Upcoming Free Trade Agreement Could Impact Ontario’s Food System

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Author: Sasha McNicoll

Posted: May 7, 2012

Categories: Food in the News

            The Canada-European Union   Comprehensive Economic and Trade Agreement (CETA) is a trade agreement the federal and provincial governments have been negotiating with the EU since 2009 and which will likely be signed by the end of this summer. While CETA negotiations have happened largely behind closed doors, we have a fairly thorough understanding of what the agreement is likely to look like from leaked drafts. As with most free trade agreements, CETA covers a broad scope of issues from water services to resource exportation. This agreement also has significant implications for food and agriculture.

CETA is unique in that it will be the first international free trade agreement signed by Canada that will apply to the MASH (municipalities, agencies, schools and hospitals) sector.  Through this agreement municipal governments and their agencies will be subject to international free trade agreement rules for the first time.  This is likely most significant in the area of public procurement.  Lawyer Steven Shrybman argues that “the inclusion of sub-national procurement in CETA is arguably the EU’s foremost demand.”  Once CETA is signed, public procurement contracts of over $340,000 for goods and services and of over $8.5 million for construction will be open to European companies.  Canadian governments at all levels will be bound to award these contracts to the lowest bidder.  Opponents argue that this will significantly delegitimize current public buy local policies and programs and hinder the development of future ones.  While municipalities are already subject to the lower procurement thresholds from the Agreement on Internal Trade (AIT), an interprovincial trade agreement whose purpose is to facilitate trade between Canadian provinces, the AIT does not threaten buy Canadian programs and does not apply to the procurement of food that will be resold, which includes much of the food purchased by food service companies

Previous drafts of CETA included stipulations that would have weakened the supply managements sectors; these have since been taken out of the negotiations.  Canadian farmers will still, however, be impacted by intellectual property right stipulations in the agreement that will allow European corporations to seize the property and farm equipment and freeze the bank accounts of farmers who have allegedly infringed these intellectual property rights on seeds, even if their farms have been contaminated.  The most recent leaked texts also contain conditions that could lead to an increased European market for Canadian beef, hog and canola farmers.  Critics, such as the National Farmers Union (NFU), however, contend that this will only be feasible if Canada adopts standards similar to those in Europe on Genetically Modified Organisms.

CETA will likely lead to an increased European market for Canadian oil sands.  Intensifying raw resource extraction often leads to what economists call Dutch disease: an increase in resource exports strengthens a nation’s currency, which causes its exports to be more expensive, thereby damaging the domestic manufacturing sector.  This is potentially significant to the already-ailing Ontario manufacturing sector and to food processing and manufacturing and could potentially lead to a slowing of the provincial economy.

Also significant to Canadian governments is the investor-state dispute process included in CETA, which is similar to NAFTA’s Chapter 11.  This process gives foreign corporations the legal right to sue Canadian governments for making decisions that impact their profits, and, unlike Chapter 11, applies to all levels of government.

Many groups have been engaging with CETA and have launched campaigns to educate Canadians about what they view as the main issue.  The NFU has been running a campaign on CETA’s impacts on agriculture since the negotiations commenced.  Ontario NFU Coordinator Ann Slater recently sent a letter (PDF) to Premier Dalton McGuinty warning of these impacts and asking the Province not to sign onto CETA unless clauses were amended to mitigate them.  The Council of Canadians also has a strong CETA campaign, though it is more concerned with issues surrounding water, pharmaceuticals and procurement.  Considering CETA’s potential effects on municipalities, the Federation of Canadian Municipalities (FCM) has also been extremely vocal on CETA, promoting its seven principles for free and fair international trade and recently publishing a statement of support following International Trade Minister Ed Fast’s commitment to ensure these principles are respected.

Canadian municipalities have been paying increased attention to CETA.  On March 5, Toronto’s City Council, the sixth largest Canadian government, followed the lead of dozens of other municipalities around the country and passed a motion agreeing to ask the Province to issue an exemption for the City.  For a list of municipalities taking action on CETA, click here.

To learn more about CETA, see the links above and the Canadian government website here.