October 19, 2013 | 13 Comments
The EU and Canada have struck a monumental trade deal, in principle. It’s not official, the text isn’t finalized and neither legislative body has taken a look at the details, yet, but the way the leaders are talking this up, it would be quite a shock if it didn’t get implemented. It’s a deal that’s on a similar level as NAFTA in terms of scope and importance, and it is very likely to have deep, long-lasting effects on both parties.
And this is a very good thing.
NAFTA, and the FTA before it, set the basis of the economic stability and expansion that Canada has experienced since ratification in 1993 (or since 1988 for the FTA). These deals aren’t silver bullets – they don’t promise endless expansion and cushy well-paying jobs or all – but they are essential building blocks towards building a robust and sustainable economy.
It’s a wide-ranging deal, touching on such industries as manufacturing, pharmaceuticals, dairy and investment. It will open up Canada’s economy to foreign wealth while also giving our home-grown industries greater access to a massive international market. One of the best aspects of the deal is a commitment that should the EU enter into a more favourable deal with another trading partner, Canada will automatically get the same beneficial deal.
There are a few drawbacks, unfortunately. We have had to acquiesce to the intellectual property demands Europe, at least in terms of drugs. Prescription drugs will now get two extra years of patent protection, and the increased regulations will put upward pressure on the price paid by provinces and consumers. Sad that a deal steeped in economic freedom would have such a market-defeating mechanism built in, but politics is the art of the possible… or whatever some self-important politico once said.
My hope would be that the added economic growth that will come from this deal will result either in people and provinces being able to better afford drugs at higher prices, or that the feds will be in a better position to provide appropriate aid to those in need.
Another drawback is the entrenchment of supply management. Okay, entrenchment might be too strong word, but dairy, eggs and poultry will still be protected. So we will still get the dual privileges of paying higher prices for these products and ensuring that there is a cap on production.
The dairy industry situation is particularly interesting, as Canada’s cheese lobby is a little up-in-arms. The cap on cheese imports is being doubled, roughly. I watched a story on CTV Newsnet about the Quebec cheese industry, and a representative for Big Cheese lamented that this would have a negative effect on Quebec’s cheese market. He’s wrong, of course.
Language matters. What he meant was that it might have a negative effect on Quebec’s cheese producers. The cheese market will be in much better shape, as consumers will have a wider variety of cheeses from which to choose. The market is far more than just farms and companies. We are all a part of the market, and we deserve equal benefit of legislation.
The whole method of talking about the effects of a trade deal are completely backwards. We have and will continue to hear stories about how the deal will hurt various industries, and no doubt there will be some “losers” in this. But this formulation assumes restrictive trade barriers as the default, and this is wrong.
Our legacy trade regulations with the EU are an infringement on freedom. It is the regulations that are affecting people – favouring some, hindering others. This trade deal is not actively hurting anyone; it is taking away government-enforced privilege from a select few. If we look at it the proper way, steps towards trade liberalization are bringing us back to a much better default – a default with less xenophobia and more economic gains.
Andrew Coyne offered up possibly the most succinct way to view this deal, or any deal that helps liberalize trade:
Be clear: what Canada “gave up” is almost always what we *gained.* The “concessions” are things that cost consumers & reduce productivity.
— Andrew Coyne (@acoyne) October 18, 2013
Today is a good day.