Negotiating from weakness: Review of European Agreement needed

“Negotiating from Weakness” is the title of a paper written by Scott Sinclair of the Canadian Centre for Policy Alternatives. Basically, the paper argues that in current negotiations with the European Union for a Comprehensive Economic and Trade Agreement (CETA), Canada is negotiating from a position of weakness and this “is almost always a recipe for disaster”.{{more}}

Many organisations in Canada are distressed over the CETA negotiations with the EU. As usual the negotiations are being conducted in secret with very little public consultation. A number of Canadian organisations, mostly trade unions, have joined together to express their “serious reservations” about the scope and negotiating process of CETA and to demand “full transparency “.

They draw attention to a consultation paper issued by the European Commission (EC) containing questions directed mainly at the business community and to “online consultations” from the Canadian Department of Foreign Affairs and International Trade, and they declare both processes “insufficient”.

They also make two very important points. First, there have been no preliminary, independent studies or broad stakeholder debate and consultation; and second, there is need for “a comprehensive impact assessment of the proposed bilateral trade agreement on the economy, jobs, poverty, gender, human rights, culture and the environment in Canada and the European Union”.

What is interesting about the reaction of various Canadian organisations to the CETA with the EU, is that there is no similar response in relation to the Free Trade Agreement (FTA) that Canada is presently negotiating with small Caribbean countries. Yet, Caribbean countries will be disadvantaged by Canada once the FTA is signed, particularly because Canada will accept no less from the Caribbean than each of these countries has already given to the EU under an Economic Partnership Agreement (EPA) signed last year.

If the title “negotiating from weakness” applies to anyone, it more aptly applies to small Caribbean countries which have already signed up to an Economic Partnership Agreement (EPA) with the EU and are now in the process of negotiating with Canada. The Caribbean negotiated from a position of weakness with the EU, and is now in the same position with Canada.

That weakness occurred because Caribbean governments, particularly of the smaller countries, did not apply sufficient resources to inform their positions or they did not pay enough attention to the intricacies of the EPA negotiations with the EU. In the end, trade negotiators were blamed for an EPA that few liked and even fewer, including in many governments, understood.

Interestingly, one of the big points of contention in Scott Sinclair’s paper, and in arguments made by other Canadian groups, concerns “government procurement” – the purchases by government of goods and services of all kinds. What the CETA between Canada and the EU is proposing is that EU companies will have the right to compete unconditionally with Canadian companies for government procurement and there can be no measures that favour Canadian companies. Sinclair points out that government procurement at the federal and provincial levels “can be an important economic development tool” as typically “governments are the single largest purchaser of goods and services in the economy”.

Sinclair is clearly concerned about the displacement of Canadian companies in their own market; and he is not persuaded by the argument that Canadian companies will have reciprocal rights in the EU countries. He recognises that larger EU companies with access to more capital and technology could maintain their hold in their own markets, while dislodging Canadian companies in Canada. Similar arguments were made by commentators in the Caribbean when the EPA was being negotiated with the EU. Additionally, the point had been made that the issue of foreign companies accessing government procurement contracts unconditionally had not been settled in the global trade negotiations at the World Trade Organisation (WTO), and that the EU was seeking to get by the back door what they had failed to achieve in the WTO talks.

As in the EPA between the EU and Caribbean countries, the CETA being negotiated between Canada and the EU gives the participating countries “most favoured nation” status. In Canada’s case whatever concessions it gives to the EU, it will have to give to the US and Mexico with which it partners in the North American Free Trade Agreement (NAFTA). Canadian companies will, therefore, be facing competition from EU, US and Mexican companies.

In the Caribbean’s case, if and when an FTA is concluded with Canada, Caribbean companies will face competition from the EU and from Canada. A small sardine toasted and sandwiched between two loaves – one larger and one very much larger.

How much Canada can concede to the Caribbean is left to be seen. Both the EPA between the EU and the Caribbean, and the proposed CETA between Canada and the EU will restrict the policy space of negotiators on all sides, however helpful Canada may wish to be to the Caribbean.

This is all the more reason why, as several of us have argued since the EPA was signed, Caribbean governments should, individually and collectively, set up a comprehensive system for the collection and analysis of data on the EPA’s impact on specific socio-economic groups such as the unemployed, women, youth, and indigenous groups, and other development objectives already identified in the EPA.

And, this data should be utilized as a basis for a review of the EPA “not later than 5 years” from signature as provided for by the Joint Declaration issued at the time of signing. Indeed, the end of the second year would be a most appropriate time to conduct such a review.

If Caribbean governments fail to do this, “monitoring” the EPA will mean “monitoring the Implementation of the EPA Obligations by the Caribbean”. In other words, the European Commission’s agenda will be satisfied at high cost to Caribbean countries while what ought to be the Caribbean’s principal concerns are ignored.

The Europeans should not be criticized for looking after their own interests. But, Caribbean governments should equally be true to themselves. In any event, no agreement should be concluded with Canada until the Caribbean has fully and properly reviewed the EPA with the EU. The strong bond between Canada and the Caribbean would be enhanced to their mutual benefit if the Caribbean applies to an agreement with Canada the lessons it learns from the EPA with Europe.

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