6 May 2009

Europe and Canada

The following is written by Bill Emmott, a former editor of The Economist, and Roy MacLaren, a former Canadian minister for international trade. They are co-chairmen of the Canada-Europe Roundtable for Business. This op-ed piece appears in today's edition of “The New York Times”.

Amidst dark mutterings about the rise of protectionism in global trade the good news is that the European Union and Canada are today launching “comprehensive trade and investment negotiations,” leading to a free-trade agreement.

This is exactly the signal that the major trading countries should be sending in recognition that barriers to trade are part of the world’s current economic problem, not part of the solution. As G-20 leaders have repeatedly declared, open trade remains central to global recovery.

Unfortunately, prior to the current economic malaise, leading trading countries, both developed and developing, have failed to come together on new multilateral initiatives in the now long-running Doha Development Round of the World Trade Organization. Against that background of stalled multilateral talks, a number of countries have moved forward on a regional or bilateral basis, concluding free trade agreements that are typically narrow in scope and unambitious.

The European Union and Canada, however, are on the move. Following last year’s joint study of the substantial trade and investment benefits of further liberalization and harmonization between them, they proceeded to “scope” the proposed negotiation of an ambitious trans-Atlantic agreement that would go beyond the terms of more conventional free trade agreements (such as the E.U. already has with Canada’s Nafta partner Mexico).

In addition to the removal of all tariffs, the new agreement will take in a wide diversity of influences on trade. These will include the free movement of skilled workers, the opening up of government procurement, and the elimination or harmonization of a range of regulations that are otherwise a particularly noxious form of protectionism. …

The European Commission expects Canada to provide a model for subsequent negotiations with other developed countries of the O.E.C.D. For hitherto the E.U. has limited its bilateral or regional trade liberalization initiatives to developing countries and has not attempted any with developed countries.

That negotiations with developed countries will now go forward is implied in the growing recognition in the United States that, in the words of the U.S. National Manufacturers Association, the combination of an existing E.U.-Mexico agreement and the prospect of a E.U.-Canada agreement “leaves us out,” putting the United States “at a significant disadvantage.” …

But it is not only the U.S. that is taking notice of the E.U.-Canada answer to protectionism. Asian countries will not fail to recognize that with trans-Atlantic liberalization afoot, it is time that they negotiated seriously with the West for fear of losing competitive access to a potentially yet more massive trans-Atlantic economy.