The Canada-EU trade deal: Signed, not sealed

In October last year, Stephen Harper, Canada’s prime minister, flew to Brussels to sign a trade-and-investment deal in principle between Canada and the EU. On September 26th, the two sides announced the close of negotiations. But despite the back-slapping there may still be work to be done. Sigmar Gabriel, Germany’s economy minister, objected strenuously this week to a clause in the deal that would allow companies to sue governments if they felt their rights had been infringed.

The clause is common in bilateral investment deals and initially attracted little attention in the Canada-EU negotiations. But it has become a flashpoint in another set of trade negotiations, between the EU and the United States. The European Parliament, a range of environmental and civil-society groups, and certain German politicians oppose it because they feel it gives multinational firms too much power in their dealings with government.

During a debate in Germany’s Bundestag about the two sets of EU talks, Mr Gabriel said “it’s completely clear we reject these investment-protection agreements” and that the debate was not over yet. In Ottawa, Jose Manuel Barroso, president of the European Commission, questioned whether Mr Gabriel was speaking for the German government, saying that all official communications he had received from Germany were “absolutely in favor of this agreement”.

The text of the trade deal must go through a legal review and translation before being presented to the Canadian and European parliaments for ratification. Reopening it now would kill the agreement, according to Karel De Gucht, the European trade commissioner.

It would also be a blow to Mr Harper. The deal goes well beyond the traditional fare of lower tariffs and higher farm quotas. It also makes it easier for companies in both areas to compete for large government contracts, closes gaps in intellectual-property rules, and allows for mutual recognition of some professional certifications.

Note EU-Digest:  any clause in the deal that would allow companies to sue governments if they felt their rights had been infringed must not be accepted by the EU parliament in any way, shape or form.

Read more: The Canada-EU trade deal: Signed, not sealed | The Economist

Russia dismisses sanctions, gambles energy needs will weaken EU resolve - by Eric Reguly

Russia’s quick recognition of Crimea as an independent state is risking a second round of more damaging sanctions that could unleash a new Cold War.

On Monday night, Russian President Vladimir Putin issued a decree to declare Crimea fully independent of Ukraine. The act of defiance came a few hours after the United States and the European Union launched sanctions against about 30 individual Russians and pro-Russian Ukrainians for what was described as their role in threatening the security and the borders of Ukraine.

The sanctions, which consisted of travel bans and asset freezes, are the first retaliatory measures against Russia since Ukraine’s pro-Moscow president, Viktor Yanukovych, was ousted on Feb. 22, triggering the Russian military intervention in Crimea and Sunday’s referendum, in which Crimeans overwhelmingly approved joining Russia.

Canada joined the U.S. and the EU in imposing sanctions on 10 Russian and Ukrainian individuals.
The confrontation – increasingly reminiscent of the mutual hostility between the West and the Soviet Union – seems set to deepen.

Read more: Russia dismisses sanctions, gambles energy needs will weaken EU resolve - The Globe and Mail

Mexico - NAFTA: The "Three Caballeros" meet In Mexico: "Poor Results, No Deals and Many Promisses"

NAFTA Showtime: Stephen Harper, Enrique Peña Nieto, and Barrack Obama

The Canadian Broadcasting Corporation noted: "Jean Chretien famously pronounced his last G8 summit as prime minister a success. When asked why, he replied, "Because it could have been a disaster.'
'
That same logic could be applied to this past weeks meeting of the three North American leaders in Toluca, Mexico.

Even though the" three Caballeros" called NAFTA a great success - looking at the results - tells another story. .

The Financial Times wrote about NAFTA: "Treally wenty years into Nafta, Mexico has too many criminals and not enough policemen; too many workers earning low wages and not enough skilled jobs; too many false dawns and not enough economic growth.

NAFTA really is a big economic failure. From 1994 through 2003, the Mexican economy has grown by only 11 percent per person. This is less than one-fourth the rate of growth that Mexico experienced in the 1960s and 1970s. This is the relevant economic comparison for anyone who wants to evaluate Mexico's experience with NAFTA.

Of course, the reforms embodied in NAFTA did not begin in 1994 - they started in the early 1980s. But if we take the longer view, it looks even worse: From 1980 to the present, income per person in Mexico has grown by about 19 percent. This compares to 93 percent for the 1960-1979 (somewhat shorter) period. In other words, there is no economic evidence that the NAFTA model is a success at least not for the tax paying public.

U.S. economic winners and losers under NAFTA vary with company size, type of industry or sector, and geographical location. Sectors affected positively include planes, trains and automobiles, large agri-businesses, appliance makers and energy corporations. Clearly, large multi-national companies with investment capacities, world-market savvy and capital resources have benefited from protected investment and cheap labor. These companies enhanced management performance-based compensation while putting downward pressure on production-worker wages and benefits, collective bargaining clout and available jobs, especially in manufacturing. Many view their actions as a major contributor to compensation inequality.

According to one estimate, workers in Canada and Mexico have displaced 829,280 U.S. jobs, mostly high-wage positions in manufacturing. The heaviest U.S. manufacturing-job losses were in states such as Ohio, Michigan, Pennsylvania, New York, North Carolina, Texas, Connecticut, New Jersey, California, Indiana and Florida. 

Canada has so far experienced significant benefit from:

• U.S. investment in automotive production,
• Increases in oil exports to the U.S. and the rest of the world,
• Increases in shipment of beef, agricultural, wood and paper products to the U.S.
• Export of mineral and mining products, which have fared well in U.S. markets.

Canada has, however, also experienced some losses in narrow sectors such as specialty steel production and processed foods due to U.S. imports.

Overall the conclusion is that NAFTA has not lived up to the high expectations of its proponents. It has made many U.S. companies and investors rich - and their managements even richer. But it has also cost many U.S. manufacturing workers their livelihoods while failing to raise living standards for most Mexicans. Any major market changes not dictated by market forces usually lead to both opportunity and loss, and this has happened with NAFTA. 

EU-Digest