Trade and the Federal Election

Trade has received increasing coverage in the 2015 federal election campaign. At campaign stops, the Conservatives have leveraged their strong record completing trade agreements. As part of its attempts to attract centrist votes, this is the first time the NDP is not running an outright anti-trade campaign. However, Thomas Mulcair has recently been critical of the Trans-Pacific Partnership (TPP) deal and its potential impacts on the auto sector.

TPP Negotiations are Ongoing During Election Campaign

The Conservative government had hoped to have negotiations concluded on the Trans-Pacific Partnership (TPP) in advance of the election. Negotiations with the 12 TPP nations have slowed and the timing of a potential deal remains uncertain. For Canada, the two most politically sensitive issues involve Canadian dairy producers and the auto industry.

A significant increase in access to Canada’s supply managed dairy, poultry and egg markets is the purported price Canada will be required to pay to be part of any final TPP deal. To date, the Conservatives have been able to avoid choosing between Canada’s TPP participation and making politically difficult changes to supply management. As TPP negotiations are ongoing during the campaign, Minister Ed Fast has positioned that the government is focused on getting the right deal for Canada and is less concerned about how long this takes.

However, TPP and impacts on auto sector jobs have the potential to be a significant election issue. Under TPP, the Canadian auto industry and its powerful unions are seeking to maintain NAFTA’s 62.5% North American content rules for tariff-free imports. Japan and the US appear to have bilaterally negotiated a lower 45% domestic content rule for TPP but have yet to secure Canadian and Mexican support for that proposal. In response, Mulcair has pledged that his government would “further protect Canadian auto jobs by defending existing regional content rules in trade negotiations.”

With jobs on the line and both the Liberals and the NDP courting the support of organized labour, party positions on trade will be subject to further elaboration and refinement on the campaign trail. Leaders will have the opportunity to articulate their trade positions in greater detail at upcoming debates on the Economy (September 17) and Foreign Policy (September 28).

CETA Timing and Details Potentially Subject to Change under an NDP Government

As Conservative support continues to wane in the polls, little attention has been paid to the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and what an NDP, Liberal, or minority government could mean for CETA implementation.

CETA Refresher
• October 2013 – Nearly two years ago the Conservative Government announced an “Agreement in Principle” with Europe.
• June 2015 – EU Trade Commissioner Cecilia Malmström noted to media that so-called “legal scrubbing” is “basically done” but scrubbing of the “Investor State Dispute Settlement” (ISDS) provisions had not yet begun.
o By way of background, ISDS is a neutral, international arbitration procedure. Like other forms of commercial, labor, or judicial arbitration, ISDS seeks to provide an impartial, law-based approach to resolve conflicts. ISDS is controversial because it provides an additional channel for investors to sue governments outside of domestic courts. Note that in January 2015 Germany and France jointly called for changes to ISDS. France has since stated that it is unlikely to achieve domestic ratification of CETA if it includes the current ISDS provisions.

Where the Parties Stand on CETA
• Conservatives – Continue to position the deal as fait accompli and a signature accomplishment. If re-elected with control of Parliament, the Conservatives will likely implement concurrently with the EU ratification process which could stretch well into 2016, if not later.
• NDP – Have not taken a clear position on CETA. Thomas Mulcair does not appear to be opposed in principle, but has clearly positioned against the deal’s ISDS provision and will likely revisit that specific issue, and perhaps others, if elected. Mulcair’s position on ISDS is closely aligned with European concerns.
• Liberals – Have publicly supported the deal in the past have even criticized the Conservatives for not acting faster to implement it.
• Green Party – The green party platform states the party will “vigorously oppose” both CETA and the TPP.

A potential outcome of the election is a minority or coalition scenario, with no single party commanding sufficient support to advance legislative initiatives alone. The fate and timing of CETA under the various potential configurations is uncertain and may end up linked to other, unrelated policy issues as a condition of achieving the support of the House of Commons. A government comprised of or supported by the NDP would likely see the issue of ISDS be revisited / renegotiated.

In short, the timing (and final content) of CETA hinges on the Canadian election outcome, including whether and what the next government ultimately negotiates with Europe on ISDS.

It should also be noted that CETA-related compensation issues may be raised in the regional electoral context. This could include discussion of supports for Quebec dairy producers and Newfoundland fish processors.