Should provinces have a say in global trade talks?

Hey there, time traveller!
This article was published 30/06/2021 (1588 days ago), so information in it may no longer be current.

If all goes well in a post-pandemic world order, Canada could be back negotiating a slew of bilateral trade liberalization agreements with such countries as England, India or even Taiwan. This raises an interesting and tricky question: is there a need to formalize an institutional role for provincial governments in free trade negotiations?

As a federal state, and a former colonial appendage of Great Britain, the Canadian government had little appreciable control over the conduct of its foreign policy until the early 1930s. That created an opening for sub-federal entities such as provinces to carve out a role for themselves in external relations — especially in the field of foreign trade policy.

Where their constitutional jurisdictions are involved (e.g., energy and natural resources, labour and government procurement, etc.), provincial premiers have invariably demanded a larger role in world trade matters. Courts in Canada, including the initial highest court, the Judicial Committee of the Privy Council (JCPC), have ruled that provinces should be consulted on international/bilateral trade negotiations that encroach upon provincial responsibilities.

Since the 1980s, and probably earlier, provincial governments in Canada have sought a seat at the international trade and investment table. Nowhere was that more evident than during Canada’s high-stakes free trade negotiations with the United States in the mid-1980s. Indeed, premiers from Quebec and Alberta were anxious to make their presence felt in the tense bargaining phases — and then-prime minister Brian Mulroney went some way, however small, in trying to accommodate all provincial governments in a formalized consultative process.

Former prime minister Stephen Harper, eager to showcase his idea of “open federalism,” went even farther than Mulroney’s provincial inclusion efforts. Ever-firmly committed to respecting provincial constitutional competencies, Harper was prepared to allow provinces to have more of a formalized role in crafting Canada’s foreign trade policy.

When talks began with the European Union (EU) in 2009, and ended with a Comprehensive Economic and Trade Agreement (CETA) in 2017, Harper had agreed to direct provincial participation in the trade negotiations. (Some of the push for provincial engagement, interestingly enough, actually came from Canada’s European partners, who were worried about overall compliance and sufficient provincial buy-in of the final pact.) They were, however, limited to specific provincial jurisdictional tables such as services, labour and environmental issues, state-owned enterprises and monopolies and procurement.

While federal trade negotiators did most of the talking during these meetings with the Europeans, provincial representatives were able to impress upon their federal counterparts the nature and scope of their respective offensive and defensive interests. At one point, there were bargaining sessions where the two or three EU trade negotiators would be facing some 20 or 30 so-called “Team Canada” participants.

And if there was a need to secure a truly “pan-Canadian” position, federal officials would simply walk down the hall to a conference room to confer directly with provincial trade representatives.

Although provincial governments may not have been driving Canada’s international trade policy, it was difficult for Ottawa to say no when a provincial consensus crystallized around a particular set of concerns or demands. There was even the highly unusual development of the Quebec trade delegation’s top official meeting in a one-on-one session with the EU’s chief trade negotiator.

Naturally, stresses and strains did develop — particularly when you greatly expand the numbers around the table — between federal and provincial trade representatives. Most of this tension was a function of excessive and unhelpful provincial demands, which only complicated Canada’s overall trade posture.

Furthermore, it became obvious that as the negotiations with the EU progressed, these persistent dictates of provincial governments reflected a lack of both knowledge and basic experience at how the international trade game is conducted at higher levels.

Moreover, carving out a larger space for provinces at the international trade table needlessly hobbles Canada’s negotiating position. Not only does it confuse and confound our foreign trade allies by having to witness federal officials constantly consulting with provincial representatives, but it also nullifies a much-needed Canada-wide list (and not one from each province) of trade priorities.

In addition, having all these provincial voices in the negotiating room makes it difficult for Ottawa to make the necessary tradeoffs to conclude a bilateral pact, as well as opening up the possibility of Canada’s trade competitors dividing the provinces and squeezing federal negotiators for more concessions.

For my money, it would be best if there was no formalized institutional mechanism for involving provinces directly in international trade negotiations. They should be left in the capable hands of Canada’s federal trade officials, as we saw during the critically important NAFTA 2.0 negotiations (where the provinces were effectively marginalized) with the U.S. and Mexico.

Including provincial representatives in anything more than enhanced economic communication and transparency will only weaken Canada’s overall bargaining position, and thus undermine our vital global trade and investment interests.

Peter McKenna is professor of political science at the University of Prince Edward Island in Charlottetown.