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Comment: Trade deal affects how Canadian firms do business

The Comprehensive Economic Trade Agreement that Canada recently signed with the European Union is Canada’s most important trade deal since the North American Free Trade Agreement.

The Comprehensive Economic Trade Agreement that Canada recently signed with the European Union is Canada’s most important trade deal since the North American Free Trade Agreement. CETA is likely to transform Canada much more than NAFTA has, and has already had a significant impact on provincial-federal relations in Canada.

CETA’s potential to transform Canada lies in the fact that the European Union is the world’s largest trader of manufactured goods, and is the No. 1 investor and recipient of investments worldwide. It is also the most important trading partner for about 80 countries around the world.

Furthermore, the EU is also the most important trading partner to nations in the Global South. To achieve this position, the EU has worked on a worldwide trading strategy that started in the 1970s and is premised on the general understanding that to trade well, one needs to trade fairly and with reciprocity.

Clearly, when then-prime minister Stephen Harper approached Nicolas Sarkozy, then president of France and of the European Union, to initiate free-trade negotiations, the first reaction of EU technocrats was a cautious “maybe.” The assumption was that trading with Canada would be limited to primary goods.

But the first economic assessments pointed toward the quality of Canadian service industries, and the surprising discovery of a thriving service sector. Indeed, at the beginning, it was our competitive edge in the service industries that motivated the EU to enter negotiations for a free-trade agreement.

One discrete and important part of the service industry is that public contracts play an essential part in modernizing service economies, and our country is well known (at least in academic circles) to have been successful over the past 20 years at modernizing its public sector so as to work in concert with the service industries in public-private partnerships and contracting out.

Today, Canadian service industries are thriving, thanks in part to healthy procurement contracts with public local, provincial and federal departments and agencies. Those contracts are often important to local, provincial and federal economies, and are managed with the highest standards of transparency and accountability.

As it happens, having access to those public contracts was a very important part of the EU’s interest in CETA.

In brief, CETA’s originality is that it has a broader-than-traditional free-trade agreement’s focus on manufactured goods because it includes all forms of procurement contracts and any form of intellectual property, and industrial services such as pharmaceutical and financial goods.

As a result, during the past seven years, CETA negotiations have had a transformative impact on federal-provincial relations.

At the demand of the EU (not the Canadian government), provinces were asked to get involved in the international discussions at a level of engagement and confidentiality that is a first in Canadian history. Each province and territory had to send its director and staff responsible for international trade both to Ottawa and Brussels to contribute position papers. They had to discuss the results of their consultations with provincial-level businesses regarding procurement contracts, government tenders and public contracts, and the particulars of government tenders on service industries.

EU negotiators required the presence of provincial representatives because they wanted access to Canadian procurements and tenders, and they wanted clear and aligned procurement regulations in place.

This meant that provincial officials had to have time to consult with their respective service industries to report on their assessment of the likely success the Canadian service industries could have when bidding for government tenders in Europe, and vice versa.

What are we talking about here? The small and large public tenders and contracts that affect industries such as accounting, architects, accountants, banks, consulting, marketing and publicity firms. These contracts are an important aspect to CETA and will change the business scenes for local and provincial Canadian service providers. Bids will have to abide by CETA rules — bidders in Canada might be European firms, and vice versa.

In brief, CETA has affected Canada already in more than one unexpected way. In the future, Canadians will be exposed to the European ways of making political and business decisions for the better; and this is just a start.

Emmanuel Brunet-Jailly is an associate professor in the University of Victoria’s school of public administration, director of UVic’s European Studies minor, editor of the Journal of Borderlands Studies (Routledge) and Jean Monnet Chair in EU Border and Urban Region Policies.