Is CETA Canada’s Last Hope if NAFTA fails? Not so fast, says Don Newman


Ensight and Navigator’s Don Newman on the potential of CETA to replace any economic loss from a failed NAFTA but why European business are not committing until NAFTA is resolved.

Canada’s safety net may not be as strong as we had hoped.

With the renegotiation of NAFTA stalled by American demands on automobile content, Buy American procurement rules and the elimination of the current dispute settlement,‎ both the Canadian government and Canadian businesses have begun thinking about alternative arrangements.

And it is no idle search. We are a trading nation. More of our GDP is dependent on trade‎ than the any of the other G-7 countries and eighty per cent of that trade is with the United States. Not having NAFTA would not stop all cross border trade with the United States, but it would certainly put a crimp in it.

So what to do if NAFTA expires in a Donald Trump inspired wave of American protectionism? Enter CETA, the ‎Comprehensive Economic and Trade Agreement between Canada and the European Union, which went into effect in September.

It is too early to see the benefits of the agreement yet, but there is optimism on both sides‎ of the Atlantic.

Now, however, some Europeans are saying not so fast. CETA took years to negotiate and the problem of market size was significant.‎ Europe has a population of 350 million people while Canada has a population one tenth of that. But throughout the negotiations the Europeans were aware that as a member of NAFTA, access into Canada was a way into the United States as well.

Trade agreements are as much about investment as they are about the movement of goods. With CETA, Canada stands to benefit from billions of dollars of investments in plants and equipment and the jobs that would come with them, not just to serve the Canadian market, but also the 300 million Americans living south of the border.

But now NAFTA is anything but a sure thing. And I am told by European sources that businesses there are awaiting the outcome of the ‎talks before making any CETA decisions.

In fact, the trade deal we thought could help offset any losses from a cancelled or diminished NAFTA may not be much help after all.

Low key NAFTA talks are scheduled in Washington next month, with a full blown round of negotiations with the Trade Ministers present scheduled for Montreal in January.

But as the NAFTA talks come to the crunch point, it is ironic that the fate of not one, but two trade deals, may ultimately be at stake.

Don Newman is Senior Counsel at Ensight and Navigator Limited, a Member of the Order of Canada, Chairman of Canada 2020 and a lifetime member of the Canadian Parliamentary Press Gallery.