Here is a recent article written by our Mike Coates and Jack Hughes discussing the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the significance of Prime Minister Harper’s contribution to its success. This piece was originally published in Policy Magazine’s November-December issue.
The Comprehensive Economic and Trade Agreement between Canada and the European Union is the product of a massive effort by a legion of public servants. And when its conclusion was announced in Brussels in mid-October, Stephen Harper was careful to credit them. But without the personal involvement of Harper himself, through doubts and delays, the deal would never have been done.
It will take some time to fully realize the economic benefits of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), but the political benefits should accrue almost immediately. The successful negotiation of the most important trade agreement since NAFTA has not only provided the Conservative government with a clear political victory, it has given Prime Minister Stephen Harper a clear personal victory.
The story of how CETA came to pass has many chapters, each detailing a different aspect of the various forces which crossed the Atlantic and brought Canada closer to Europe. We leave to others the task of analyzing the economics of the deal itself, and have instead elected to focus on Harper and his role as chief strategist—an important story that risks being ignored amidst the maelstrom of the current parliamentary session.
When he announced that CETA had been concluded in Brussels in mid- October, the Prime Minister rightly acknowledged the legion of public servants who made the deal possible, including but certainly not limited to our chief negotiator and the minister of international trade. But for their collective Herculean efforts, the deal would never have come to fruition. Yet, in this as in all things, Stephen Harper remains primus inter pares.
While he came to office as a strong proponent of expanding the Canada-US trade relationship, the economic meltdown of 2008 proved to be an important catalyst for the government’s trade agenda. The PM was among the first to recognize that it was vital for Canada to diversify its trade portfolio in an effort to reduce our overdependence on the United States, particularly at a time when American economic prospects looked bleak.
Harper initiated the EU trade talks, bet heavily on them, and ultimately went all in. The Prime Minister is not one for betting on long shots, or for banking on initiatives that require the approval and cooperation of others, but he felt he had a strong hand and that betting big was the best and surest way to win. While history has proven that he bet wisely, it must be acknowledged that CETA was neither a sure bet nor a safe one.
In the latter half of 2008 and the first half of 2009, the crucial period when the Harper government sought to embark on CETA negotiations, the idea of an ambitious trade agenda was hardly common. The World Trade Organization’s Doha Round negotiations had faltered and the global economic downturn was reviving protectionist instincts around the world. Even our most trusted trading partner was tying stimulus funding to “Buy American” conditions.
Although the question of Canada’s openness to trade liberalization had been largely decided 20 years earlier, during the seminal “free trade election” of 1988, the environment and appetite for boldly ambitious trade agendas was poor. Had the CETA negotiations failed, or if the subsequently initiated EU-US talks had concluded before ours, the prime minister would have been personally criticized and a central pillar of his agenda would have crumbled.
For close to five years, Harper put his trade strategy at the heart of his economic plan and CETA at the heart of his trade strategy—and he did not do so timidly. The 2011 Speech from the Throne expressly committed the government to concluding the deal by the end of 2012. Even late last year, when that self-imposed deadline became clearly improbable, Harper never wavered from his personal commitment to concluding the talks as soon as possible.
At the World Economic Forum in New Delhi last November, Harper reiterated that trade—including free trade with Europe—was one of his government’s so-called five “T” policy priorities. Yet, as the months passed, the chorus of critics grew. Either emboldened or distressed by the government’s perceived inability to conclude a deal, there were many alarmists who began to question whether the government had missed its chance.
Instead, as the events of the past month have proven, the prime minister’s patience was rewarded and his credentials as the leader best able to guide Canada’s economic recovery have only solidified. With the exception of cheese producers and a handful of half-hearted NDP critics, there are no serious opponents of the deal anymore. There is instead widespread support from a wide array of stakeholders from every region of the country. And the provinces and territories are unanimously onside.
The broad national appeal was by design, not by default. The degree to which various provincial and territorial governments, of all political stripes, were involved in these negotiations was unprecedented. Not only did the federal government have to satisfy the nations of Europe, it had to build a solid consensus among provincial governments here at home—a challenge which added another layer of complexity onto an already complicated deal.
At the time of writing, the CETA agreement in principle appears to have the support of the Liberal premiers of British Columbia, Ontario, P.E.I., and Nova Scotia; the conservative premiers of Newfoundland, New Brunswick, Saskatchewan, and Alberta; not to mention the Parti Québécois premier of Quebec and, yes, even the NDP premier of Manitoba. That such a disparate group of leaders could agree on CETA speaks volumes about its merits.
For the West and the Prairies, the government secured significant market access for beef, pork, and wheat producers. For Ontario, the automotive industry and other advanced manufacturers stand to benefit. For Quebec, the aerospace and forestry sectors are poised and positioned to make major inroads. For Atlantic Canada, there is increased market access for fish and seafood products. Overall, the rising tide of economic activity will lift all boats.
Most importantly, it is not simply the politicians and industry stakeholders who approve of CETA. According to an Ipsos Reid poll commissioned for CTV News, 81 per cent of Canadians as a whole are supportive of the deal. In fact, Ipsos concluded that there was strong support for CETA amongst each and every demographic group it studied. That degree of widespread approval for any type of government initiative is both extremely rare and politically invaluable.
Significantly, it has almost gone unreported that this deal can only be improved upon. As Pat Cox, former president of the European Parliament, has made clear, any enhancement that the United States is able to subsequently negotiate will be automatically granted to Canada. This insurance clause guarantees that the Canadian deal will not be rendered obsolete, or insignificant, should our American neighbours swiftly conclude their own EU free trade deal.
Ultimately, the deal validated Stephen Harper’s leadership and negotiation style. There were no histrionics about the process, and he resisted the politician’s typical attempt to bolster his own reputation by emphasizing personal involvement. While he often spoke about the promise and potential of CETA, the prime minister allowed expectations to rise and fall based on events, and, in the end, was able to bring the deal to fruition at the moment it mattered most.
Lastly, the success of CETA now makes the signing of other trade deals more likely. Just as NAFTA proved to Canadians that free trade strengthens our economy, CETA proves that Canada is serious about liberalizing trade, even in areas, like cheese, which are covered by the blanket of supply management. This was an important signal for us to send to other prospective free trade partners like Korea, India, Japan, and New Zealand.
Those countries, along with the other members of the Trans Pacific Partnership negotiations, are particularly significant because, now that the books on Europe have been closed, Harper will turn his full attention to Asia. No more shuttles from Brussels to Bali—the full resources of Canada’s trade negotiators can now be marshalled toward the Pacific Rim. Given enough time, the government might even run the table.
Yet, even without those future deals, Canada now has a distinct competitive advantage over almost every other developed country: it is the only G8 country to have preferential access to both the European Union and the United States. The 28-nation EU is an economy of 500 million people, with a GDP of $17 trillion, in which government procurement alone accounts for $2.7 trillion. For that reason alone, CETA should and will stand as the cornerstone of Harper’s legacy—much as the Canada-US FTA and NAFTA are widely and rightly regarded as the cornerstone of Brian Mulroney’s.
While NAFTA and CETA are in many ways different, they are symbolic bookends for two Conservative prime ministers and their respective governments. It is in many ways fitting that this fall we celebrate not only the successful conclusion of the CETA negotiations, but also the 20th anniversary of the formal signing of NAFTA, and the 25th anniversary of the 1988 free trade election. One can’t help but wonder what new horizons will be celebrated 20 years from now.
In the nearer term, of course, the government’s trade agenda serves as an important part of Harper’s narrative for the next election. It frames a very favourable ballot question: Do you want a government with a strong, stable economic record or an unknown quantity in uncertain times? By delivering on a deal with Europe, Stephen Harper has secured his status as a global leader and shrewd negotiator—two traits that Canadians value in their prime ministers.
Mike Coates is the chairman and CEO of Hill+Knowlton Strategies Canada, and is a member of Hill+Knowlton’s Global Council. Jack Hughes is a vice president at Hill+Knowlton Strategies Canada, and is the leader of the company’s Procurement + Trade group.