It could be months before Canadians learn what’s really in — and more importantly, out of — the interprovincial free trade deal Canada’s premiers announced in Whitehorse last Friday.
Not only is the Canada Free Trade Agreement not finished, but at least one hard-fought-for section has to be temporary to avoid contradicting previously agreed-to international trade rules.
Nevertheless, words like “historic” and “unprecedented” were bandied about last week when an agreement in principle was announced, even as trade aficionados pointed out the acronym is already taken — a Continental Free Trade Area (also CFTA) is in the works for Africa in 2017.
The most important part of the agreement — the “negative list” of what goods and services are excluded — remains a mystery.
Meanwhile, inconsistent regulations across provinces for everything from corporate registration to transportation safety remain. The agreement doesn’t actually fix those, but provides a “mechanism to harmonize and reconcile” specific rules.
Ontario’s minister of economic development chaired the negotiations earlier this summer that gave the premiers something to work from at last week’s Council of the Federation talks.
In a statement to CBC News, Brad Duguid said he’s “thrilled with the progress that was made” and explained the next step.
“The negotiating officials who have played an integral role in getting us to this point will now work to resolve the remaining technical issues, with the goal of submitting a fully finalized agreement for consideration and endorsement by premiers at their next meeting. This is likely to occur in the fall,” he said.
A First Ministers meeting is expected in October, when Prime Minister Justin Trudeau will join the premiers to finalize Canada’s strategy for reducing carbon emissions.
Last week, the premiers called for talks on a new health-care accord as well — so that agenda’s really filling up.
“If that [meeting] unfolds as expected, a final legal scrub and translation would be the last necessary steps before the agreement enters force,” Duguid said.
The deal was negotiated on a “negative list” basis — jargon that means the deal liberalizes “everything but” specified exclusions.
Officials say they’ve seen the list of what other provinces and the federal government want excluded. They say it’s long, but still an improvement.
But it can’t be shared — as the cliché goes, “until everything’s agreed, nothing’s agreed.” Leaking drafts ties the hands of those still at the table.
“Until the final details are ironed out, it would be premature to discuss details of the agreement,” Duguid’s office said. “The agreement will be published in full after it’s finalized by the premiers, which is likely to be this fall.”
The wait until it’s posted publicly will be months, not weeks, sources confirm.
Business groups like the Canadian Chamber of Commerce want results faster — and more transparent decision-making about what regional differences are really necessary.
By chamber estimates, internal trade barriers cost Canadians billions. This, in a country that was supposed to have enshrined free trade at Confederation.
“We’re disappointed to have to wait longer for a concrete agreement, especially since it has taken 149 years to get this far,” CEO Perrin Beatty said.
‘Buy Alberta’ protectionism
One of the biggest puzzlers coming out of Whitehorse was how the deal makes provincial and municipal procurement a bit less free.
Facing a downturn in the oil and gas sector, Alberta Premier Rachel Notley’s government wanted new spending — and there could be lots, considering infrastructure repairs and rebuilds after recent natural disasters — to translate into jobs for the recently unemployed.
Some $34 billion is set to roll out over the next five years — $5 billion might be on the table to rebuild Fort McMurray alone.
Notley proposed a kind of “Buy America”-style move to favour local firms: up to 20 per cent of an evaluation could be based on “local benefits.”
Multinational construction companies might need to set up Alberta offices to satisfy local requirements.
Provinces discussed what would constitute an Alberta resident for the purposes of satisfying employment conditions. It was a sensitive topic: many non-residents commuted to work on oilsands projects and might want to return.
Alberta’s proposal was hard to accept. It ran afoul of the New West Partnership trade deal with British Columbia and Saskatchewan. (Manitoba’s in talks to join, too.) Its neighbours needed an exemption.
Plus, Alberta isn’t the only province that needs more jobs.
Atlantic Canadian premiers stood up as a group and called it a deal-breaker. They were prepared to retaliate. They wanted an exemption, too.
That left only Ontario and Quebec on the receiving end of the protectionism.
To save the deal from collapse, Quebec agreed to take it.
Short-term advantage for Europe?
But Central Canada’s disadvantage may be temporary because Alberta’s special arrangement comes with a four-year sunset clause.
Premiers also had to consider what they’d already agreed to in the Canada-EU comprehensive economic trade agreement (CETA.)
Once that deal is ratified — and that’s still an “if,” not necessarily a “when” — provinces can’t disadvantage European companies.
Discriminating against an out-of-province bid could trigger an unfair trade challenge, using the newly rewritten investor-state dispute settlement (ISDS) process under CETA.
Although 90 per cent of CETA might come into effect provisionally in 2017, the ISDS was classified as shared jurisdiction in Europe. Federal government officials say it can’t be used until all EU member states vote in their respective legislatures.
Could a French or German company have a bidding advantage over one from Ontario?
Yes — until the sunset date, anyway.
To paraphrase B.C. Premier Christy Clark on another topic: trade is freer, but not completely free.
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