Why Did it Take So Long to (Sort of) Finalize the CETA?

By Patrick Fafard, January 3, 2014
In the fall of 2013 the Government of Canada finally announced that it had finalized (sort of) an agreement with the European Union for a comprehensive trade and economic agreement. I say "sort of" since all that was released was a general overview of the agreement.
While a number of questions still remain about the agreement, one of the most puzzling (at least for some of us) is why it took so long for Canada and the European Union to come to an agreement.
We believe that one of the reasons it took so long to finalize an agreement is that Ottawa and the provinces did not put in place a formal process for securing provincial approval of the final shape of an agreement.
Negotiations began in the spring of 2009 and the Government of Canada began hinting that a deal was imminent as early as 2011. The fact that the two sides disagreed on some key issues like patent protection and access of Canadian beef to European markets, to name but two, is not in itself a sufficient explanation for the long drawn-out process of concluding an agreement. And strictly speaking, absent a final legal text it is likely that a form of negotiations is ongoing.
My colleague Patrick Leblond and I have followed the CETA negotiations from the beginning. We are particularly interested in the role of provincial and territorial governments in the negotiations. (For a comparative perspective on the role of subnational governments in trade negotiations, see the paper we wrote for the Forum of Federations).
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Simply put, for the first time provinces were invited to be part of the negotiations rather than merely consulted. This is in large part because the EU insisted that provinces be present, since several parts of an eventual agreement lie within provincial jurisdiction. We are interested in understanding what this means in practical terms.
We believe that one of the reasons it took so long to finalize an agreement is that Ottawa and the provinces did not put in place a formal process for securing provincial approval of the final shape of an agreement. Absent such a process, the federal government found itself negotiating bilaterally with individual provinces (and associated powerful economic actors, e.g. Alberta beef producers). To put it another way, a process was put in place to involve provinces in parts of the CETA negotiations but nothing was done to formalize a process for eventual decisions about the final terms of an agreement. This, we believe, is at least a partial explanation for the delay in securing a final agreement. This argument is developed more forcefully in a paper we recently published in the International Journal , along with a strong set of related papers on the provincial role in the CETA negotiations.

See also:
Benjamin Zyla, Transatlantic Free Trade: Not a Novel Idea at All
Robert Hage, Sexy Vanilla: Canada-EU Free Trade

And the story is by no means over. While several provinces have publicly signaled their support for the draft agreement with the European Union, de facto negotiations continue. Quebec is concerned about the impact of the proposed agreement on Quebec cheese producers, and several provinces are concerned about the impact of a deal with the EU on the price of prescription drugs. More importantly, perhaps, it remains to be seen what, if any, mechanism will be put in place to formalize provincial support for the CETA. Absent some sort of agreement, if and when a provincial government fails to implement its promises pursuant to the CETA negotiations, the federal government will be on the hook to pay any financial penalties that may be levied.
In effect, even though much was made of involving provinces in the negotiations, the CETA may end up being quite similar to the NAFTA. In that case, because Ottawa is the sole signatory to the deal, it is responsible for ensuring compliance-and, failing that, for paying any financial penalties that may be levied. More generally, there are limited ways for provincial and territorial governments to "sign on" to the NAFTA. The same appears to be the case for the CETA. From both an economic and political point of view, surely we can do better than this.


Published on the blog Ideas, policy and all that on January 2, 2014
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