Canada-EU trade deal remains controversial

16 September 2016 20:34 Source:ICIS News

Focus article by Stefan Baumgarten

TORONTO (ICIS)--The pending Canada-EU free-trade deal remains controversial on both side of the Atlantic – despite renewed support from German chemical industry and Canadian government officials on Friday.

Negotiations on the Comprehensive Economic and Trade Agreement (CETA) were finalised in August 2014, but the deal has yet to be ratified. CETA is often described as template for the stalled US-EU Transatlantic Trade and Investment Partnership (TTIP).

Germany chemical producers' group VCI on Friday issued a statement in support of both CETA and TTIP, ahead of planned big demonstrations in many German cities against the deals this coming weekend.

"It is deplorable that so many people currently see the free trade agreements with Canada and the US as a threat to our society," said outgoing VCI president Marijn Dekkers.

A large part of Germany’s prosperity depended on German companies’ successes on international markets, he said.

Globalisation would not simply disappear because of German concerns, but it would rather "be driven forward by other actors, like China", Dekkers said.

Germany should therefore use CETA and TTIP as "the chance to shape a globalisation with fair rules", he added.

Meanwhile, Canadian trade minister Chrystia Freeland will once again travel to Europe next week to pitch CETA in Germany and other countries.

Earlier this week, she met German Vice Chancellor Sigmar Gabriel in Montreal to discuss and promote CETA's implementation.

CETA has been her top priority since she became head of trade in Prime Minister Justin Trudeau’s new government last year.

In Germany, CETA is being opposed by many members of the Social Democrat party, the junior partner in Chancellor Angela Merkel’s ruling coalition government.

The party is due to vote on CETA next week. If it comes out against the deal, this could harm Gabriel.

As economic affairs minister, Gabriel is defending CETA. However, as leader of the Social Democrats he is facing increasing resistance from inside the party against both CETA and TTIP.

German business daily Handelsblatt said on Friday that if Gabriel cannot convince his own party about CETA then this could dim his chances of being nominated as the Social Democrats’ candidate for chancellor in next year’s federal elections.

Meanwhile, a number of Canadian labour unions, including one representing chemical workers, on Friday issued a joint statement against CETA, outlining many concerns they said are shared on both sides of the Atlantic.

The unions pointed to CETA’s clauses on investor rights, as well as fears that the deal would harm the delivery of public services in Canada, in particular health care, which is provided by the provincial governments.

They called on Trudeau not to ratify CETA, for the time being.

First, all investor rights rules, which provide for an investor court system, needed to be removed, they said. There was no need for such an "extra-judicial arbitration that favours corporations", they said.

The unions also noted concerns over CETA’s patent protection provisions, which could increase the cost of pharmaceuticals in Canada.

Also, CETA would constrain the public procurement processes of Canadian provinces and municipalities, they said.

Furthermore, the trade deal was not providing for "labour rights – a marked contrast from the provisions that address the rights of investors", the unions said.

"Our analysis shows that CETA will cost Canada jobs across the manufacturing and processing sectors," added Jerry Dias, president of the Unifor labour union which represents chemical and energy industry workers, among many others.

CETA will eliminate all duties on industrial goods, saving European exporters almost €600m/year, the EU has estimated. It will also open up Canada’s €30bn/year public procurement market to EU firms.

In Canada, the government has estimated that CETA could boost Canada’s income by C$12bn/year ($9bn/year).

The government has lauded CETA as "an historic opportunity to gain preferential access to the largest market in the world, a market with over 500m consumers and a GDP of almost C$18 trillion".

($1 = $1.32)

By Stefan Baumgarten