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Session Summary: Pierre Marc Johnson, Former Premier of Québec

Canada is currently in negotiations with the European Union (EU) to craft a Comprehensive Economic Trade Agreement (CETA).  As Mr. Johnson explained it, a trade agreement begins with agreement on two principles:

1. The free flow of goods, capital and people between parties
2. Each party will discipline itself to allow the first principle to apply.

However, the bulk of the agreement constitutes the exceptions to those principles!

With Canada’s exports into the EU valued at nearly C$30 billion and imports from the EU at C$45 billion, the EU is a major trading partner for Canada. 

While the U.S. remains Canada’s main trading partner and most important investor, Canada is working on an agreement with the EU to obtain diversification in its trading partners.  Due to a deterioration in the power of NAFTA (and the FTA before it), Canada has taken a defensive position due to border disruptions since 9/11/01, the Buy American Act, increasing protectionism in a weak economy, the growth of industry in China and India and a strong Canadian dollar.  Because of these issues, Canada finds itself in a regular negotiating position with the U.S. 

Working in favor of an EU-Canada trade agreement are several commonalities including a great number of existing cooperations, a common value system and interests and the challenges of demographics and financing social spending.  Canadian offensive interests range from free movement of goods (e.g., tariffs and rules of origin), free movement of people (e.g., temporary entries, recognition of qualifications), free movement of capital and cooperation from a regulatory, cultural and environmental standpoint.

One of the challenges that must be faced in negotiating any trade agreement with Canada is Canada’s structure of a decentralized federation.  Each of the provinces has the right to negotiate the items which fall under provincial jurisdiction.  Provinces are consulted on federal issues but also create internal trade agreements between the provinces. 

Three rounds of negotiations on the Canada-EU CETA have already taken plan.  Negotiations are expected to continue through 2010 with two additional rounds of negotiations tentatively scheduled for early 2011.