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Free trade with Europe will be good for Canada

By Cam Dahl
web posted February 14, 2011

Canada and the European Union (EU) are quietly negotiating a free trade agreement.  This deal will be worth over $3 billion to the Canadian economy. Ordinary Canadians, the people who will benefit most from the agreement, need to voice their support for it to their elected officials.

The negotiations are truly an ambitious undertaking.  A great deal is on the negotiating table from agriculture through to federal and provincial government procurement contracts.  In a number of ways, this agreement will be more ambitious than the North America Free Trade Agreement (NAFTA).

The agreement would eliminate duties on trade between Canada and the EU, which includes the sometimes sensitive area of agriculture export subsidies.

But the proposed agreement goes much further than just tariffs.  For example, the proposals result in more transparent federal and provincial procurement contracts, something that will be good for business and taxpayers alike.

If Canada and the EU are able to reach an agreement, it will include provisions for dealing with the technical barriers that so often block trade.  Canada's beef farmers could have used these provisions to block European efforts to keep Canadian beef out because of pseudo-scientific concerns over growth supplements.  That one issue alone has cost Canada millions of dollars and many jobs.

Canada is a trading country.  Collectively, we almost always produce more than we consume (living in the dead of winter in Winnipeg I do have to note that tropical fruit is a notable exception to this statement).  As a country we will be better off if we see increased trade between Canada and the 500 million people in the EU.

Increased trade with the EU will generate more jobs.  It will mean more money in the pockets of working families.  And it will lessen our dependence on the US market.  As any investment advisor will tell you, diversification is a good thing. 

But there are storm clouds on the horizon – special interest storm clouds.  Will provincial governments really give up their ability to reward the powerful lobbies in their back yards?  For example, last year Quebec all but ignored cost to award a lucrative contract for Montreal subway cars to Bombardier.  Our governments should be forced to clean up this kind of favouritism without the pressure of international agreements.  But recent reports indicate that some provinces, Quebec and Ontario in particular, are reluctant to move forward on this issue.

Politicians don't make questionable policy decisions like these because they enjoy making them, they make them because they are pressured by the special interest groups at home.  Governments need to hear from more than just the special interests, they need to hear from ordinary voters and taxpayers too (who will not only benefit from increased trade but also from fairer government contracts).

Some of the most effective special interests groups come from Canada's supply management sectors.  Our diary and poultry policies might have been well intentioned at the time they were implemented a generation ago, but the law of unintended consequences has taken over.  It now costs over $30,000 just to get the piece of government paper that allows a farmer to milk a cow.  Our tariffs on dairy products now reach about 300%.  All Canadians are paying higher prices for dairy and poultry products to support these programs.  Do these policies really make sense anymore?

It definitely does not make sense to allow the lobbying efforts from these industries derail trade negotiations.  But that is exactly the risk we face if the only voices politicians will hear are those of the 17,000 diary farmers in Canada.

There is no question that free and fair international trade is good for Canada.  Yet, we might not see these benefits because of our fear of internal reforms.  Our political leaders are doing the right thing in engaging the EU in free trade talks.  Ordinary Canadians need to let them know that.  Politicians should hear from more than just the few with special interests. ESR

Cam Dahl is a Research Associate with the Frontier Centre. He is a former Canadian Grain Commissioner, and has 20 years of experience in agribusiness, lobbying and in work within the Parliament of Canada.

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