Wednesday Night #1616

Written by  //  February 19, 2013  //  Wednesday Nights  //  No comments

The week’s topic is TRADE – of all kinds.

President Obama announced during the State of the Union Address that the U.S. would start comprehensive free-trade talks with the EU, prompting Danielle Goldfarb to ask Did Obama Just Derail the Canada-EU Trade Deal? , adding “A deal could help revive the U.S. and European economies, but U.S.-EU negotiations could also make it difficult to get the EU to wrap up the Canadian deal, which is currently in the final stages, and is already past deadline. And that could make it harder for Ottawa to complete other free-trade deals.”

Several Wednesday Nighters weighed in on this question: Stephen Blank asks: why, given the deeply interconnected nature of our two (three!) North American economies, there isn’t more (some!) coordination (not to speak of collaboration) among us on negotiating these agreements. Of course, that would require more coordination on trade issues between (among) us anyway. To which Tony Deutsch replies that As a rough approximation, we might need something like the degree of integration between the US and Canada, as exists among the EU members, to coordinate trade agreements with third parties such as the EU. To make a wild guess, the Canadian agricultural lobby and the US pharmaceutical industry might be among the chief losers from closer US-Canada economic integration, thus the chief supporters of “loss of sovereignty” alarmists in both countries. (So far nobody raised the eternal issue of inter-provincial trade.)

Guy Stanley offers a more lengthy response:
There is still a WTO and article XXIV on regional trade pacts is still in place. Any trade diversion imposed by those excluded has to be compensated. Also, if the agreement is better than MFN, it should (a) include those whose trade volumes top the list of those involved, to qualify for an Article XXIV exemption. and (b) be showing progress at moving from trade law to a common competition policy/anti-trust law form of regulation of business practices within the region. NAFTA, since the rise of Asia and the failure of the dispute panels is a bit sketchy in both areas. If Europe and North America do a deal (back to the Asiento?) then these issues are kicked down the road. But what if one NAFTA partner is excluded? Not likely if there is any deal at all. Therefore, for the Canada-EU game, is it better to call the other’s hand or check and see what happens next? Presumably the EU would like to close an advantageous deal to use as a floor with the US. Canada may feel it can drag its heels a bit given the strength of US agricultural and other protectionism –& bearing in mind the US announced goals of a renegotiated FTA with Canada. Bear in mind–as Stephen points out–these economies are thoroughly wired together anyway, so the final deal is really about reducing long term irritants that have been overdue for settlement. The other Canadian consideration is that the EU deal would help close other deals still in negotiation, esp. South Korea. Ultimately, the political level has to drive closure.

Meantime, Spiegel reports (EU-US Trade Talks : Southern European States Put on the Brakes) that “France and other Southern European nations … want to exempt issues like food regulation and gene technology from the talks in order to protect the interests of their farmers … The German government is concerned that the US might in this case respond by demanding exemptions itself, which would end up producing only a modest agreement.”

Elizabeth May worries about the Environmental Assessment of the Trans-Pacific Partnership (TPP) Free Trade Agreement Negotiations and particularly insists on the need to include investor-state arbitration clauses.

Canada needs to close its free-trade deals writes Brian Lee Crowley in hardly disguised exasperation, pointing out that “If you visit the website of Foreign Affairs, you’ll see the list of countries with whom we are seeking to negotiate free trade deals. It includes India and Japan and the trans-Pacific Partnership, that might open the doors to China and other growing Asian economies. But most of those negotiations are embryonic at best.”

And on an FTA-related issue, his colleague, L. Ian Macdonald, writes Spare the lectures and approve Keystone , reminding us that “In the energy chapter of the Canada-U.S. Free Trade Agreement, we gave the Americans security of supply in return for security of demand.” (Thank you, Ron Robertson)

Citing the complications that would arise from Scottish independence (Go-it-alone Scotland ‘would be brand new country forced out of 14,000 treaties and have to renegotiate membership of the EU from scratch’), Cleo wonders how many Quebec would have to renegotiate. Tony Deutsch points out that one of the first areas to be renegotiated would have to be NAFTA, while Tom Haslam-Jones noted that “in the Quebec aerospace industry there would be chaos, because a whole, internationally negotiated, structure for the certification of products would be needed. In 1995 the headquarters of Pratt & Whitney Canada would probably have instantly transferred to their Mississauga, Ontario plant in order to be able to use the existing certification capabilities of Transport Canada. The same would apply to Bombardier and Bell Helicopter as well as component suppliers.” We suggest that this topic would be suitable for a lengthy, scholarly [redundant?] analysis. Volunteers?

Beyond that reference, we will refrain from the Quebec topic this week, despite the increasing worry over the proposed Bill 14, which makes 101 look like a soothing nursery rhyme. Beryl Wajsman is on the case and in full cry.

The Catholic Church is trading in one Pope for another, but neither we nor all those pundits have any idea whether we will be trading up. Seems like what’s on offer changes from day-to-day. The commentary on Benedict’s legacy – not to mention what his influence over the Conclave may/may not be continues – but it is all conjecture.

Liberals are trading-in leaders in Canada and Quebec. Last Saturday’s third debate among the 9 candidates for the national party leadership was, in our opinion, a vast improvement over the previous ones in terms of substance – due, without doubt, to the change in format. It was also livelier which is probably inevitable as everyone gets a bit tired of platitudes. However, there were a few points at which individual candidates fell into the nasty trap. In the aftermath Jason Kenney took aim at Justin (Jason Kenney slams Trudeau) with some quite pointless statements whose only purpose appears to be to prompt Liberals to rally to Justin’s banner. A bad sign.

The Russians have a politician who beats all Canadian science deniers – The Independent reports that according to Vladimir Zhirinovsky, meteorites falling on Russia is an impossibility. He apparently stated that: “Nothing will ever fall out there [from space], if something falls, it’s people doing that. People are the instigators of wars, the provocateurs.”

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