Canada-EU free trade agreement still under negotiation

First published in Landings, July, 2013.

Canada first began talks about a trade agreement with the European Union back in 2007. Preliminary joint studies and nine negotiating sessions later, some in Canada were hopeful the agreement, called the Canada-European Comprehensive Economic and Trade Agreement (CETA), would have been reached in June.

Despite misgivings by some sectors, there were predictions that CETA would be finalized by the time of the G8 Summit in Northern Ireland in mid-June. But instead of an agreement, an EU spokesman at the G8 called Canada out for delaying the pact.

Fishermen in the Atlantic provinces were never enthusiastic about CETA, fearing they might lose protections for their fishing licenses, and suffer processing job losses under the trade agreement.

The Conservative government run by Prime Minister Stephen Harper in Ottawa is anxious to seal the deal this year, and Newfoundland politicians and fish workers' union leaders appear to be more flexible lately in discussing possible changes to their fisheries laws, but the agreement is bedeviled by other issues, such as limits on exports of Canadian meat products to European markets.

Harper left the G8 on June 18 after failing to win some final concessions, particularly from France and Ireland for duty-free access to European markets for Canadian beef and pork.

Fisheries workers in the province of Newfoundland and Labrador (NL) have expressed concerns since 2009 when serious CETA talks began, because provincial statutes require fish processing to be done in the province before seafood products are exported. If CETA passes, they fear those job-protecting statutes will be negated.

In early June, Kathy Dunderdale, Newfoundland premier, said discussions between the province and the federal government were running more smoothly. "We seem to be back on track," Dunderdale told reporters following a speech in St. John's. "We have alignment. This is a very big deal for Canada." However, Dunderdale did not reveal if Ottawa had agreed to end a demand for the province to drop its minimum fisheries processing requirements, only saying that the federal negotiator for CETA would present the provincial position at the talks.

CETA is "not likely to be of any concern to Maine or to the United States," said economist Charles Colgan, professor and chair of the Community Planning and Development Program at the University of Southern Maine, Muskie Institute.

"Most of Maine's lobster processing is done in Canada. We have no similar laws to Newfoundland and Labrador, so there are no statutes their agreement will have any impact on," he added. Since the Newfoundland laws have no effect on the U.S., the issue was also not addressed in the 19-year-old North Atlantic Free Trade Agreement (NAFTA).

"There was a dispute about minimum lobster sizes between the U.S. and Canada under NAFTA," said Colgan. "U.S. law prohibits undersized lobster and those caught in the Northumberland Strait were smaller than the U.S. minimum. The Canadians said under NAFTA, they had a perfect right to bring their small lobsters in, but the arbitrator said the U.S. had a right to make and enforce laws to conserve our lobster."

Current trade talks have been too secretive for some in the Liberal party of Canada. Liberal spokesman Lawrence McCaulay said, "While the government has stated that it will keep policies such as fleet separation and owner-operator in place for now, there is no doubt that their previous disastrous communications and consultation approach with regard to the modernization of our inshore fishery created fear and uncertainty throughout eastern Canada."

But Colgan thinks given the arbitrator's decision regarding undersized lobster under NAFTA, that concerns about Newfoundland's processing and other Atlantic fisheries issues could be "a tempest in a political teapot."

Canada's government Web site said the Canada-EU joint study that preceded CETA negotiations indicates liberalizing trade in goods and services could bring a potential 20 percent boost to bilateral trade and GDP gains of up to $12 billion (Canadian) to Canada. The government Web site also says the negotiating text for CETA is well advanced and "issues in the remaining chapters (are) narrowed down to key differences where solutions are not being actively explored."

But the devil is always in the details. Even before the G8 trade talks took place, Colgan predicted a slow road for any agreement between Canada and the EU, or between the EU and the U.S. "It won't happen for a long time," he said.

Any trade agreement between two countries must honor and not violate other trade agreements such as NAFTA. The EU is now starting talks with the U.S. about a free trade agreement, one which United Kingdom Prime Minister David Cameron calls potentially "the biggest bilateral trade deal in history."

Colgan is cautious about such a deal. "Getting to a comprehensive trade agreement with the EU is a thorny issue," said Colgan. "Both sides want to do it, but it's complicated. For instance, France will want protection for its film industry and the U.S. makes a lot of money exporting its films."

Despite the setback at the G8, both Harper and Cameron expressed optimism that CETA will happen soon, even though the EU's focus now turns to EU-U.S. negotiations.

If there is such a deal, that is of concern to Maine lobstermen, according to Patrice McCarron, Maine Lobstermen’s Association executive director. “The issue is, if the Canadians are successful in eliminating tariffs or duty on lobster products, that could be a huge trade advantage for them. How would that impact U.S. competitors on similar lobster products?” she said.

Colleen Coyle, seafood program coordinator at Food Export Northeast, a public agency dedicated to improving U.S. food exports, said that the U.S. plans to begin talks with the EU. “The U.S. is also beginning trade liberalization negotiations with the EU. Food Export-Northeast last month formally requested the U.S. trade representative to negotiate the elimination of duties for seafood products,” she said in an email. The formal request stated that “EU markets are vital to distribute the vast production of lobster and scallops harvested from the northeastern U.S….Eliminating EU tariffs for our region’s fishery products will vastly improve the competitiveness of the small to medium-size companies that characterize the northeastern U.S. seafood industry.”