By Carlo Dade and Dylan Jones
In the StarPhoenix, the Leader-Post
Oct. 19, 2013
To the surprise of many trade watchers, and to the great relief of those concerned about Canada’s ability to compete in an ever more competitive global trade landscape, the Prime Minister is in Brussels to sign the long-awaited Comprehensive Economic and Trade Agreement (CETA) with the European Union.
Though the agreement is of immense importance to central Canada it also contains significant immediate and longer-term wins for western Canada.
In general, trade is good for consumers because it lowers prices. It is good for industry because it lowers the costs of key inputs that make their products more competitive in domestic and export markets. It is good for citizens because it promotes the creation of high-paying quality jobs that are best sustained by increasing Canada’s success as an exporter.
Beyond these typical benefits, CETA will have four benefits for western Canada that are less obvious:
First, and perhaps counter-intuitively, is the fact that central Canada will benefit. Strengthening central Canada’s economy and increasing its access to non-US markets will benefit the entire country, including the West. After all, a strong central Canadian economy will better position the West to address the critical investments it needs to sustain growth rather than providing increasing transfers to the rest of the country.
Second, signing the agreement will free resources and attention at Canada’s overworked and understaffed Department of Foreign Affairs, Trade and Development to focus on the deals that are of even potentially greater benefit to all of Canada, and the West in particular: the Trans-Pacific Economic Partnership, trade agreements with India, China, Korea (or all three), joining the Pacific Alliance, and discussions with the Association of South East Asian Nations. Canada has catch-up to do to establish itself as a preferred supplier to these rapidly growing regions.
Second, CETA will clarify and move the dial on opening the rest of Canada’s agricultural sectors to global competition. The goal of this is not to punish protected sectors in Canada, but to lower the costs of food for Canadians, improve quality and choice and accelerate the pace of these sectors becoming more export-oriented – the only way they can actually grow beyond supplying the small Canadian market.
Western Canada has already opened itself to global competition and benefited. It is time for the rest of Canada to come along. This agreement will help with that process. Negotiations in the Pacific could hinge on striking deals with countries like Singapore, New Zealand and Australia that are open and competitive and are gatekeepers to broader and richer agreements in the wider Pacific. This kind of an ambitious program will not be possible without more movement on supply management – movement which will benefit Canadians anyway.
Third, the agreement will raise limits for Canadian beef, pork and grain exports to Europe and will give Canadian exporters an important price advantage over their American competitors who are only just beginning their trade negotiations with Europe. This is great news for the Canadian agricultural sector. Given the current state of affairs in the US capitol, negotiating, let alone approving, an agreement will not be a quick process. The agreement also makes some concessions on dairy and the dreaded supply management issue. While the changes are limited to cheese – and even these are small given what could have been put on the table – the fact that there has been any movement at all is a positive.
The downside to the agreement is largely in the area of patent protection for pharmaceuticals that will, under almost all scenarios, raise costs for drugs. Yet, some movement on this issue by Canada will also help in our relations with the US and potentially in the Trans-Pacific negotiations. As well, given the current critical issue of drug shortages in Canada, there could also be some health and cost benefits associated with more (and better incented) European supply.
Fourth, the agreement sends an important signal to Canada’s current and future trade negotiating partners that the country, meaning the central government and all 13 provinces and territories, can conclude a major agreement. More ambitious agreements are coming and success in concluding the European agreement is an important stepping stone to those agreements.
Carlo Dade is the Director of the Centre for Trade & Investment Policy at the Canada West Foundation. Dylan Jones in the President and CEO of the Canada West Foundation. The Canada West Foundation is the only think tank with an exclusive focus on policies that shape the quality of life in western Canada.