The fine print isn’t there and the deal isn’t ratified – so how much do we really know about the Canada-European Union Trade Agreement (CETA) announced last week?
Enough to grasp that the mostly secret deal isn’t very pretty when it comes to Toronto’s ability to make decisions benefiting residents.
Here’s the good, the bad and the worrisome.
1) CLIPPING T.O.’S WINGS
With the city and its agencies like the TTC and Hydro spending billions annually, there’s a lot of money up for grabs. Will CETA cut into our ability to use that purchasing power to create local economic development?
The danger is that provisions in the pact could prohibit city contracts perceived to favour local companies over those from afar. It’s easy to foresee measures by the city to ensure the purchase of local food, for example, falling afoul of CETA clauses.
In fact, the deal insists any contracts worth more than $310,000 for provinces, $630,000 for utilities at any level of government, and $7.5 million for construction, again at any level, must be fully open to EU bids.
Similarly, the legality of T.O. policies in effect since the 19th century, like the fair wage stipulation ensuring that city contracts pay decent wages, may be questioned if it can be shown they impede competition.
2) TRANSIT PURCHASES: A MIXED BAG
Transit vehicles are the most important in terms of total contract size for local procurement, and, since the 60s, formal or informal provisions have insured that these investments create jobs locally and are partially built with parts supplied nearby.
Over the last decade, for example, TTC purchases of buses and rail cars have resulted in more than 7,500 person-years of directly and indirectly created good-paying Canadian jobs. Over the next decade, local spending on new subway cars, streetcars and buses can be expected to create roughly another 8,000 years of jobs.
In 2008, the TTC initiated a policy requiring a minimum of 25 per cent Canadian content for all rail purchases and in 2009, it extended this to require 30 to 40 per cent for buses, depending on the kind of bus.
Happily, the Canada-EU deal as it appears now allows the province and city to retain that 25 per cent for rail.
But the pact could deeply impinge on transit in other situations. One of these has to do with the campaign residents are waging to get the TTC and Metrolinx to invest in local economic development, jobs and training in neighbourhoods near new LRTs and their associated maintenance facilities.
The Toronto Community Benefits Network is pushing for a community benefits agreement with Metrolinx to ensure that locals get a boost from the $8.4 billion invested in Scarborough transit and the Eglinton LRT.
This agreement is not fully implemented, but it is unclear to what extent these kinds of projects will be allowed under the new trade pact.
3) SPECTRE OF PRIVATIZATION
We know the EU has pressed very hard to allow companies there to access our government contracts in transit, utilities and other infrastructure.
There have been concerns in particular that CETA would lead to the privatization of municipal services like water. (The EU, in fact, has protocols requiring open bidding for many government services, from water and sewer provision to transit.)
These fears prompted city council to adopt a motion by Councillors Glenn De Baeremaeker and Kristyn Wong-Tam in March 2012 requesting that the province issue a clear, permanent exemption for Toronto from CETA, and that it protect the powers of municipalities.
Unfortunately, a general exemption was not negotiated. But it appears that much of what most concerned councillors was taken off the table. Indeed, assurances have been given that the city won’t be forced to privatize services like water. The Federation of Canadian Municipalities is even supporting the deal.
But there are still huge unknowables in this mystery pact. That 44-page summary leaves a lot to the imagination.
4) THIS ISN’T NAFTA SO WHAT IS IT?
NAFTA did in Ontario’s manufacturing sector in the late 80s and 90s, so we don’t have that to fret about. It seems CETA will have a more limited effect on Toronto because Canada’s trade relationship with Europe is worth only a fraction of the value of our trade with the U.S.. Only 10.6 per cent of Canada’s imports come from the EU, and the EU presently buys 8.4 per cent of our exports. Most of the new relationship will involve high-value goods and services coming into Canada in exchange for our commodities or specialized goods.
Yes, we might see cheaper cheese and wine, but most imports will be in the luxury department: pricey cars and appliances. And don’t look for airline bargains or cheaper cellphone costs travel and telecommunications are specifically not the focus of this agreement.
5) PROGNOSIS IFFY
The government wants us to believe this deal will create 80,000 new jobs and a $12 billion increase in the GDP. But past promises surrounding trade agreements have never quite been realized. While GDP has grown since NAFTA, speeding up the shift away from manufacturing to services, Canadians have seen no gains in purchasing power in the last two decades, and income disparity has increased significantly.
Trade agreements tend to drive production to the lowest cost jurisdiction, and have helped reduce middle-class jobs and repress wage gains here. And if predictions hold true that 50 per cent of the increase in exports resulting from the agreement will be in services and not actual goods, most new jobs will be at the high end of the spectrum. This is good for GDP numbers and expensive restaurants downtown, but not for those struggling to get a job beyond minimum wage.
The government promises CETA will increase trade by 20 per cent, but as past pacts show, simply increasing transactions doesn’t guarantee generalized prosperity. Don’t buy the hype.