Published in Embassy Magazine on September 19, 2012
By John M. Curtis
International trade negotiations and trade, investment, and innovation policies more generally have become a, if not the, central priority for the government of Canada in recent months.
They will continue to be so throughout the coming fall and winter. The prime minister, finance minister, and international trade minister, never mind other federal ministers and members of Parliament, have highlighted the importance of these negotiations either completed, almost-completed, on-going, or planned, and tied them directly to helping lay the foundations for Canada’s future economic prosperity. Nowhere is this clearer than in the 2012 budget where it is stated: “Our country’s prosperity is linked to reaching beyond our borders for economic opportunities that serve to grow Canada’s trade and investment. Open trade has long been a powerful engine for Canada’s economy. It is even more so in these globally challenging economic times.”
What, then, lies ahead in the coming months? What will be most important in this area of intense activity given other demands on ministers’ and officials’ time, as well as that of business leaders and others directly or indirectly involved? What noneconomic, social, environmental, or larger foreign policy factors will be in play?
It is clear that a very active and ambitious program of negotiations and of operations— including consultations with the provinces, territories, the business community, and several NGOs, as well as work in specialized committees in Canada and abroad, and dispute management and resolution—will continue through the fall, winter, and beyond. This will include finishing trade, foreign investment protection, science and technology, and air services agreements with a number of countries—the Canada-European Union trade agreement being the most notable—continuing others, and assessing the desirability of launching more.
This trade-related activity will also include, as always, monitoring the practices of other countries and speaking out or at times undertaking litigation where necessary against any evidence of other countries’ protectionism, be it bilaterally, in the G7/G20 context, at the upcoming annual general meetings of the IMF and the World Bank, or at the World Trade Organization. Domestically, intensive and high-profile work will continue as well on applying the Investment Canada Act to the CNOOC-Nexen proposal (the “net benefit test”) while across the federal government work will continue on updating the highly successful 2007 Global Commerce Strategy, setting out new directions, as needed, in Canada’s trade, and investment expansion efforts.
Trade talks
On the negotiating front, the highest priority over the coming months undoubtedly will be to conclude and sell the Comprehensive Economic and Trade Agreement with the European Union. After numerous large- and small-group negotiating sessions, including formally for the first time all the provinces and territories, difficult and controversial areas such as government procurement, intellectual property, and regulatory and tariff issues dealing largely with agriculture, remain to be resolved, which will require political decisions at the highest level.
Advancing a Comprehensive Economic Partnership Agreement with India, also as in the case of the Canada-EU negotiations called for in last year’s throne speech, will be another priority during the coming months, attracting a large amount of Canadian business and media interest. Many countries, however, are competing with Canada for India’s attention. India’s serious current internal economic and political issues also complicate the deal.
Another key focus of Canada’s negotiators over the coming months, in addition to the CNOOC-Nexen investment review noted above, will be strengthening the economic and trade partnership with China. A major Canada-China complementarities study was completed and released by both governments in August. Deciding whether and how to initiate exploratory discussions on deepening and institutionalizing the relationship lies ahead in the coming months, especially in the context of Canada now having been invited at the G20 meeting this past June in Mexico to join the Trans-Pacific Partnership negotiations, which do not now include China.
The just-launched free trade negotiations with Japan, exploratory negotiations with Thailand, following up on the Joint Declaration on Trade and Investment with the ASEAN (Southeast Asian) countries, possibly completing the on-again, off-again negotiations with Korea, and examining the wisdom of such negotiations with Australia will all reinforce this coming season Canada’s interest in expanding trade, investment, and innovation in the Asia-Pacific region.
Finally, within our own hemisphere, Canada over the coming months will be in exploratory talks with the Mercosur countries to build on the trade and investment agreements already completed and in force with Honduras, Panama, Costa Rica, Chile, Colombia, and Peru. Canada will also be carrying on negotiations through CARICOM with many of our Caribbean neighbours with whom we have such a wide range of economic and social relationships. Most importantly, Canada will be working to revitalize and expand NAFTA, our most important trade agreement but for our membership in the multilateral World Trade Organization.
The Shared Vision for Perimeter Security and Economic Competitiveness, regulatory co-operation, and working particularly with the United States at every level on joint areas of concern remain Canada’s ongoing and highest overall priority as we try to put in place sound economic, trade, fiscal, and monetary policies with our largest and closest partner to ensure better jobs and higher economic growth for Canada and for Canadians into the future.
It won’t all be smooth sailing. Some of the negotiations referred to above will fail, be less ambitious, or take longer than hoped. Some people will be displaced and have to move into new activities or be supported by the state or by others. Some businesses will disappear, while others prosper. But this will define the contours of Canada of the future and indeed one hopes of most, if not all, of the world and its peoples as together we move beyond the Great Recession of 2007-2009 and the Great Stall since then.
John M. Curtis is a senior fellow at the C.D. Howe Institute, and was the founding chief economist of the Department of Foreign Affairs and International Trade.
