Canadian envoy: To make CETA succeed, governments must redistribute wealth

Daniel Costello [Anders Ahnlid/Twitter]

Wealth created by trade needs to be evenly shared, so that everyone profits from it, Canada’s Ambassador to the EU, Daniel Costello, told euractiv.com, ahead of a likely signing of the EU-Canada trade deal.

Costello spoke to EURACTIV’s Editor-in-Chief, Daniela Vincenti.

CETA, are we on track?

Certainly, in Canada, we have a broad consensus of support from the government, the opposition, 10 provinces, three territories. We are eager to move ahead.

I understand that on the European side things are complex, but that decisions will be made soon. We are monitoring it closely and we are doing our part, but we are not at the table for the discussions.

There’s a joint interpretative declaration of the parties coming, which will clarify a number of provisions that have been a centre of concern.

It’ll underline what we have achieved and what we intend to do, in order to provide some assurance.

A number of countries might still want amendments. Austria is not convinced about the investment issue for example, how do you think this is going to play?

I think that question has been settled. The Commission referred CETA to the Council as a mixed agreement, so it will need approval from all the member states at a national level. The portion that will be considered EU competence exclusively, have not yet been decided.

We are hearing that the issue of investment dispute will be a mixed competence and therefore it would not be provisionally applied.

A lot more time would be afforded to the member states to consider the issue. But we maintain that CETA is the most progressive trade agreement out there.

Still, there might be a lot of criticism, which could derail ratification. Should we anticipate and do something about it?

With the changes we have made, we have tried to reassure critics, who we listened to. CETA is intended to promote growth and jobs, through increased trade AND investment.

The EU and Canada are both mature economies, we don’t just sell to each other’s markets; we like to do business in them.

So what we hope to see is more Canadians coming to Europe and setting up companies and investing. And vice-versa.

We like to use the example of renewable energy. In Canada, we have a lot of innovators working on projects with great promise. But we don’t have as much access to growth potential as the EU.

Many Canadian companies, when they get to a certain level, move offshore where they can find partners that can help them develop. We want to see a lot of growth. Investment protection is just an effort to encourage investment and make it clear that we oppose unfair competition and expropriation. I think we all agree on that.

The ways in which we have done that is by creating a process that is more transparent that what we have seen elsewhere. That includes a public roster for the tribunal, stricter conflict of interest rules and clearer stances on eligibility. Only companies physically present in our market, with significant business activity, can access this. That’s one way in which we have advanced and tried to show that it is not an attempt to restrict the role of government.

We have been very clear that these procedures are in no way meant to restrict a government’s ability to legislate in the public’s interests.

We are aware of these concerns; we saw the same thing when we brokered our US-Canada free trade deal and NAFTA. Those concerns haven’t materialised, especially in quality public services. We share the same values and CETA is a natural thing to build into our relationship.

Some say that NAFTA has failed in job creation in the US. What have we learned from NAFTA that can help implementation of CETA?

I think that is a minority view, especially among economists. Our experience shows that we have benefitted immensely from NAFTA.

Our society has benefitted hugely from trade, we are a trading nation. Trade creates wealth but it doesn’t distribute it.

We have to make it clear that trade deals do not subvert the essential role of government. And CETA does make that clear. The concerns that NAFTA would erode quality public services did not come to pass.

One of the major criticisms of trade and globalisation has been the issue of inequality and failing to redistribute wealth. How do you think CETA would positively contribute to globalisation?

Once CETA is signed and applied it will be able to demonstrate its own results. But it will do so with these important provisions on the role of government and sovereignty built into it.

We always say that we don’t have to agree with our critics, we live in an open society where we don’t want to pull up the drawbridge. But we will learn from them because their criticisms come from a source of frustration.

There is a clear consensus that the benefits of open societies, globalisation and technology are there. But that they haven’t been shared.

Free trade creates wealth, but states haven’t kept up with its rate of growth. Governments have not kept pace with the levels of social support that is needed.

Trade agreements can’t impose obligations on its parties, because we live in a democratic world, but they need policy support. Like income redistribution, child and retirement benefits, environmental standards etc.

Our government was elected to support the middle class, whose frustrations (come very) much down to inequality. They are concerns that have to be addressed, but that’s not going to happen by stopping trading.

Canadian Prime Minister Justin Trudeau is perceived as a new 21st-century leader. Could Trudeau change the face of globalisation at a time when we hear a lot of trade-bashing in the US elections campaign?

One of the criticisms of trade agreements is that they restrain the control of the state. We don’t believe in that, much like Europe. CETA has made clear that we want more jobs and growth, that’s it. It’s up to the public to elect representatives that promote their interests.

Supporting the middle class in Canada means we are supporting the open society. The main challenge is reducing inequality.

We have to remain open to fighting climate change, helping refugees, reducing inequality.

You talk about open societies: Bulgaria and Romania made it clear they would veto CETA because of the failure by Ottawa to lift the visa requirement for their nationals. Will this issue be resolved in time??

I am confident it will be. One of the ways we have maintained broad popular support for an open society is through managed migration.

We look to welcome 1% of our population through immigration every year. We are resettling significant numbers of refugees. And it’s all being done in the right way.

In order to do this, we have to be able to control irregular migration, otherwise, the support dries up. Visa policy is not a part of trade agreements, we can’t link them.

Our immigration minister was recently in Brussels and we committed to providing a roadmap to visa liberalisation in the autumn.

Juncker mentioned CETA in his State of the Union address in September, calling it the best deal the EU has ever negotiated. Not having mentioned the US, would you say Canada is replacing them as the privileged transatlantic partner?

I wouldn’t say it that way. The US will remain there. We are sovereign countries and do not like to be compared to this kind of relationship.

We think we have achieved something great with CETA and we share President Juncker’s view. If it means we can be helpful in demonstrating the benefits of open society and trade, that’s great; if we become an example, all the better.

To prepare for Brexit, Canada is setting up an agency in the UK to boost trade links. Do you think Brexit is a boon or a curse for Canada?

I wouldn’t call it either of those things, it’s just a fact. The implications and consequences are not yet known. There’s not been a Brexit yet. Until we see what emerges on the other side, all I can say is that we are committed to a close relationship with both the UK and the EU, regardless of their relationship with each other. They are our closest partners and allies. We need to stick together.

Some in the UK are advocating remaining in the Single Market without freedom of movement. The EU won’t accept that. Any advice for Mrs May?

She doesn’t need any advice from me, she has her own excellent advisers.

If CETA is signed this month, could there be a CETA 2 between the EU and the UK?

CETA is between Canada and the EU. The UK still remains a part of the EU and we hope that we can move it along quite quickly and that the benefits can be seen as soon as possible.

At the UN, last week, Trudeau warned repeatedly against politicians exploiting society for their own gain. This was clearly a swipe at Trump. Is Canada concerned about the growing populism in Europe?

We should be concerned about populism everywhere. But it is a contested term, so we have to be careful. I would rather talk about the anger and frustration felt by people, particularly young people. It is leading them to question the main institutions that underpin our open society.

We have to listen to, engage with and learn from them though, especially young people. We have to do a better job at making a case for openness, both of society and markets.

We hope CETA can be a way of demonstrating this. Our interdependence with our partners is an inescapable fact and we can achieve great things.

What’s the future of EU-Canada relations?

I would like to see us sign and implement CETA and the strategic partnership agreement soon. Our shared commitment to the same values and openness means we can help each other face the challenges of this world and the people who question the benefits of open societies. These new agreements reconfirm this commitment.

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