The Comprehensive Economic and Trade Agreement (CETA)

Brief prepared for Megan Leslie, MP for Halifax, Deputy Leader and Environment Critic

submitted by

ALERT, Atlantic Chapter of the Sierra Club, Cooper Institute,

Canadian Union of Public Employees - PEI,

Canadian Union of Postal Workers, Council of Canadians, Citizens’ Alliance of Prince Edward Island,

Don’t Frack PEI, ECO- PEI, Guatemala – Maritimes Breaking the Silence Network - PEI,

Latin American Mission Program, MacKillop Centre for Social Justice,

National Farmers’ Union – Region 1 – District 1, PEI Federation of Labour,

PEI Food Security Network, PEI Health Coalition, PEI Nurses Union,

PEI Public Transit Coalition, Save Our Shores and Seas - PEI,

PEI Union of Public Sector Employees, United Food and Commercial Workers.

June, 2014

Introduction

It is with great concern to the organizations submitting this brief that in this year of celebration of the

nation’s founding, provincial and national autonomy may be compromised by the Comprehensive

Economic and Trade Agreement (CETA) between Canada and the European Union. In Canada’s

founding constitutional document (the British North America Act), first discussed on PEI in 1864, PEI

and the federal government were ensured a defined set of legislative powers in the use of which they are

largely autonomous. This tidy division of powers, first discussed 150 years ago, may be compromised or

diminished by the CETA.

We believe that trade with other provinces and countries is essential to the economy of Prince Edward

Island. However, the manner by which trade is organized and the rules which are applied to it

determine not only who benefits from trade but also determine the role which public policies can play

in ensuring that those benefits are shared as widely as possible.

Contrary to the impression created by the federal government, only a small part of the CETA is about

trade. The vast majority of its provisions concern issues only loosely connected to trade, such as:

investor protection

the creation of mechanisms through which investors can enforce their rights

the restriction of the policy tools of local governments

locking-in privatizations.

In the context of modern-day trade and investment treaties, the corollary of investors’ rights is a

decrease in the ability of democratically elected governments to govern on behalf of their voters i.e. in

the public interest. Their policy flexibility is diminished.

We believe that this erosion of democracy should concern both the PEI and Canadian governments.

We face an uncertain future. We face climate change, changing employment patterns and systems of

production which pose challenges to our eco-systems. For all of these reasons, the future demands on

public policy (regarding both local economic development and environmental sustainability) are

unpredictable. Prince Edward Island is still developing its public transit system and still has a long way

to go. The community is better educated than ever about the consequences of the industrial potato

industry on the health of Island families and the health of our eco-systems. The lobster fishery on

Prince Edward Island faces challenges connected to the price which fishers are getting at the wharf. We

may be surprised what policies Islanders will be demanding of their government in 15 or 20 years time.

We need to preserve a full range of policy options rather than give them up in trade and investment

treaties.

The CETA is the most intrusive agreement which Canada has ever signed. For the first time municipal

and provincial government services and procurement are subject to a trade agreement, stripping

governments of some economic development tools.

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Each trade agreement which Canada signs builds on the last one

The next agreement could be the Trans Pacific Partnership (TPP) which the Government of Canada is

currently negotiating with 11 other countries in the Pacific Rim. Leaked documents indicate that

investor rights in the TPP will be even greater. It is widely held that supply management in the dairy

industry, which would be eroded by the CETA, would not survive the TPP at all. This would have

significant consequences for rural Prince Edward Island.

The government of Prince Edward Island should have serious concerns about the ultimate

consequences for PEI if we take the path of repeatedly acceding to these trade treaties with ever

expanding investor rights. Instead, we need international agreements that promote sustainable

development and a more equitable distribution of income at both the national and global levels.

The level of secrecy around the CETA is worrying and inconsistent with our democratic tradition.

There has been no plan for democratic debate once the final text is released. On the contrary while the

agreement has been kept secret, the federal government has pumped out statistics regarding the promise

of jobs and prosperity which economists have exposed as based on dishonest models and assumptions.

Our network of organizations came together because citizens of PEI were expressing concern that

neither of the two largest opposition parties in the Canadian legislature were acting as an opposition on

this issue.

Are free trade agreements good for the economy?

The statement that free trade agreements are good for the economy is often bandied around as if it were

fact. Research shows that, overall, free trade agreements have not improved our trade balance with the

counterpart countries. (It should be noted that since the 90s, international trade has increased regardless

of trade agreements.) A study which compared the growth of our imports and exports with five

countries with which we had a free trade agreement (the US, Israel, Mexico, Costa Rica and Chile)

with the growth of imports and exports with countries with which we had no trade agreement showed

that our trade balance was better when we had no agreement. Exports to the countries with which we

had agreements increased at an average of 4.77% whereas exports to the countries to which no

agreement applied increased at a rate of 7.25%. Similarly imports from the countries with which we

had agreements increased by 9 %, while imports from other countries increased by 7 %.1

Who do free trade agreements benefit? Do they reduce inequality?

Free trade agreements have winners and losers. We live in a Canada which has unprecedented levels of

inequality and a constant downward pressure on wages while accumulation of wealth at the top is

happening at rates never experienced before. An analysis of the provisions of CETA reveals that

pharmaceutical companies, agro-business corporations, mining companies and oil and energy

companies are winners. But there is no reason to believe that the wealth they accumulate will be 1 “Out of Equilibrium” – Jim Stanford. www.policyalternatives.ca

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redistributed. It is interesting to note that Chile, a country which has embraced the free-trade agenda

wholeheartedly and was a founding member of the TPP, had the highest post tax Gini coefficient of all

OECD countries in the late 2000’s. In other words it has the worst inequality. It is also noteworthy that

Mexico is the only large Latin American country in which the number of people living in poverty is

rising. 46% of Mexicans now live in poverty. 2

A realistic look at the likelihood of job gains as a result of CETA

We need sound, independent research which disputes the wildly fantastical projections of the

government. In the first eleven months of 2013, Canada had an $18.965 billion trade deficit with the

EU. The average tariff on European imports into Canada is 3.5% while the average tariff on Canadian

imports into Europe is 2.2%. Not only does Europe have more to gain from tariff reductions than

Canada but our trade imbalance would likely worsen. Normally trade deficits are associated with slow

economic growth and loss of jobs.

Do Canadians support CETA?

There is much stock put in the current opinion polls showing high support for the CETA among

Canadians. There have been Environics polls conducted which asked Canadians questions about

specific provisions of the CETA such as “Do you think that your provincial or municipal government

should have the right to favour local over foreign businesses when contracting services?” These polls

showed that Canadians do not like CETA when they hear what it contains. If we put a question to

Canadians such as “do you believe that tariffs are never a good thing?” we would likely hear that most

Canadians can see that tariffs can be an appropriate strategy to develop a growing industry.

It is our experience that Canadians do not know what is in the CETA. It has been negotiated, largely,

in secrecy. We urge MPs in all opposition parties to strive to provide information, research and analysis

to Canadians and to promote a process of consultation so that all of us can have objective information

on the contents of the deal and its possible implications. It is not good enough to accept the self-

interested opinions of those who stand to gain.

In the next few pages we will examine a range of aspects of the agreement and their implications for

different sectors of the Island economy and on our overall well-being. The aspects are as follows:

Investor State Dispute Mechanism

Wind Energy Systems

Health Care

Local Food

Dairy Industry

Government Procurement

2 “Mexicos Latest Poverty Stats” – Christopher Wilson and Gerardo Silva. Woodrow Wilson International Centre. July 29,

2013

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Public Transit

Fisheries

CETA Reservations

Investor-State dispute mechanism

The CETA includes a provision which allows European investors to sue Canada whenever they feel

that public policies or regulations (originating at all levels of government) interfere with their profit

making ability. There is a similar provision in the NAFTA and in many of the new generation of

investment agreements. These provisions allow investors to by-pass domestic court systems and

instead use investor-state dispute tribunals which lack any accountability and are completely outside of

our democratic reach.

Similar provisions have been used in Canada, and world-wide, to challenge and obstruct a range of

environmental protection measures. In addition, it is used to frustrate governments wishing to bring

local benefits (jobs and local sourcing requirements) as a condition of investment.

Canada is facing nearly $2.5 billion worth of corporate lawsuits under NAFTA’s investment protection

chapter and has paid over $170 million in awards or settlements. Over half of the lawsuits are against

environmental regulation including wild-life conservation measures, regulation of toxic substances and

bans on the export of toxic waste. A Calgary-based oil and gas company, (which conveniently has an

affiliate in the U.S.), Lone Pine Resources Inc. is suing against the Quebec government’s moratorium

on fracking for more than $250 million. And one of the world’s largest pharmaceutical companies, Eli

Lilly, has sued against Canada’s legal system for reviewing the utility of drug patents for $500 million.

Cigarette companies are using these provisions to sue countries against their plain packaging

requirements– a proven strategy to improve the health of a nation and reduce national health care costs.

The most recent challenge is against one of the most successful smoke reduction strategies in the world

– in Uruguay. Philip Morris has sued Uruguay for $2 billion.

There are many countries around the world including South Africa, India and a dozen Latin American

countries which have either stopped signing, or are withdrawing from/repudiating, investment treaties

that give corporations the right to sue governments for public policies they don’t like. And recently the

press has reported that a number of countries in the EU are expressing concern about these types of

provisions.

Prince Edward Island should also be concerned about agreeing to such provisions in the CETA.

Policies aimed at protecting our water supply, policies protecting our coastal and

environmentally sensitive areas, moratoriums on fracking or drilling for oil in Island waters

could all be targets for challenges from European companies.

In addition, attempts to receive benefits for Islanders from investors using our resources could be

challenged. When the government of Newfoundland and Labrador required that Exxon Mobil make

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certain investments in Research and Development in the province in return for offshore drilling rights,

Exon sued Canada pursuant to investor-state provisions in NAFTA and won.

With CETA the rules for who pays these large compensation packages will likely change. The

Government of Canada has indicated that since the provinces have been at the CETA negotiating

table they intend to hold provincial governments accountable for any damages resulting from

provincial policies or regulations.

Wind Energy Policy

Prince Edward Island has shown some good sense in the past by linking the necessary transition to a

low-carbon future with the creation of clean energy jobs. The provincial government’s Ten Point Plan

for the development of wind energy states that: “Evaluation criteria will favour development proposals

that maximize economic benefits to Prince Edward Island – through both construction and ongoing

operations”. The government committed to a policy which would “create an environment where

developers will have the incentive to develop projects in a way that offers the greatest benefits to

landowners, businesses and our Island community as a whole”

This policy establishes that developers which can promise spin-offs such as local sourcing and local

jobs will be given preference. It is a policy which makes sense. Wind is a public resource and it is

reasonable and fair that in return for allowing a European company to exploit it for profit we receive

some economic benefits. Island taxpayers pay for all kinds of infrastructure which benefits the

developer.

Unless the province asserts iron-clad reservations, such policies will be prohibited under the CETA.

The agreement protects investors from any kind of obligation to provide any benefit to the community

whose resources they are exploiting.

We should expect that the European multinational company, GDF Suez Energy, which is already

invested in wind energy on Prince Edward Island, will vigorously enforce its new rights under the

CETA to invest free of obligations to directly benefit Islanders. In 2010, Suez Energy’s parent

company won two investor-state disputes against Argentina over the failed privatisation of municipal

water systems. The company is seeking over $1 billion in damages. We shouldn’t kid ourselves that the

same thing couldn’t happen here.

Health Care and Drug Costs

The reservations on health care in the CETA are flawed and thus pose a threat to Canada’s health care

system. Indeed, health care should never be part of any trade agreement because health is not governed

by market rules.

As Roy Romanow states, “Canadians view Medicare as a moral enterprise, not a business venture.” In

Canada, health care is regulated as a public good, not a commercial commodity and is delivered solely

on the criterion of the need of patients without regard for their ability to pay or their socio-economic

status. CETA’s central objective is trade liberalization through the reduction of trade barriers. Access

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to services is seen as a barrier to trade. This is further complicated because, in Canada, the delivery side

of the health care system makes it difficult to draw a sharp line between what is public and what is

private while the trade agreements require a clear demarcation between the two modes of service.

Both Canada and the EU stated that they intend to exclude health care from CETA but since one of

Europe’s highest priorities is to expand trade to provincial and local government services, the EU

demanded that Canada abandon the general reservation in NAFTA Annex 1, which provides some

protection for health care services. Canada has reportedly agreed. This demand requires that

provincial and territorial governments must negotiate exemptions for specific non-conforming

measures in the health sector or else rely exclusively on protection through the Annex 11 reservation

which does not shield the health sector from the full force of trade agreements. It is a limited and

qualified reservation that only shields a health service to the extent that it is a social service established

or maintained for a public purpose.

The scope of this protection is uncertain because the Canadian and American governments have a

fundamentally different interpretation of what these terms mean. This uncertainty in the language of

Annex 11-C-9 of NAFTA caused the Canadian government – under strong public pressure - to

negotiate a second general reservation in the NAFTA. This reservation will be missing in the CETA.

The Canadian government would have to negotiate a new, more effective exemption for health care in

order to protect it.

The Canadian Health Coalition recommends the following wording for this exemption in CETA and all

future trade agreements: “Nothing in CETA shall be construed to apply to measures adopted or

maintained by a party with respect to health care, health services or health insurance.”

CETA will result in up to 13% higher drug costs by delaying the arrival of cheaper generic drugs at a

cost of anywhere between $850 million and $1.65 billion annually and will commit Canada to:

create a new system of patent term extension that will delay the entry of generic medicines by

up to two years;

lock in Canada’s current terms of data protection, making it difficult or impossible for future

governments to reverse them; and

implement a new right of appeal under the patent linkage system that will create further delays

for the entry of generics.

The increased cost to Islanders has been estimated at $3.6 to $6 million annually. CETA drug increases

will be passed on to seniors and the sick. It will seriously impact the ability of Canadians to afford

quality health care and will increase costs of health insurance. Yet the federal government is

perpetuating the myth that CETA will “strike a balance between promoting innovation and job creation

and ensuring that Canadians continue to have access to the affordable drugs they need.” Canadians

began paying 15% to 20% more for new patented drugs under the Mulroney government in exchange

for a promise of innovation and jobs. The higher prices in Canada for the new brand name drugs are

costing us, at least, an additional $2 billion a year. The provisions in the CETA on patent extension

would cost at least another $1 billion in subsidies to the drug industry, paid for out of the pockets of

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seniors and the sick. Canadians get nothing in return for these major concessions. We now invest

twice the amount in the form of various subsidies to the brand-name drug industry than we receive in

benefits.

The argument that brand-name manufacturers need the extra patent protection to attract Research and

Development dollars has not borne up to the test of time. After patent protection was extended as a

result of the NAFTA, brand-name manufacturers pledged to invest 10% of their sales in Research and

Devleopment and since 1997 have consistently failed to meet this commitment.

Pharmacare

A pharmacare program is a stated goal of many politicians, either on a provincial or national basis. If

CETA were to come in to effect, any attempts to introduce a pharmacare program would likely be met

by investor state challenges from European insurance companies.

Local Food

In Prince Edward Island, as in the rest of Canada, there has been an increased demand for locally

produced food in recent years. Whether their food comes from farmers markets, grocery stores,

restaurants or in a weekly food basket from their CSA (community-supported agriculture), consumers

are getting closer to the people who produce the food they eat. The trend is good for farmers and

fishers, who have access to a wider variety of markets, and for consumers, who get fresh, nutritious

food. The PEI Government has invested in promoting local food, by sponsoring events and activities

such as Farm Day in the City, Open Farm Day, PEI Culinary Trail, and even Burger Love.

These efforts may be helpful, but more is needed to provide producers with dependable markets for

larger quantities of food. One option that has been pursued in some jurisdictions is to create policies –

and they can be municipal as well as provincial – with targets for the amount of locally-produced food

to be supplied to schools, hospitals, prisons, nursing homes and universities.

Across the country, municipalities and provinces are implementing “Buy Local” food policies as a

means to supply nutritious food to consumers, and to provide marketing options for local producers.

Such policies have a positive environmental impact due to decreased reliance on the fossil fuels

required to transport food over long distances. CETA poses a threat to these “Buy Local” policies,

which are essentially designed to promote food security. Under CETA, European companies would be

allowed to bid on provincial and municipal contracts, because, unlike previous trade agreements,

CETA extends to “sub-national entities”, that is, provinces and municipalities and even some

institutions. Any policy that favours local suppliers would be seen as an unfair advantage and as

interfering with free trade.

Household food insecurity in every province and territory is on the rise. At the same time, our primary

producers are faced with increasing costs of production and frightening levels of debt: our food system

is in need of repair. We need to protect the right to develop and implement “Buy Local” policies that

promote food security and a healthy food system.

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For example, on Prince Edward Island a policy requiring provincially funded hospitals and nursing

homes to buy local food would be an important step in supporting our primary producers and our rural

communities. Such policies would involve expenditures which were above the CETA threshold and

therefore be prohibited by the agreement.

Dairy Industry

Around the world, dairy production and processing are almost exclusively a domestic industry. The

markets have evolved this way historically due to the freshness cycle of milk. In Canada, we have

developed a system of matching production to the domestic Canadian market requirements. Through a

cooperative relationship between government, producers and processors, we are able to supply a

consistent, stable supply of quality milk to processors across the country to be processed into Canadian

dairy products. Supply management limits expensive over-production in the system, ensures fair prices

to farmers and enables good processing jobs nation-wide.

World dairy markets are essentially a dumping ground for dairy products produced in excess of a

domestic market. Prices are very volatile and well below milk production costs. European Union (EU)

countries choose to support their farmers directly with direct payments from the Common Agricultural

Policy (CAP) through direct subsidy payments; both coupled and de-coupled from production. EU

farmers, in addition to the revenues received from the market place, also receive direct revenue from

European taxpayers. However, the cost of production between EU Nordic countries and Canada are

very similar.

Prince Edward Island dairy farmers invest over $1 million dollars per year in new product

development, market growth and promotion. As a result of this effort, combined with similar

investments by dairy farmers from across Canada, the fine cheese market has been growing in Canada

between 0.5% and 1% annually. In a shocking announcement, the Government of Canada is giving

access to an extra 17,600 tonnes of the fine cheese market to the EU; European negotiators had only

asked for 12,000 tonnes. This pushes the total cheese import market share to 9%. Canada's access to

the EU cheese market is only 1%. The CETA announcement effectively gives the Europeans 60% of

the premium fine cheese market and subsequent market growth too

Dairy Farmers of Canada estimates the annual revenue loss for Canada due to CETA to be $150

million. PEI's share of this would be roughly $2.5 million. On-farm milk production is projected to

decline 2.2% with the loss of the market. Island milk processor, Amalgamated Dairies Ltd. (ADL),

could suffer unintended consequences if EU companies scale back or discontinue processing

relationships they currently have with ADL as a result of the changes announced. Also, the inclusion

of geographical indicators in cheese labeling as a result of CETA will have negative consequences for

ADL, a commercial cheese plant with a diverse product line.

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Government Procurement

Procurement issues in CETA are of concern for provincial governments, municipalities, school boards,

hospitals and academic institutions (the MASH sector). Provincial and municipal government

procurement policies are excluded under NAFTA and the WTO. In the area of procurement, as well as

in other key provincial activities (land protection and wind energy, for example), provincial autonomy

must not be reduced. We must not surrender autonomy to exercise our constitutional powers nor

should CETA become a means to erode our ability to maximize power production or control our land

base. The Lone Pine case in Quebec would cause concern for any reasonable observer who believes in

the right of provinces to regulate within its borders.

There are few things more significant to the private sector in the province of PEI than access to

government contracts. European demands to make it impossible for the provinces and municipalities

to use government spending as a job creator or local economic development tool should be resisted.

Leaked documents concerning CETA show the EU wants unconditional access to local procurement

with such low thresholds that they would have the ability to bid on up to 80% of Canadian

procurement. This would mean that conditions such as minimum Canadian/local content, public

benefit, environmental, quality and green/innovative technological development or even Buy Local

food conditions can be challenged. The CAW estimates that 12 municipal-level procurements per year

include some aspect of a Buy Local condition. Already extant conditions would be protected but if

CETA were implemented it would mean that any community or MASH sector entity that wants to

bring in such conditions after the agreement is signed may face considerable financial penalties.

We have been examining leaked documents for CETA for some time now and originally we thought the

thresholds for contracts would be so high, that it would not affect PEI, but the most recent documents reveal that

the thresholds for CETA are as low as $315,000 for service contracts and $8 million for construction.

It is not difficult to find contracts with our provincial government that exceed $315, 000.

Food Purchasing

Office and paper supplies

Computers

For example, there is tender out right now to supply the English Language School Board with office

supplies and paper that is estimated between $250,000 and $500,000.

Some provincial government construction contracts are valued at $8 million or more:

The public Plan B highway project cost $17 million

The Souris High School is going to exceed $24 million dollars.

There are few things, more significant to the private sector in the province of PEI than access to government

contracts.

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Municipal-Level Motions against CETA

At least 83 motions, resolutions against CETA and requests to the federal government for exclusions

have been passed at the municipal level. 43 of these ask for a clear exemption from CETA for their

community (this includes two school boards and one school board association). The Union of BC

Municipalities (UBCM) has made it clear in motions at two of its conventions that its members want

the federal government to:

“...issue a clear, permanent exemption for BC local governments from the Canada-EU CETA

and that it otherwise protect the powers of local governments; and disclose what it is putting on

the table regarding procurement, services and investment as part of CETA discussions, explain

the impacts CETA would have on municipal governance, and Give local governments the

freedom to decide whether they will be bound by the agreement.” (https://maps.google.ca/maps/ms? msid=212953270345448797564.0004b25bba0a636506a16&msa=0&source=gplus-ogsb)

Municipal-level Procurement in CETA Negotiations

Municipal government officials have been misled by the federal government. According to the latest

leaked negotiating text, it seems that the Canadian position is to use sub-national procurement

conditions as a bargaining chip for more market access. These documents show that the EU is satisfied

with the access they will gain with regard to procurement. The documents show Canada’s willingness

to ban local content restrictions and limit the use of "sustainable development" as a condition. The

Agreement will put new limits on the use of all procurement conditions for municipalities (as well as

the rest of the MASH sectors).

In the leaked document entitled “Landing Zones”, it states:

"The Public Procurement market access offer that Canada made in July 2011 is the most

ambitious and comprehensive offer Canada and its Provinces have made to any partner,

including the U.S. It also outreaches the mutual commitments between the different Canadian

Provinces in the Agreement on Internal Trade (AIT). The outcome regarding the inclusion of

regional and local government entities, including agencies, crown corporations, and the MASH

sector (municipalities, academia, schools, and hospitals) is highly satisfactory. Thus the offer

fulfills our expectations, including regarding the expansion of procurement to the sub-central

level (Provinces and Territories) and to Canadian Crown Corporations and already now

provides for very considerable added value with regard to the existing situation.”

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But the EU Wants More

The terms outlined by the EU also reject offsets. Offsets refers to language that encourages local

development or improves balance of payments such as local content, the licensing of technology,

investment, counter trade or similar. The EU is pushing for a minimum of unfettered access in the final

round of negotiations to:

Public Urban Transit (full access and, in particular, eliminate all local content requirements for

EU operators)

Energy (significant overall improvement on the offered coverage in ON, QC and NL)

The elimination of Provincial and Regional Development Clauses (so they do not

undermine market access to provinces)

Re-municipalization/Nationalization

CETA will not cause municipalities to privatize but it will have a chilling effect on those considering

creating new or expanding existing public services or utilities. CETA will make re-municipalization

extremely difficult. Once privatized, a service will have to stay open to private sector service

providers. If the MASH entity decides to bring the service back into the public sector, EU corporations

will be able to bring suits against the MASH entity. This is the reason Hamilton City council has been

particularly vocal about its concern over water being included in the CETA agreement. This is not

surprising, given their experiences over the privatization of their water and sewage treatment plants.

While water services are now no longer listed in the services and investment chapter, such services will

still be subject to CETA procurement rules. According to the leaked text from the EU, contract bidding

on projects for upgrades and development of water and wastewater infrastructure would be open to EU

companies. In addition, the exclusion of water also does not preclude investor-state disputes against

municipal decisions to re-municipalize formerly privatized systems, it simply gives municipalities

some space to create new public water and transit monopolies. Further, if conditions were placed on

these procurement processes, EU-based investors could bring suit against Canada. It is not clear in the

agreement which level of government would be liable for the costs of an arbitration decision awarded

to the EU investor. Similarly, at a public consultation organized by the PQ government on October 5,

2012, Quebec’s lead CETA negotiator Pierre Marc Johnson conceded that given the privatization of

wind energy in Quebec, “nationalization” of wind power generation in Quebec would have to include

compensations paid to the private sector.

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Public Transit

In 2008, an ENTRA Consultants study confirmed that, with proper support, a province-wide public

transit service in Prince Edward Island was feasible. It would produce benefits for employers and

workers, seniors, students, persons with disabilities and low income individuals and families, as well as

for taxpayers and travelers more generally. It would help maintain our rural communities and benefit

the environment. However, with the looming Canada-European Union Comprehensive Economic and

Trade Agreement (CETA), the Prince Edward Island Public Transit Coalition fears those potential

benefits may never be realized.

Based on what we currently know CETA could have a significant negative impact on the future of

transit in P.E.I. and pose a threat to:

public ownership and control of transit;

maximization of local economic benefits;

the potential reach of transit into rural and less-populated areas of P.E.I.; and

the environmental benefits of province-wide public transit.

Perhaps most significantly, CETA:

interferes with the ability of governments at all levels to make decisions related to transit that

might serve as democratic expressions of the will of their citizens.

For example, unless the provincial government was to identify transit as an area reserved from CETA’s

impact, investment provisions would prohibit both “public monopolies” and “exclusive service

supplier” arrangements. If a future government wanted to operate transit as a direct public service or

through a public agency set up for that purpose (a non-profit P.E.I. Public Transit Organization), it

would not be allowed to do that.

The current system operates as a sort of P3 model (public-private partnership) involving a private

company (Trius Tours) with majority funding from government. If CETA’s provisions extend to

transit (in the absence of any provincial government reservation, as indicated above), a European

company would be granted the right to bid on the provision of P.E.I. transit services and neither the

provincial government nor local municipal governments would be able to block such a bid.

Bids from local companies and European companies would have to be treated equally, with no

preference for local companies (even though the local company would likely return more benefits to

the local community). As well, a European company that succeeded in winning such a contract could

probably count on receiving the same subsidy provided to Trius Tours.

If an effort were made to convert the current P3 model into a publicly-operated model, any European

company that was prohibited from operating a transit service in P.E.I. or tendering a bid on the

provision of that service would be able to challenge that decision.

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Fisheries

The CETA would have a number of impacts on the fisheries sector including:

Elimination of tariffs on fresh and frozen lobster

Fleet separation and owner-operator policies would be considered illegal investment

restrictions

A ban on policies which a government might want to implement in order to restrict the

export of unprocessed seafood, such as mandatory processing requirements

Greater access of European fleets to our ports

Elimination of tariffs

Europeans have been consuming large quantities of fish for centuries. They have exhausted their stocks

and now import two-thirds of the seafood they eat. Union leaders in the fishery have suggested that

European tariffs on Atlantic fish and seafood products were likely to be gradually eliminated over the

next decade. The question then is “Why did the Canadian government give up important policy options

and protections for a tariff reduction which might well have been achieved in any case?”

In addition, there is no guarantee that reduction in tariffs will result in better prices at the wharf for

Prince Edward Island lobster fishers. As this season illustrates, the price which fishers fetch for their

lobster does not necessarily respond to the rules of supply and demand. This season, due to cold waters,

the catch is down and prices have not reflected a reduction in supply. Similarly, an increase in demand

from Europe may not be reflected in the price at the wharf. On PEI the lobster market is imperfect. The

problems with the fishery go far beyond a lack of demand for the product. Because of this, we have to

be particularly vigilant not to give up policy options which may be important to reshape or revitalize

the industry in the future.

Fleet separation and owner operator policies

CETA’s investment rules are more intrusive than those in previous treaties. Existing owner-operator

and fleet separation policies in the fishery, which have up until now been sheltered by a blanket

reservation, would need a specific reservation to protect them. These policies will not be as safe as

they previously were. What are the implications of this weaker protection? And how will it weather

the TTP negotiations? Owner-operator and fleet separation policies are the backbone of the Island

fishery, based on geographical proximity, history and tradition. But they are in stark violation of

normal trade liberalization rules. It is hard to imagine that they will not become targets in future trade

treaty negotiations. What plans does the PEI government have to protect them?

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Mandatory processing requirements

PEI does not currently implement mandatory processing requirements, although, apparently, it does

have a policy on its books. This is the result of a recent history of challenges in the processing industry.

In different market conditions mandatory processing requirements could be a very important policy

option for creating jobs for Islanders. Who knows what the state of the lobster market will be in twenty

years? Why would our government want to permanently give up its authority to have some input into

how much lobster should be landed in our ports?

The Prince Edward Island government, by agreeing to these terms in the CETA, is abandoning its

responsibility to ensure that it will always have the tools available to ensure that the local and inshore

fishery can always be appropriately regulated in order to provide maximum benefit to our local

communities.

Reservations

Reservations (or exceptions) are important mechanisms for governments to, for example, preserve key

activities in their jurisdictions and to eliminate or minimize negative implications of a trade deal. In the

CETA, Canada has abandoned many of the reservations which in previous agreements, such as the

NAFTA, protected provincial governments and provincially regulated bodies. Policies which were safe

before will not be safe any longer unless the PEI Government insists on iron-clad reservations to

protect them.

Existing owner operator and fleet separation policies in the fishery are a prime example of this. We

have noted that the EU has insisted on broad reservations for public services and regulations about

health care, education and water, while Canada has barely proposed any. Why is this? What

reservations does the PEI government intend to make in this area? Currently it is our understanding

that PEI has not taken out a reservation on water services.

Steven Shrybman, a lawyer with the Canadian firm Sack, Goldblatt and Mitchell wrote, in an opinion

prepared for the Canadian Union of Public Employees, that:

“Among the more significant deficiencies of Canada’s present proposed reservations is the

failure to exempt key areas of public policy and law, including those necessary to:

Regulate health care services when these are provided on a commercial basis or

in competition with other service providers…

Regulate early learning and child care services provided on a commercial

basis…

Establish and maintain public monopolies for such diverse enterprises as

electrical transmission and distribution, scientific and technical consulting, and

certain environmental services…

Maintain public control of water…

Regulate for environmental or conservation purposes in regard to manufacturing,

industrial activities, and land use…

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We are aware that the government of PEI has proposed a reservation for intra-city public transit

systems. What about our government’s promise regarding public transit? Has the PEI government

taken a reservation to ensure that PEI has the ability to put in place a provincial (inter-city) transit

system?

Also of great concern are policies such as the Island Lands Act, numerous local economic development

strategies, and our provincial Wind Energy Policy which favours companies which provide local

benefits.

In conclusion the CETA would expose public policies, which have been previously protected, to rules

of trade liberalization. If the PEI government does not take measures to protect them through

reservations, they could be rendered illegal. We are asking that the PEI government release its

reservations immediately, in order that they can be debated publically and to allow input from

Islanders. To wait until the full text has been negotiated will be too late. Now is the time for

Islanders to be consulted.

Conclusion

We are asking M.P.s and M.L.A.s:

To pressure our provincial government to immediately foster full public scrutiny of its proposed

reservations

To demand full public disclosure of the CETA text once it is finalised

To demand that meaningful public consultations be held in communities around Prince Edward

Island and to take a lead role in these consultations

To give organizational support to these public meetings

Develop a critical analysis of the agreement

Become informed on critiques of the agreement from within Canada and also from within the

European Union