Beware trade-deal trade-offs for Nova Scotia

November 25, 2013

The federal Standing Committee on International Trade will be in Halifax next week to hold hearings on the Canada-EU Comprehensive Economic and Trade Agreement (CETA) before the full details of the agreement have actually been revealed.

Agreements such as the CETA are about far more than simply trade. They have developed into constitutional-style documents that threaten governments’ democratic authority in many areas only loosely related to trade.

Information available through leaks and the EU and Canadian technical summaries shows this sweeping treaty could have significant implications for Nova Scotians and Canadians.

The CETA would hike provincial drug costs, undermine provincial and local governments’ ability to use procurement to boost local economic development, and increase the provinces’ vulnerability to corporate lawsuits against environmental protection and other public-interest regulations. It will also erode supply management in the dairy industry.

Canada’s per capita spending on pharmaceuticals is already the second highest in the world. Despite this, Canada has given in to EU demands to create a new system of patent term extension that will add up to two years of monopoly protection to brand-name drugs.

Changes to Canada’s drug patent system will reduce the availability of cheaper, generic medicines. In Nova Scotia, the added costs to consumers, businesses, unions and the provincial government is estimated at between $29 million and $56 million annually, beginning in 2023.

Provinces have demanded compensation for the fiscal impacts of these changes. Yet even if the federal government agrees to and honours such a commitment, it simply means that Canadian taxpayers would pay at the federal rather than the provincial level in order to boost the profits of the brand-name pharmaceutical industry.

The fishery is one of the few sectors where the lowering of EU trade barriers might produce significant gains for Atlantic Canada. However, in return for dropping its high tariffs on fish (averaging 10.8 per cent), the EU has made demands that could adversely affect the management and regulation of the Canadian fisheries, including the elimination of restrictions on the export of unprocessed fish. It has also obtained port privileges that would make it easier for European vessels to catch fish adjacent to Canadian waters.

To no one’s surprise, agriculture emerged as a stumbling block in the final stages of the negotiations. To secure the support of the industry and western provinces for the deal, the federal government obtained improved access to Europe for pork and hormone-free beef. But the trade-off in agriculture was a very substantial increase in the level of European exports of cheese to Canada. This increase will harm both Canadian cheese-makers and the dairy farmers who supply them with milk, including those in rural Nova Scotia. It also undermines the supply management system, which matches milk production to domestic demand, and must strictly control imports to function properly.

This threat comes at a time when there have been some positive initiatives to support local producers, such as “buy local” policies and farmers’ markets. It is critical to determine what supports will be available for Nova Scotia farmers to ensure their operations can withstand an increase in European imports.

The CETA also includes an investor-state dispute mechanism, which gives unaccountable arbitral tribunals (made up of private individuals) the power to order governments to compensate investors allegedly harmed by public policies or regulations. There have been over 30 investor-state claims against Canada under NAFTA, targeting public policy measures at all levels of government that foreign investors claim affect their profitability. These include challenges to export bans on toxic waste, wildlife conservation measures and the environmental assessment that recommended against the Digby Neck quarry.

A 2012 Canadian Centre for Policy Alternatives study also projected that the province is likely to see net job losses.

These costs clearly outweigh the potential benefits from any increase in fish exports. Nova Scotians should insist that once the veil of secrecy and confidentiality is finally lifted from the CETA text, there will be meaningful public consultation and debate on the agreement’s costs and benefits before the provincial government decides whether or not to give its consent.

Scott Sinclair is the director of CCPA's Trade and Investment Research Project (TIRP), and Christine Saulnier is the director of CCPA's Nova Scotia office.

This op-ed was first published in The Chronicle Herald.