Premier Jean Charest is described as the savior of Canada-European Union free trade talks in this month's l'Actualité magazine. It's an honour that will come back to bite him. Because despite Charest's belief the negotiations will increase provincial political and economic autonomy within Canada, the only possible outcome is the exact opposite.
If Europe gets its way, Canada's provinces and cities will lose considerable political flexibility, including the room to set economic, environmental and other social priorities and public policies that interfere, however superficially, with global capital and investment flows. To the extent that the Quebec and also the Ontario government places many conditions on economic activity to encourage local development -- think of McGuinty's minimum local content rules on clean energy projects -- these provinces stand to lose more than others from the European trade talks.
Negotiations toward a Comprehensive Economic and Trade Agreement, or free trade-plus deal between Canada and the European Union started this week in Ottawa. Some 35 EU negotiators will put on their best poker faces as they lay out a list of federal and provincial policies they'd like to see eliminated in order to boost European access to Canadian markets.
Of course Canada's negotiators will be doing the same, hoping, for example, to convince the Europeans they should be eating more genetically modified produce (which they revile) and relaxing quotas on Canadian beef imports (which were put in place because of our growth hormones).
Quebec-based engineering and firm SNC Lavalin and provincial favourite son Paul Desmarais Jr. of Power Financial Corporation, among 100 other Canadian and European companies on a statement in support of a NAFTA-plus bilateral agreement, would also like to see reduced EU state-level barriers to services so they can expand their already formidable empires. (Desmarais will be anxious to improve market access in Canada for Power Corp's European holdings, including French private water giant Suez, which would benefit from increased access to public water contracts.)
But it's important to realize that, as during free trade talks with the United States in the mid-1980s, Canada is the underdog. We have less to offer the Europeans and, not surprisingly, much more to lose. The scope of negotiations is huge, politically sensitive and to date largely shielded from public scrutiny. But it goes on with enthusiastic support from some premiers, including Charest and McGuinty. Why is this?
According to the article in l'Actualité this month, the Europeans walked away from preliminary talks in 2006 because of difficult jurisdictional issues with the provinces. Three months later, Charest was being wined and dined by the likes of Alcan, Bombardier and SNC Lavalin, who convinced him to take up their cause.
In January 2007, he went on the offensive, enlisting McGuinty and former Manitoba premier (now U.S. ambassador) Gary Doer. Persistent lobbying from Quebec ministers and provincial diplomats in Europe, including tag-team sessions with Sandra Pupatello, Ontario's minister of economic development, eventually convinced the EU Trade Commission the provinces would cooperate. By mid-2008, Europe was talking to the Harper government again, and insisting that McGuinty, Charest and the other premiers have a seat at the table.
The reason provincial participation was so important to the EU is because so much of what they are asking of Canada -- access to provincial and municipal public contracts for European companies, the removal of foreign investment caps (particularly in telecommunications and finance), taxation policy reforms, a single national securities regulator and enhanced services (including health and possibly water) liberalization -- involve provincial jurisdictions.
Even sacred cows like culture and supply management, which curbs overproduction of eggs, dairy and poultry in Ontario and Quebec, provides stable prices for consumers and stable incomes for farmers, are in Europe's crosshairs -- despite reassurances from the federal government that the popular and successful practice is safe.
Also contentious are provincial spending powers. NAFTA's procurement chapter prohibits favouring Canadian or provincial companies when spending public money on goods or services over a certain threshold. Like the World Trade Organization's procurement agreement, NAFTA also forbids many local minimum content rules or local hiring requirements. Provincial exemptions from these rules were crucial in developing Ontario's internationally recognized wine industry. We'd be crazy to give them up.
Consequently, sustainable and ethical purchasing policies that distinguish between goods or services based on how they were produced have been successfully challenged under the WTO as unreasonable barriers to trade -- showing the extent to which trade flows are prioritized over all other societal goals under these arrangements.
Neither NAFTA nor the WTO procurement agreement applies to Canadian provinces or cities, which is a bone of contention not just for the Europeans, but also a rallying call for corporate lobby groups in Canada who are successfully using the "Buy American" controversy to push for unnecessary limits on provincial and municipal government spending powers. These powers are a rare benefit in a world of ever shrinking democratic control over markets -- not some evil to be cleansed with more corporate welfare.
Charest is talking out of both sides of his mouth by at once claiming that Quebec will come out of these European talks more powerful while at the same time endorsing new limits on the scope of legitimate government action to improve local economies and protect the environment. We have yet to hear from McGuinty about how he really feels.
The only clear winners from Charest's heroic efforts to re-start Canada-EU negotiations will be politically powerful corporations inside and outside Quebec, who will benefit from the deregulation and privatization that these bilateral trade and investment negotiations are designed to encourage.
Stuart Trew is the Trade Campaigner for the Council of Canadians. Claude Vaillancourt is General Secretary of l'Association québécoise pour la Taxation des Transactions financières pour l'Aide aux Citoyens (ATTAC-Québec).
Links:
[1] http://rabble.ca/print/news/2009/10/charests-european-free-trade-gamble#comment-1076596
[2] http://rabble.ca/user
[3] http://rabble.ca/user/register
Thanks for this info, and I want to clarify some issues around supply management, in relation to some of my earlier comments elsewhere on this site.
The supply management system is useful, but here's the picture with respect to its minimum quotas, and its interaction with the brick wall of financier control of commodity and currency exchanges, as well as practically every other price in the markets:
High level threshold minimum quotas, for example in poultry or dairy, keep small producers out of the system. The minimum quotas in these sectors foster larger scale factory farming practices.
Are these minimum quotas in place to allow existing farmers to remain viable? Why can farmers not remain viable with smaller and healthier farm practices?
One answer is that relevant input and output prices are determined to a large degree, even with supply management, in cross-border markets, subject to all the financier-controlled strings. These strings include insurance prices, interest rates, currency values, as well as 'trade' laws and regs that favour certain big players, hydro rates, commodity input prices, and all the other costs which farmers must absorb, which, combined, do not match the output prices which farmers obtain. Farmers are forced to go big and to go global which, in the current global food and finance structure is difficult to hold to healthy account, and is at the expense of smaller producers particularly in lower income countries.
A top priority solution for this situation is for all farmers and their advocates to jointly address control of finance, including the banking and insurance industries. Public participatory control of private financial markets is needed, rather than the current effort of Obama and Harper and others to allow further self-regulation by the financial/insurance sector.
Instead of having the private-banker filled Federal Reserve system responsible for financial regulation in the US, and instead of tying our own financial system to the US and European private financiers through the various rigged 'trade' and interprovincial deals, we need to ensure the committee members running our own central bank and making policy decisions are not crony financiers themselves, but are filled with people who in practice take steps to a) set up participatory processes for, b) listen to, and c) enact the requests of residents whom they are supposed to represent as public servants.
We are quite unique in Canada in that we have a central bank whose sole shareholder is the government of Canada. We need to retain that sovereignty, not give it away in NAFTA or further deals.
Instead we need to use and expand the capacity we have to run finance publicly in the interests of all people and the environment.
The majority of farmers, and the world's population, have had enough of a private-financier run planet. We need politicians who will come clear on steps to address that core issue.