Canada-EU Agreement – A Newfoundland Fish Tale

By | January 31, 2015

Op-Ed published in The Globe and Mail on January 28, 2015

Lawrence L. Herman, principal at Herman and Associates, practises international trade law and is a senior fellow at the C.D. Howe Institute in Toronto.

It’s happening again.

In the early 1980s, Canadians witnessed the sorry spectacle of provinces roaming around Westminster, cap in hand, lobbying British politicians to save them from their own federal government in its move to patriate the Constitution.

It was a sad chapter in Canadian political history, provinces invoking Britain’s role as colonial master, asking Britain to save them from their own federal government because the provinces couldn’t settle internal differences with Ottawa by their own means.

This time, it’s Newfoundland complaining about a fisheries compensation deal with Ottawa that’s supposed to help ease adjustment once the Canada-EU trade agreement (CETA) comes into effect.

So piqued is the province that it’s withdrawn support for the trade agreement and is going around European embassies in Ottawa, complaining that the feds can’t be trusted and asking foreign governments to support Newfoundland’s cause.

As in the patriation episode some 35 years ago, we have a Canadian province asking foreign governments to save them from their own unfeeling government in Ottawa.

Apparently, Newfoundland government ministers are even heading to European capitals to voice opposition to CETA and continue the lobbying.

The mind boggles. This is, after all, an agreement that provides substantial market gains for Newfoundland and all other exporting provinces. As if Canadians can’t sort these disagreements out themselves.

Newfoundland’s action is both unhelpful and dangerous. Unhelpful because it undermines critical political support for the agreement on the other side of the Atlantic.

Dangerous because at this sensitive juncture in the European Union’s internal procedures, it could put the entire treaty ratification process at risk.

Until now, Canada could pressure the Europeans to move ahead with CETA ratification, pointing out that Canada had its ducks in order. But Newfoundland’s gambit gives the Europeans an argument to go slow on ratification. Why should they move ahead if Canada hasn’t sorted out its own internal problems?

Newfoundland’s position is also legally off-base. Constitutionally, the federal executive (Prime Minister Stephen Harper’s cabinet) has the exclusive authority to negotiate, sign and ratify international treaties. Parliament alone can pass the necessary legislation to give a treaty international legal effect, binding on Canada as a whole.

Provinces have no constitutional voice in that process. It’s true that federal-provincial practice has meant that provinces have been consulted and in some cases involved directly, but as a legal matter, they have no role in negotiating and ratifying international agreements.

This means that once the federal government, under its exclusive authority, signs and ratifies a treaty, Canada is bound under international law. What happens then?

A province could decide not to comply with treaty obligations – but it’s unclear whether provincial laws can legally violate Canada’s international treaty obligations.

Suppose the federal government moved ahead and ratified CETA without Newfoundland’s consent. If Newfoundland then refused to recognize the EU’s treaty rights, Ottawa might challenge that in the courts and may well prevail on constitutional grounds.

The other, more plausible scenario is that the EU would invoke binding arbitration against Canada for breach of the treaty. If the EU succeeded and Newfoundland still refused to comply, the EU would have the right to retaliate. They would do that by applying prohibitive duties on Canadian exports. Those duties would target Newfoundland’s own fishery products.

The CETA, of course, provides tariff-free access to the huge EU market and many other benefits for exports of Canadian goods and services. This includes seafood and other exports from Newfoundland. So in the end, Newfoundland would be the big loser.

That’s why the Newfoundland seafood processors and other business groups in the province have come out against their government’s actions.

Let’s stand back for a moment and accept that there may be some legitimate differences over the compensation to be paid to Newfoundland as a result of the CETA. Fair enough. But the proper response is to settle those issues internally, among Canadians.

The wrong course is to parade the disagreement among our European partners. Not only does that put the CETA ratification process at risk on both sides of the Atlantic, it portrays Canada as a less-than-reliable negotiating partner that can’t get its own team in order.