April 18, 2012

The CETAstration of Canadian Municipalities

Pending trade agreement with EU only benefits big business

by Chera-Lee Hicox

The Dominion - http://www.dominionpaper.ca

Critics say that the far reaching powers of the Canada-EU free trade agreement will reduce municipal powers and local democracy. Photo: Shira Ronn

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CHARLOTTETOWN—As Canada negotiates its furthest reaching free trade agreement to date, cities and towns across the country are sounding warning bells that it could change local governance as we know it.

The Canadian government is negotiating a Comprehensive Economic and Trade Agreement (CETA) with the European Union. The accord goes far beyond the reach of the North American Free Trade Agreement (NAFTA), offering unrestricted trade in goods, services and investments between the 27 EU nations and all levels of Canadian government.

“The first thing to realize is that it [CETA] involves far more than trade,” says Scott Sinclair, Senior Research Fellow with the Canadian Centre for Policy Alternatives (CCPA). He warns of the potential for the deal to greatly affect municipalities’ ability to govern.

The agreement has become known as the “next-generation” deal because of the degree to which it includes all aspects of trade, covering intellectual property, standards and regulations, settlement dispute resolutions, services, investments and government procurement.

The biggest business leaders in Canada and Europe have been the driving force behind the negotiations. They stand to profit, particularly through the agreement's offer of sub-national procurement contracts, which is creating worry and opposition within municipalities.

Municipal-level governments traditionally use procurement contracts to benefit the local economy, opening bids, or a tender contracts, that target local businesses. These local contracts create jobs and opportunities in the region, and and can promote certain kinds of development policies.

But under CETA, non-federal contracts, formerly exempted from free trade agreements, will soon be open to any and all competition, and not limited to local businesses or groups.

Example: the City of Charlottetown, PEI, recently announced an $18 million combined sewer contract that will be opened up to local Maritime engineering, construction and water treatment companies.

For a major project such as this, Charlottetown might look to local contractors for the construction services in order to create jobs in the community. The project may also use the tenders to support environmental or other development initiatives.

However if CETA becomes law, Charlottetown would lose its authority to choose to hire locally and to choose to which parties to grant the procurement contract.

The EU is pushing for a “non-discrimination” clause within the CETA agreement that would mean the procurement terms would apply to all levels of government: when any government calls a bid, it must be open to foreign investors as well as local or national ones.

Minimum limits (or “thresholds”) are in place to distinguish projects and services that are worthwhile to open to foreign investors, which allow smaller contracts to remain outside the purview of the CETA. These limits have been criticized as being too low; they are modelled off of World Trade Organization figures and are set at $340,600 for goods and services and $8.5 million for construction projects.

Charlottetown city councillor Cecil Villard admitted that while the thresholds pose little to no threat for a municipality the size of his city, larger municipalities have much to lose. “My first reaction was that I would be more concerned about the level of thresholds if I were a big city. Toronto’s, Vancouver’s, and Montreal’s are sure to feel the impact,” Villard told The Dominion in an interview.

In fact, municipalities have been calling for a complete exemption from the agreement. The City of Toronto passed a resolution on March 6 demanding its exemption from CETA. And Toronto is not alone: Montreal, Hamilton, Burnaby, Prince Albert and Kingston have all passed resolutions to safeguard their rights to local governance.

The Federation of Canadian Municipalities (FCM) has submitted seven principles to International Trade Minister Ed Fast and the negotiating team. The principles lay out the protections it would like to see in CETA. The Council of Canadians and the Canadian Union of Public Employees (CUPE) have also launched a major national campaign to educate and empower the public on the potential consequences of CETA.

As pointed out in a recent NDP report, CETA “deprives provincial and municipal governments of crucial economic levers, particularly during economic downturns, to use government purchasing to stimulate the economy and encourage local spinoffs.”

CETA fails to recognize the autonomy of municipalities and is solely playing to the interests of big businesses, say its critics. “It's a bill of rights for corporations,” according to Leo Broderick, Vice Chair of the Council of Canadians.

Inspired by the concept of social justice, Chera-Lee advocates for human and environmental rights through community and legal initiatives from Charlottetown.

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