Previously published in iPOLITICS on June 8, 2012.
The first big test for Prime Minister Harper's ambitious
trade negotiations agenda will come late this year with the
expected climax of the negotiations between Canada and the EU. The
outcome will determine the credibility of the government's
The Harper government has put major emphasis on its ambitious
trade negotiations agenda as a cornerstone of its Jobs and Growth
Strategy. The list of countries with which Canada is negotiating
free trade agreements or actively trying to deepen economic
relations is breathtaking. Negotiations are underway with a range
of countries including the European Union, Japan, India and Korea,
as well as Morocco and a group of Caribbean nations. The government
is seeking admission to the TransPacific Partnership negotiations
involving the United States and 8 other Pacific states, and is
working to deepen trade and economic relationships with China.
What does this ambitious trade agenda really mean for Canada and
Canadians? We will have much better idea once we see what Canada
can get from the EU. There is a big difference between launching a
negotiation and making the necessary concessions to complete and
The Harper government asserts in the budget that a comprehensive
economic and trade agreement (CETA) with the EU will result in a
"$12-billion annual boost to Canada's economy."
The strategy so far for EU and Canadian negotiators —
who are meeting again this week in Ottawa — has been to
build up the package to make the negotiated outcome as robust as
possible, but we are fast approaching the time for hard choices
about its final content.
These negotiations go beyond market access for goods and
services to set rules on investment and intellectual property that
reach well inside the border.
Decisions made by governments in the closing phase of these
negotiations will have major impacts on investment decisions and
One area where such issues are very much in play for Canada is
in the pharmaceutical sector. The EU is pressing Canada to adopt
tighter disciplines on intellectual property that would benefit
international brand-name drug companies but increase health care
costs and damage generic drug producers.
We learned this week from B.C. premier Christy Clark that she
and her colleagues from other provinces have written to the federal
government to express their opposition to these proposals. They are
opposed to the increased drug costs that the EU proposals would
entail. For its part, the Government of Canada continues to hold
its cards close to the chest.
The stakes are high. Two leading health economists have
suggested the cost of prescription drugs in Canada would rise by
some $2.8 billion annually if three EU proposals for
pharmaceuticals are included in the final agreement.
Put another way, these EU proposals have the potential to cut
the potential "$12-billion annual boost to Canada's
economy" by more than a quarter to $9 billion.
And that figure doesn't include the damage to the generic
industry itself, and its contribution to life sciences and the
manufacturing sector. For Canadian generic producers, these
proposals would inevitably reduce their participation in
On the other side of this issue are the brand name drug
companies who assert that extended protection of their patents is
needed to justify the huge investments required to develop new
drugs. They are the ones who are behind the EU proposals. However,
they have never been able to establish a fact-based correlation
that increased intellectual property protection will lead to
increased research and development.
In considering hard choices it is important to underline that
there will be significant exceptions on both sides of the Atlantic.
An indication of what is in store can be found in the leaked
267-page list of federal and provincial proposed exceptions to the
potential new rules on investment and cross border trade in
In the very near future the government will need to make up its
mind on a number of difficult questions. These decisions will have
important impacts on jobs, the business environment and a range of
Canadians may have been lulled into a sense of complacency by
the lack of detail in government pronouncements on its free trade
agenda. It's time to start paying attention.
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On May 6, 2013, the World Trade Organization’s (WTO) Appellate Body issued its decision affirming an earlier panel ruling that Canada had violated its national treatment obligations by offering green energy incentives that included domestic content requirements in Ontario that favoured local suppliers.