Will new trade pact with EU create jobs — or see them vanish?
If you’re a beef farmer in Manitoba or Ontario, a pledge in this week’s Throne Speech to at last cement a free-trade pact with Europe spelled huge relief: stringent import restrictions on Canadian meat stand on the verge of being torn down.
If you’re a Quebec cheese maker, however, news of the long-awaited deal with the European Union set to be completed in the “coming days” likely has your blood curdling.
Indeed, after years of talks between Canadian and EU trade officials, barring any unforeseen stumbling blocks, the Comprehensive Economic Trade Agreement, or CETA, will be announced, opening a new era of free trade between Canada and the 28 EU member countries.
What that means for our economy and for jobs depends on who you ask.
The Harper Conservatives have trumpeted repeatedly – including during Wednesday’s Throne Speech – CETA will generate nothing less than 80,000 new jobs, and stir up more than $12 billion for the domestic private sector annually.
Others, like labour economists, suggest the deal could be disastrous, ramping up imports from Europe and resulting in 150,000 jobs vanishing – among them, presumably, mom and pop cheese-makers who will suddenly find their heretofore relatively cozy market flooded by competing products from larger purveyors in Europe, which under the deal will double their imports to 30,000 tonnes.
“For the dairy farmers of Canada this is a deal that is unacceptable. We’re more than disappointed,” Yves Leduc, director of international trade for the Dairy Farmers of Canada told the Canadian Press.
“It will allow significant access of high quality or fine cheeses into Canada, a segment that is supplied by the smaller or medium-size cheese factories in Canada,” he said.
When reached for comment, Ron Versteeg, vice-president for the trade association said it was still “assessing ways we can counteract” the effects of the deal.
Time appears to be running short.
Prime Minister Stephen Harper traveled Thursday to Brussels to seal the pact, which European Union sources said could be firmed up within days.
Other sectors, like potentially some manufacturing fields, will be dealt a body blow as well, labour officials say.
The trade agreement, on which talks were first launched in 2009, seeks to lower or erase tariffs and facilitate mutual market access for trade in goods, services and investment. It aims at making it easier for companies to bid for government contracts in the other economy.
Yet union economists like Unifor’s Jim Stanford suggest that the trade imbalance Canada has with Europe currently, where more EU goods are sold into Canada than vice versa, will grow worse under CETA, handing work to European workers that would otherwise be won by Canadians in sectors like telecommunications.
“The Europeans get a bigger bang out of CETA than we do,” Stanford said in an interview.
“They have a bigger base to sell from” than Canadian firms in Europe do, the economist said. Meanwhile, tariffs of EU goods into Canada are currently double what Canadian products face headed the other way to Europe, “so if you eliminate the tariff on both sides, you’re still giving a bigger stimulus to the European side.”
It all amounts to a greater share of work here won by European companies, on things like transit systems and other government contracts, with no guarantees of Canadian companies winning comparable jobs in Europe.
EU-based firms would be granted “unobstructed access to public procurement by municipalities, utilities and other provincial agencies,” Unifor said in a statement Thursday, noting initiatives like Ontario’s ‘buy local’ program for transit upgrades would be undermined.
Still, others are skeptical of the potential for job losses, and instead say the improved flow of trade should lift all boats.
“It’s a potentially substantive deal. [Europe] is a market of 500 million people,” Mike Moffatt, economist and assistant professor at the University of Western Ontario, said.
“We have to wait and see. I would be very cautious in making any estimates until we get the final text of the deal and have time to analyze it.”
Walid Hejazi, associate professor of international business and competition at the Rotman School of Management, said the loss or gain of tens of thousands of jobs is irrelevant in the broader picture.
“This is not a nice to have agreement, it’s a must have,” Hejazi said. “Canadian companies need to increase their global footprint.”
Hejazi was part of the Canadian group at Rotman that pored over the benefits CETA can potentially deliver when the initiative was first being developed in 2008.
He said with access to bigger markets, Canadian companies will have the incentive to innovate – something lacking among some sectors that have for decades been sheltered from external competition necessary to spur them to seek out new markets.
“By having access to a large market like the EU, Canadian companies can become larger and are therefore more likely to invest in R&D,” Hejazi said.
“What Canada needs is that increased focus on competition. This is a stepping stone.”
© Shaw Media, 2013