Issue

On May 6, 2009, Canadian and European Union (EU) leaders announced the launch of negotiations towards a Comprehensive Economic and Trade Agreement (CETA). The agreement set out a broad and ambitious negotiating agenda. ¹ Because of the ambitious nature of this agreement, European negotiators have insisted that individual provinces in Canada sign onto the agreement in addition to the federal government. 

European negotiators have three primary objectives: obtain access to government procurement at all levels in Canada; harmonize and update intellectual property rights (IPRs) in Canada; and instate geographical indications (GIs) on select products that are geographically unique.

Background

In 2008, Canada and the EU released a joint study, Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership. ² The study shows there are important benefits for both sides to pursuing a closer economic partnership. It estimates that Canadian national income could increase by $11.4 billion Cdn (€ 8.2 billion) over seven years from a comprehensive integration of the two economies. An updated analysis at the beginning of 2010 by Kitou and Philippidis of the economic and trade effects of the CETA suggested that the increase from the Agreement might be smaller but still substantial ($4.5 billion Cdn/€ 3.2 billion). ³ 

Major beneficiaries of the CETA would include Alberta wheat farmers and beef and pork producers. Based on estimated increases to price and production taken from Kituo and Philippidis’ analysis, total wheat crop receipts stand to increase in Alberta by nearly $200 million. Increased returns to cattle and hogs are understated in the study, which does not account for the unique regulatory and quota system imposed by Europe. Should tariffs, quotas and restrictions be reduced on these products, some estimates predict that Canadian exports may reach as high as 100,000 tons of beef per year within five to 10 years ⁴  Other major Canadian beneficiaries from the implementation of the CETA include manufacturing, construction, apparel and textiles, financial services, insurance, and public service.

Potential concerns do arise from the development of such a comprehensive agreement. In particular, EU negotiating objectives require considerable changes to Canadian procurement, Intellectual Property Rights, and Geographic Information policy. 

• Procurement: European demands for Canadian procurement options would restrict all levels of government (federal, provincial, and municipal) from denying procurement contracts to non-domestic companies on the basis of their country of origin. 
• IPRs: While increased IPR requirements are expected to combat major aspects of piracy and counterfeiting, there have been concerns expressed regarding specific aspects of IPR demands by the EU in regards to farmers’ rights. In particular, pressure exists for Canada to adopt the March 19, 1991, revision of the International Convention for the Protection of New Varieties of Plants (UPOV ‘91). Many farmers’ advocates, including the National Farmers Union, have opposed adopting UPOV ’91 because it “would virtually eliminate farmers’ rights to save, reuse, and sell seed”⁵ by extending the rights of breeders. 

Benefits to the Canadian economy and, in particular, to the economy of southeastern Alberta are considerable. Beef and pork producers currently face highly restrictive barriers, including regulatory restrictions and steep quota-tariff system. The liberalization of these and, similarly, of tariffs and domestic subsidies on other agricultural products (especially wheat producers) could result in hundreds of millions of dollars in increased revenue from higher production and prices. 

However, the danger exists for extensive demands to open procurement may restrict stimulus spending and “buy local” programs should the need for such programs arise as part of government policy. Similarly, strengthening Canadian IPRs has the potential of increasing profits to property rights holders, encouraging innovation, and protecting copyrights. However, concerns regarding farmers’ rights to save and reuse seed provide an instance where copyrights and the Canadian way of life directly conflict. As a result, the imposition of UPOV ’91 could provide a serious detriment to small scale farmers which rely on seed saving and reuse. 

Recommendations

The Alberta Chamber of Commerce recommends that the Government of Alberta and the Government of Canada:

1. Continue to emphasize the elimination of tariffs on agricultural products. 
2. Review UPOV ’91 to ensure that farmers’ and breeders’ rights are equally addressed and considered in negotiations. 
3. Ensure that open procurement requirements under the Canada EU Comprehensive Economic & Trade Agreement extended to municipal governments do not exceed the requirements within the current Agreement of International Trade and New West Partnership Trade Agreement

Resources

1. Foreign Affairs and International Trade Canada. (2010). “Canada-European Union: Comprehensive Economic and Trade Agreement (CETA) Negotiations”. [Online] Foreign Affairs and International Trade (DFAIT) Website. Retrieved September 29, 2010 from http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/eu-ue/can-eu.aspx. 
2. European Commission and the Government of Canada. (2008). Assessing the Costs and Benefits of a closer EU – Canada Economic Partnership. Retrieved September 29, 2010 from http://trade.ec.europa.eu/doclib/docs/2008/october/tradoc_141032.pdf 
3. Kituo, E. and Philippidis, G. (2010) “An EU-Canada bilateral trade agreement a DefraTAP application”. Paper presented at the 84th Annual Conference of the Agricultural Economics Society, Edinburgh, 29-31 March 2010. Retrieved September 30, 2010 from http://ageconsearch.umn.edu/bitstream/91679/2/11kitou_philippidis.pdf. 
4. Personal communication with John Masswohl, Alberta Cattlemen’s Association, October 15, 2010. 
5. Boehm, T. (2010, April) “CETA/UPOV steamroller set to crush farmers.” [Online] National Farmers Union Press Release. Retrieved September 30, 2010 from http://www.nfu.ca/press_releases/press/2010/April/CETA%20Analysis.pdf