Former Canadian ambassador to the European Union David Plunkett on the history of the the Comprehensive Economic and Trade Agreement – mostly known as CETA – and what it means for Canada and the European Union today. Plunkett spoke with Borderlex’s Sarah Anne Aarup and Iana Dreyer.
The genesis of CETA
In the early 2000’s, Canadian trade was overwhelmingly turned towards the United States: the North America Free Trade Agreement, or NAFTA, was implemented in 1994. By 2002, 84% of Canadian exports were heading to the United States. That same year, exports to the EU accounted for only 5%.
This is where Plunkett comes into the picture. After four years in London as Canada’s senior trade commissioner, Plunkett returned to Ottawa in 2006 to become director general for bilateral and regional trade policy at Canada’s department of foreign affairs and international trade. In 2009, he became chief negotiator for Canada’s bilateral and regional trade agreements.
“My day job in effect was focusing on expanding the range of trade agreements that we had with other countries because the US dominated our trade and investment numbers. Many people thought it was much too high, much too concentrated.”
“There had always been an element within our system that recognised that we needed to diversify. Some of these markets were beginning to look very attractive: this was when they talked about the BRICS [Brazil, Russia, India, China, South Africa],” Plunkett reminisced.
At that time, Canada also turned its attention to concluding investment protection agreements and trade deals with Colombia, Peru and the European Free Trade Association made up of Switzerland, Norway, Iceland and Liechtenstein.
In the early 2000s, Canada and the EU were considering striking a limited deal that would have omitted market access issues, Plunkett explained. At the time, Canada had agreed with the EU that market access should be handled in the multilateral arena during the World Trade Organization’s Doha Development Round, which was launched in 2001 and stalled in 2008.
Despite this, the EU repeatedly pressed market access issues in talks with the EU without opening up enough on other topics that mattered for Canada, so the bilateral talks eventually petered out.
“The idea wasn’t going anywhere, and my branch was getting busier and busier,” Plunkett said. “So we talked to our minister, and he agreed that given how busy we were and how limited resources everybody has, there wasn’t any point in continuing this modest effort with the Europeans.”
But Canada has always maintained close ties to Europe, especially the province of Quebec. So the provinces made their voices heard at the federal level.
The Canada government sent Plunkett and his team to explore a deal with the EU once again. “If you look at the economic study that we did with the Europeans in 2008, many of the potential gains from the European side were in the provincial area,” Plunkett told Borderlex. These gains included public procurement, which is dealt with at the provincial level in Canada.
CETA’s secret sauce
In 2007, the European Commission “was not keen” on a deal with Canada, according to Plunkett.
“So my role from early 2007 until the formal launch of negotiations in May 2009, was that myself and literally two or three people basically lobbied to convince the EU side that there was value to be had in negotiating an agreement with Canada,” said Plunkett.
Plunkett said that behind this small team, there was really a Team Canada effort with strong support from the then-deputy minister, government and other stakeholders in Canada. “We used our embassies, our consulates, and we talked to the member states in capitals, we talked to European business. Our business was talking to European business. So it was a gradual, holistic lobbying approach,” the diplomat explained.
“We went from European capital to capital,” Plunkett said, before adding, “I visited most, not all, but certainly most.”
The strategy was so successful that it’s now used as a model in Canadian trade diplomacy, Plunkett told Borderlex.
Another key factor was a 2008 economic study commissioned by both parties that predicted an additional € 25.7 billion in two-way trade. “We said, ‘we’re prepared to talk about everything,’ including dairy, including provincial procurement,” Plunkett told Borderlex.
Negotiations were launched in May 2009 at an EU-Canada summit. Steve Verheul was appointed as Canada’s chief negotiator, and David Plunkett became Canada’s ambassador to the EU from 2011 to 2015 because Canada wanted someone with robust trade credentials in Brussels during the negotiations.
Q: So far, only 14 of the 27 EU member states have ratified CETA. What is your view of the slow ratification process?
Ratification for us was never going to be a problem, but we knew that this would be a long, drawn-out process on the EU side. Frankly, there’s not a whole lot that the Canadian side can do: this is an EU internal issue.
Q: The Dutch parliament is currently debating CETA—do you have any words on this, given your close personal link to the Netherlands?
My wife is Dutch, and I did my graduate studies in The Netherlands, so I know the country very well. If the Dutch, with their history of being outward-looking, were to turn their back on an agreement like CETA, the implications would be enormous.
Even before I left, there was a comment being made in Brussels that if the EU could not make a deal with Canada, well then who could the EU make a deal with?
Q: What does this ratification process mean for trade policy more generally?
The CETA process, just the formal part, went from May 2009, and the provisional application was in September 2017. We’re now at 2020, and we still haven’t yet gotten full ratification.
If at the end of all this, it all goes belly-up, other trading partners are going to ask themselves: ‘Why would I ever waste all my time and resources when it’s not going to go anywhere anyways?’
If the EU were to pull the plug on CETA at this point, it would have implications for the agreement itself, but it would also have huge implications for European trade policy.
Q: How do you see the nexus between trade, sustainability and CETA?
Canada is actively pursuing the issue of trade and sustainability in many fora. You’ll see that it shows up in the Asia-Pacific CPTPP which Canada signed and in the ‘new NAFTA’ or CUSMA/USCMA with Mexico and the United States.
Prior to CETA, we always had labour and environment issues as side agreements.
What was trailblazing for us in CETA was that labour and environment became part and parcel of the actual agreement, with a dispute settlement mechanism.
Canada is quite comfortable with this whole area and open to enforceability mechanisms. My understanding is that there may be more reluctance in the EU than Canada on this.
Q: How was CETA received in Canada three years ago?
While the Canadian liberal and conservative parties part company on a number of issues, on trade policy, in particular CETA, they are very much on the same page. Although the New Democratic Party—the equivalent of the UK’s labour party—has long expressed concerns about CETA, there was not much hesitation that it would pass in parliament.
The business community was fully supportive, so at a macro-level, there’s wide support. The polls when CETA came into effect were overwhelmingly positive.
Q: How has public perception of the deal shifted over the past three years?
The last few years, rightly or wrongly, there’s been increased pressure towards protectionism. This is where CETA in some ways was going against the grain at the time. When there were increased pressures against trade liberalising, Canada and the EU announced this massive agreement which was very well received.
If you couple the impact of Covid on economies, massive unemployment, etc., the world that CETA is taking place in now is certainly different than when the provisional agreement took place.
Q: The UK is now negotiating a separate post-Brexit trade deal with Canada. What might a Canada-UK trade agreement look like?
I suspect that at the end of the day, you’re going to see a lot of CETA language scattered in the EU-UK deal, if it’s not the bulk of the agreement. My guess is that the vast majority of the CETA rules, architecture and institutional language will be recycled in one way or another.
But I think that market access would not be likely to stay exactly the same as with the EU. I’m sure that there were parts of the final CETA texts the UK wasn’t entirely happy with, and likewise there are issues that we might accept for a market of 500 million that we wouldn’t accept for just the UK.
Q: From a more geopolitical perspective, now that the UK has walked out of the EU, the US is being a difficult partner and China is playing an increasing role, how do you see EU-Canada trade relations evolving?
Over the last years, Canada and the EU have been working quite closely together in multilateral fora on a number of issues outside of CETA, which reflects our shared common values and approaches.
If you look at the EU-Canada strategic partnership agreement [that was signed in complement to CETA], it covers a whole set of non-trade issues where frankly, in some areas we’re probably closer to the EU than to current US administration.
We are all facing how to deal with China as it’s increasingly throwing its weight around.
For a mid-sized country like Canada, the multilateral institutions have always been very important to us, so it’s almost in our DNA. It would be highly unlikely that we would be walking out of these sorts of agreements because we’ve always been great multilateralists.
To the extent that the Europeans also are big in the multilateral area, I think that it’s easy enough to find common ground. We may not always agree on individual points here and there, but stepping back, looking at the big picture, there’s been a lot of cooperation.