Canada-Europe Services – The Need for Effective Institutions

By | October 24, 2013

The information material the Feds have been issuing on the benefits of CETA is pretty good and quite informative, particularly on things like CETA’s tariff rate reductions in key industrial and agri-food sectors. There are clear gains in the manufactured goods – including in advanced manufacturing – and processed foods sectors.

In some other areas, as has been noted by other commentators, the information still remains pretty vague. This is the case for the trade in services provision under the CETA. While the government talks about “a transparent approach”, providing Canadian service providers with “better, more predictable and secure access” to the EU market and ensuring that Canadian companies operate on a level playing field in terms of licensing and qualification requirements, there is an absence of detail so far as to how this will be done.

 What precise commitments and guarantees will there be to ensure that Canadian service providers are actually treated by EU government regulators in a non-discriminatory fashion?

Trade in services is a vital part of this deal. More and more international business involves services as major parts of a transaction. According to the Feds, Canada exported an average of $14.5 billion in services over the 2010-2012 period and this is growing. For several years, the WTO has reported on the tremendous expansion in international services trade.

So far, nothing in Ottawa’s material speaks about EU guarantees of national treatment for Canadian service providers. National treatment means that you give foreign companies in specified fields – with some special exceptions – the same treatment as accorded to your own service providers.

It’s great to be assured that qualifications and regulatory matters will be clear, open and transparent, but if there is no guaranty of non-discriminatory treatment, that could be a roadblock for Canadian companies.

Hopefully, as more detail unfolds this will become clear.

The other element that needs more explanation is in the institutional mechanisms that oversee the proper implementation of the CETA and ensures both sides live up to the bargain. I’m talking about the need for a more robust system  – better than the arrangements in the NAFTA.

This is where dispute settlement provisions become critical. The last thing a Canadian service provider needs if it isn’t treated fairly is to get bogged down in years of complex and costly litigation.

Commerce is highly dynamic and business moves quickly. Disputes have to be resolved impartially but efficiently. We hope that when the detailed text of the CETA is finally provided, there will be effective and efficient dispute settlement provisions so that a Canadian service provider with a complaint can get the matter effectively and rapidly resolved by an impartial arbitrator in a cost-effective fashion.

 We need these points clarified in the final treaty text.