There’s been much hand-wringing and sniping in the media lately about Canada’s “failure” to conclude a comprehensive trade agreement with the EU. But how much of it is negotiating atmospherics and posturing and how much is real? It’s difficult to know — in part because the list of issues supposedly outstanding in the trade talks changes almost every day.
The jousting in public seems more pointed than the hard-bargaining at the table. What is evident is that, after five years of effort, a certain amount of fatigue and frustration surrounds the negotiation. Equally apparent is that, without firm political will on both sides, negotiations will continue to languish and the ultimate deal will be smaller than either party had anticipated.
The operating principle for Canada in the final stages should be that ‘no deal is better than a bad deal’. The cardinal rule for any negotiator is to know your BATNA — your Best Alternative To a Negotiated Agreement. If your BATNA exceeds what’s on offer, you should walk. In this case, Canada’s BATNA is not just status quo — which we can obviously live with — but also the very real benefits that may come from our trade talks with the dynamic, emerging markets of the Asia Pacific.
The option of walking away from a bad deal is essential leverage that should never be squandered. If an agreement with tangible and balanced benefits for Canada cannot be secured, then there should be little remorse. You do not get points for persistence and your negotiating leverage is not enhanced if the other side senses that you are desperate for a deal — any deal, at any price.
A judicious “time-out” may be in order. Sometimes negotiations have to break down before they can succeed. That may well be the situation now with the CETA.
We should certainly not be bamboozled by the notion that we need to conclude a deal before the EU turns to the bigger prize with our southern neighbour. That may be the Europeans’ negotiating tactic but the ambitious two-year timelines for that negotiation have little basis in fact.
For one thing, the U.S. administration has no negotiating authority from Congress to secure a deal, a feature some Europeans regard as a prerequisite for the negotiation. Does anyone really think President Obama would be able to get any trade agreement through Congress? Similar doubts haunt the prospects for the Trans-Pacific Partnership (TPP) talks.
In any event, the best counter-tactic by Canada to this EU ploy would be to demonstrate progress on some other trade front, namely with Japan or Korea. As big as it is, the EU (with one or two exceptions) hardly represents an avenue of robust growth these days, either for its member states or potential trade partners. Its economies are on a downward slide, with little prospect of improvement any time soon.
Aggravating as the protracted process of negotiation may seem on the surface, the ultimate success will be determined by a basic analysis of what benefits it brings — bearing in mind that estimates and studies to date about potential benefits were based on abstract theory and not on the terms of an actual agreement. That is why the risk of “failure” should not be hyped. To date, the CETA negotiation has raised little passion for or against, either in Canada or Europe.
The Canadian government needs to be very clear on what its bottom line “asks” are in the negotiation. There will have to be trade-offs and some Canadian oxen will have to be gored. But the overall result must be demonstrably balanced — providing mutual, not lopsided, benefits.
Spin doctors should take their seats and let the negotiating teams conclude their work, preferably accompanied by a strong, political prod from leaders on both sides of the Atlantic. On trade, it takes two to tango.