Fraser Forum

Despite predictable opposition, pending trade deals would benefit Canada

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At the top of her agenda, Chrystia Freeland (pictured above), Canada’s new Minister of International Trade, plans to work with Parliament to ratify two important treaties that reduce existing barriers to free trade—the Comprehensive Economic and Trade Agreement with the European Union (CETA) and the Trans-Pacific Partnership (TPP) with 12 countries in the Pacific basin.

Before the ratification votes take place, she will arrange hearings before parliamentary committees and debates in the House of Commons. It’s encouraging that Freeland will bring to these events her own, previously expressed views: “Canada is a small country. The world economy is huge. And if we want our middle class to be prosperous... having trade deals with the world is absolutely essential.” But she also sees the need to make sure that the treaties make Canada “a winner.”

She will face much opposition to the treaties from organizations whose interests will suffer from the lowering of tariffs, subsidies and regulations, and which will argue that the trade deals will harm the middle class and make Canada a loser. For example, Jim Balsillie, the founder of Research in Motion (now BlackBerry Limited), is likely to present the argument he has made recently that the TPP will diminish the rights to intellectual property like that used to make his telephones a great financial success.

Unfortunately, there will be few presentations in favour of the treaties since the increased productivity and lower prices for consumers they bring are diffuse and are not taken up by many organized lobby groups, except for some public interest think-tanks and public intellectuals like University of Toronto Law School professor Richard C. Owens, who refuted Balsillie’s arguments in an article in the Financial Post.

Fortunately, parliament cannot demand renegotiations of the existing treaty drafts, regardless of how much the ideology and election promises of newly elected members will make them responsive to lobbies opposing them. The reason is that the provisions of the draft treaties submitted for ratification are like a house of cards—move or take away one, the entire structure will collapse—and governments can only accept or reject them in their entirety.

This characteristic of draft treaties is the result of horse-trading by governments that want continued protecting of some of their organizations in return for allowing others to retain the protection of some of theirs. For example, Canada retained the right to maintain the essential features of the agricultural supply management system by allowing other countries to retain protection of some of their favoured interests, though confidentiality of the negotiations prevent us from ever knowing the cost in terms of lower Canadian exports.

The government’s parliamentary majority is of course free to reject these two treaties, but there is hope that it will not. Doing so would not be without precedent. In 1993 the newly elected government led by Prime Minister Jean Chretien made much political noise demanding the renegotiation of some aspects of the North America Free Trade Agreement (NAFTA), which had been promised during the election campaign. However, facing the reality that the previous Parliament had already ratified the treaty and that revisions were impossible, the government accepted it legally through an executive decision after the media and public had lost interest.

NAFTA brought many benefits and few costs to Canada. CETA and TPP will do the same. Let’s hope Chrystia Freeland knows her history.


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