PRIME Minister Stephen Harper and his government deserve credit for achieving a comprehensive economic and trade agreement with the European Union. Europe has 15 times Canada’s population and 10 times its gross domestic product, but Mr. Harper achieved a package of trade concessions that looks reasonably balanced.
As with Canada’s other major trade agreements — with the U.S. and Mexico — the costs and benefits will only become apparent as the years go by. The agreement, for example, provides that Canadian automakers can ship 100,000 vehicles a year to Europe, a 12½-fold increase from our current average exports. The government’s sales pitch for the agreement assumes that this level of sales will be achieved. But do that many European consumers want the cars Canada produces? Perhaps, but it’s too early to say.
In the same way, trade in cheese may increase to the large extent the government forecasts with the expansion of Canada’s cheese import quotas. The authorities have agreed on removal of a trade barrier, but will Winnipeggers increase their cheese consumption or will they stop buying New Bothwell cheese and switch to European-made cheeses instead? Removal of the barrier is a worthy action, but the practical effects remain to be seen.
The dairy producers of Canada are already convinced the agreement is a disaster. The same song was sung by Canadian wine producers when Canada-U.S. free trade removed their protections, yet that industry has, in fact, gone from strength to strength under the free trade regime. Dairy producers deserve a fair hearing on the agreement, but it should also be recognized they don’t know what will happen any more than the wine producers did.
Canada won the agreement by granting concessions — more cheese imports, longer patent protection for pharmaceutical drugs, opportunities for European firms to bid on government procurement contracts. But these measures are most likely to benefit Canadians, though they are presented as concessions for negotiating purposes. It’s high time the excellent Canadian dairy industry re-organized to compete on a world scale. It’s high time Canada honoured the rights of drug innovators instead of trying to enjoy worldclass drug therapy on the cheap. It’s high time suppliers to Canadian provinces and municipalities learned to compete against European firms, with the possible result of lower government purchasing costs.
A couple of years more will be needed to produce a legally binding trade treaty and win the necessary concurrence from Parliament, from Canada’s provinces and from the complex decision structure of Europe. During that laborious process, Canadians will hear both horror stories and fairy tales about the costs and benefits of the agreement, most of which should be taken with a grain of salt. By the time the next election rolls around, Canadians will have a better idea how good or bad it is.