What`s in CETA? What we know so far and potential

What’s in CETA? What we know so
far and potential implications for
Canada-US ties
Robert G. Finbow
EUCE, Dalhousie University
Prepared for presentation at the Roundtable "Trading Off Canada's economic relations with the
US and Europe in time of crisis."
October 23, 2013
CETA as a “next generation” FTA
 “enhanced economic partnership agreement”
 EU’s interest in an FTA with the US? CETA could set
 new issues to catch up with changes and challenges
of global economy; complex supply chains, IP,
virtual goods.
 trade in services and intellectual property
 “beyond the border” issues involve domestic or
sub-national issues in a federation like Canada.
 Conflicting assessments of economic benefits – did
Canada gain as much as the EU?
Liberalization of Goods Trade
• Eliminating duties – rapidly removing 98% of tariffs (though
many are already low)
• Elimination of technical barriers to trade
• Industrial tariffs – lower costs to buyers
• Agricultural tariffs – gradual removal on 92%- 94% of
• No end to EU agricultural subsidies, even in some affected
areas like cheese production
• Fish (raw and processed) to be opened up
• Quotas remain in dairy, meats but access increased
• Potential gains in advanced goods exports? aerospace and
auto-parts in Ontario and Quebec, agricultural machinery in
Saskatchewan, extractive machinery in NL, biomedical in NS
Trade in Goods
Merchandise Trade
Liberalization of services
• negative list" approach:
• services in all sectors are granted access and nondiscriminatory treatment except for specific exceptions
listed in the CETA
• Covered areas include:
• Financial services
• telecommunications,
• energy
• maritime transport
• E-services: e-books, e-payments, e-recruitment
Trade in Services
Services Exchanged
Technical barriers to trade
Technical regulations
testing and certification requirements.
often establish necessary safety measures,
Can become a barrier to trade if they are too burdensome
or discriminatory
Follows WTO Agreement on Technical Barriers
Promotes mutual recognition of standards to facilitate
Creates mechanisms so regulatory bodies can recognize
each others product tests and certifications to reduce costs
and duplication
Public input and cooperation between standards bodies
Coordination of sanitary and phytosanitary measures
Professional Mobility
• Mutual recognition of qualifications – gradual
coordination of licensing for professions such
as architects, engineers, and accountants
• Temporary Movement – rights for firms to
move employees to facilitate trade in services
and investment as well as maintenance and
monitoring for exported equipment
Intellectual property
• Canada moving closer to EU, WTO standards
• Covers IP, trademarks, designs and copyrights
• Important in pharmaceuticals where at least 2
years patent protection extension granted
• Data protection keeps Canadian model
• Concerns re price increases from patent
• Geographic indicators – respect for trademarks
on local and speciality products
Public procurement
• Access for both parties at all levels of government and all
agencies, departments
• Limited declared exceptions
• Transparency in tenders via new electronic systems for
• Thresholds for local preferences raised
• $315,538 for goods and services
• $631,077 for procurement by utilities
• $7.8 million for construction services
• Thresholds: too high or too low?
• important sectors, such as education and health services
may be excluded
Investment provisions
• non-discrimination, a fair and equitable treatment
and appropriate compensation for expropriation
• Elimination of barriers and clarification of legal
• Raising threshold for review of takeovers
• “Modern” disputes settlement procedures based
on mediation and penalties as a last resort
• Will it contain guarantees against frivolous use to
secure penalty payments for speculative losses?
Investment Relationship
Investment Relationship
Dispute settlement mechanism
• Comprehensive across the agreement
• Addresses disagreements on interpretation and
enactment of CETA
• Arbitration and mediation provisions
• Last resort penalties
• Investor rights as yet unclear but likely include the ability
to proceed in closed tribunals and in court against losses
related to violations of CETA
• Will disputes system limit regulatory power in areas like
the environment? Or other areas of public concern?
CETA: Complicating the North
American Relationship?
• Bilateral talks with Canada could set
precedents for US-EU negotiations
• But provisions could differ
• Canada: movement towards EU friendly
regulatory standards could conflict with
NAFTA collaborations with the US?
• EU will seek similar concession in US deal, but
prospects complicated by fraught US political
Automotive Sector Controversies
• Automotive rules of origin: EU sought as much as 60%
Canadian content
• Canadian co-production with US firms makes this difficult
to attain
• Compromise: all vehicles with 50% Canadian content are
now unrestricted (could aid US exports)
• Vehicles over 20% get larger quota of 100,000
• Canada will recognise some EU car standards and will
considers others in future
• Easier for EU to export cars to Canada
• Could complicate Canada-US coordination on standards
Possible complications for US
• Will CETA GIs force US suppliers to re-label goods for
export to Canada?
• US exporters will need to be aware of rules of origin
requirements and be able to provide proof of origin
when need be
• Regulatory standards coordination with EU could have
impact on US firms
• New regulatory approval procedures or changed
standards could alter Canada-US regulatory practice
• Some US firms with Canadian or EU subsidiaries could
benefit from liberalization
How will Canada fare?
• Government cites the access gained to the world's largest economy
• 28 member states, 500 million people and annual economic activity
of $17 trillion
• Existing trade deficit with EU expected to slightly increase
• Imbalance of trade: primary for advanced goods
• Are less visible flows (investment, services, virtual goods) more
favourable to Canada?
• Most vocal supporters this week: forest products, barley growers,
beef and pork lobby
• This concerned: dairy, poultry, wine sectors
• How does the EU economic crisis affect the potential gains for
Canadian exporters?
Impact of Economic Crisis?
Whose opportunity? Whose risk?
how much distribution of opportunity?
Since CUSFTA failure to prepare population for adjustment
Governments look to immigrants for new skilled workers;
Conference Board: basic education sound but lifelong learning
Tax cut mantra undermines adjustment prospects
Training off-loaded to the provinces; federal government
“unconcerned” about provincial budgets
but pledging some unspecified compensation for those harmed
in the deal
Regional inequalities could lead to uneven adjustment programs.
Selected Sources
CBC.Ca “CETA: Canada-EU trade deal by the numbers” http://www.cbc.ca/news/politics/cetacanada-eu-trade-deal-by-the-numbers-1.2125473
“Effect of CETA on Auto industry debated” http://www.ourwindsor.ca/news-story/4167785-effectof-ceta-on-auto-industry-debated/
European Commission “ Facts and figures of the EU-Canada Free Trade deal”
European Commission “ Countries and Regions: Canada
Alexandre Gauthier and Simon Lapointe “Canadian Trade and Investment Activity: Canada–
European Union” http://www.parl.gc.ca/content/lop/researchpublications/2010-86-e.htm
Government of Canada “Opening New Markets in Europe: Final Sectors”
Government of Canada “Opening New Markets in Europe: Overview”
Peter E. Kirby, Clifford Sosnow and Julia Kennedy “CETA: what will the agreement mean for
Canadians?” Fasken Martineau LLP http://www.lexology.com/library/detail.aspx?g=19a42eae277d-48e9-a544-46f56edb44bf
“Ontario’s worst fear about CETA isn’t realized” The Globe and Mail October 21, 2013
Stewart Trew, “CCPA asks 10 questions about the Canada-EU CETA “

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