easier arrangements for credential recognition and more efficient tax arrangements for individuals moving between Europe and Canada.

Also on the table is opening up the possibility of increased foreign ownership in media and airlines, the regulation of financial services and the encouragement of foreign direct investment by EU in Canada and Canadian in the EU.

Canada already has several other agreements with the EU – on science and technology, on aviation and on cultural exchanges. This new agreement will be substantial and very comprehensive - all Provinces, except Newfoundland and Labrador, have signed up to the framework for the agreement and have participated in shaping the key agenda for this weeks talks. There are significant concerns, including the implications for Canada’s fisheries and fur trade and for environmental protection under the terms of the treaty. Newfoundland is concerned that EU fishing fleets may have too easy an access to an already stressed fishery while others are concerned that the EU will force Canada into a “green” strategy that is not in keeping with the economic interests of Canada. For many, including the Canada-EU Business Council, the agreement is more substantial than the NAFTA agreement, but is moving through a process of negotiation almost unseen by the public.