Canada should not count on EU trade deal

Opinion

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This article was published 26/10/2016 (3268 days ago), so information in it may no longer be current.

International Trade Minister Chrystia Freeland should not be surprised Canada’s free trade deal with Europe has run into political trouble. The Council of Canadians has been hard at work peddling scare stories among left-wing parties in Europe about the horrors of free trade. Demonstrations against free trade in general and the deal with Canada in particular have drawn good crowds lately in Europe.

The surprise is that the Brussels technocrats who negotiated the deal were poorly informed about the views of their political masters. This sometimes happens in negotiations — but in a highly professional outfit such as the European Union, you would expect the trade authorities to find out what the member countries will accept before asking Canada to agree to the same terms.

Canada and the rest of the trading world learned that the European Union is not as efficient as it’s cracked up to be. European and Canadian authorities had scheduled a grand signing ceremony where Prime Minister Justin Trudeau and Canada’s European trade partners were to sign the Comprehensive Economic and Trade Agreement. But they forgot to ask the socialist-dominated regional assembly of the Belgian region of Wallonia, an economic backwater where people see little advantage in trade expansion. The Walloons voted to reject the agreement and now Canada doesn’t know if it has a deal.

The European Union, which exists because of a belief in free trade, has spread the trade gospel by taking in new member countries from the old Soviet empire and by concluding treaties with non-member countries — notably South Korea, Mexico and South Africa — but also including many smaller countries in Africa, Central and South America and the Arab world. Work has already started on EU trade treaties with Japan and the United States. The delay — it should not yet be called a failure — of the treaty with Canada has cast doubt on the prospects of those eventual treaties.

An even more difficult negotiation faces Europe: the United Kingdom intends to disentangle itself from the European Union while keeping many of the advantages of free trade with Europe. The Scottish regional assembly, however, may hold a fresh referendum on independence because Scots wish to remain in the EU. Since the EU has such difficulty making a trade treaty with Canada after seven years of work, how long will it take to forge a new trade relationship between the EU and one of the continent’s largest countries? No commercial lawyer in Europe or the U.K. need fear a shortage of work.

Trade treaties necessarily produce winners and losers. One government takes down a trade barrier in return for removal of another country’s trade barrier. Companies that were sheltering behind those trade barriers have to adjust and some will go out of business. Both economies expand, but the process is hard on some industries. Anti-trade campaigners such as U.S. presidential candidate Donald Trump and the Council of Canadians can win easy applause by appealing to people who think they are victims of free trade. The winners in the trade game, however, don’t always recognize how their prosperity came about.

Europe may yet find a way to conclude its treaty with Canada, but don’t count on it. The U.S. may yet decide to let the Trans-Pacific Partnership come into being, though no presidential candidate is recommending it. Canada should get busy on Plan B.

» Winnipeg Free Press