A Friday to remember: Surprise Wallonia defence hurts Canada’s chances of clinching historic CETA victory

October 31, 2016    

My op-ed in the The Hills Times on what the collapsed Canada-EU Free Trade Agreement negotiations means for Canada-EU trade, what’s at stake for the Canadian government and Canadian companies and what are the next steps?

  • By Omar Allam || October 24, 2016

Last week, Canada’s International Trade Minister Chrystia Freeland was driving Canada’s offense through the EU’s red zone with sights set high on a touchdown to bring the Canada-EU Free Trade Agreement (CETA) home. With the clock winding down in the 4thquarter, Belgium’s province of Wallonia made a defensive move that Canada (and the European Parliament) wasn’t prepared for. With no timeouts and no other plays in their offensive playbook, Canada got sacked for a loss.

Whichever side you’re on, the Europeans need to rethink the way they negotiate trade agreements and the way they communicate about it. This whole CETA saga reflects very badly on the EU, and shows that some institutional issues urgently need to be settled if Europe wants to be able to adjust to today’s world.

This uncertainty of trade protectionism will impact, and potentially threaten, the renegotiation of Canadian trade agreements. It may influence the choices Canada makes about future agreements and could limit them over the next two years.

So what now? What will this mean for Canada, and the Canadian companies that have been waiting and preparing for CETA to be ratified?

Let’s unpack this.

Mixed signals (and Minister Freeland’s statement on Friday) are rarely good news, nor do they instil confidence in the Canadian business community, especially for small and medium sized exporters (SMEs) that are risk-averse.

Regardless of the final call on CETA, exports and investments between Canada and Europe won’t come to a grinding halt since we are a trading nation. Europe is and should still remain a key trading partner for Canada, but the Europeans obviously need some time to put things in order internally. Alexander Graham Bell said it best: “When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”

Canadian exporters will need to base their European strategy on the fact that things will never be the same. Every company with interests in these markets will need to assess the impacts of CETA, Brexit, and the outcome of the U.S. election on their commercial operations and overall international strategy. If you haven’t done this already; your competitors have.

Next Steps?

Ottawa needs to move on, and develop a coordinated Canadian International Trade and Investment Strategy with the private sector, look at which other global export and investment opportunities are out there (beyond the U.S.), and try to leverage them to the greatest extent possible.

A successful strategy requires clear priorities, based on understanding the strengths we need to preserve and capitalize on, and the weaknesses that threaten our prosperity. Strategy addresses what to do, but also what not to do. It is far from clear that we are taking the right steps to improve investment attraction and global exports.

It is also time to develop and make available real incentives, export grants, and financial instruments that can help Canadian exporters perform better internationally despite all of the political, social, and economic risks in the world today. This goes beyond the CanExport program and small provincial export growth initiatives that are limited in scope for the majority of exporters that struggle the most. According to a recent study of Canadian business owners and senior managers, when it comes to businesses thinking about taking the plunge internationally, 46 per cent felt that they didn’t have the insights needed to identify markets for expansion; 63 per cent said they didn’t know the steps required, and 24 per cent didn’t even know where to start.

The government should also establish a new non-partisan advisory council on international trade and investment to give advice on how Canada can best tackle challenges in the global economy and take advantage of opportunities in international markets.

This Advisory Council should advise on initiatives relating to exports, foreign direct investment, and commercial diplomacy, as well as the broader cooperation between Ottawa and the provinces to support Canadian business interests in strategic global markets.

The Minister of International Trade also needs to take the lead and convene a special international export and investment summit so the government can hear firsthand from Canadian business executives on how Canada can best tackle challenges in the global economy and take advantage of export and investment opportunities in markets of strategic importance to Canada.

Political leaders, Canadian diplomats, public servants, business leaders, and civil society have the talent and must begin a respectful, fact-based dialogue about our challenges and how we want to move forward. We need to focus on competitive reality, not defending past policies, going back to old playbooks, and rubber stamping consultations.

Global markets will not wait for us. There is an element of urgency. The drivers and pieces are all there, government and industry just need to be properly structured in a truly Team Canada approach with proper leadership bringing our best senior leaders and young talent from both sides. It all starts with the right leadership to champion international trade, followed by strategy—and more importantly—execution.

About the Author:

Omar Allam is a former Canadian diplomat with World Bank and UN experience, and is currently serving as the CEO and founder of the Allam Advisory Group, a global trade advisory and commercial diplomacy consulting firm.