HomeMy WebLinkAboutFCS-12-085 - Canada-European Union Comprehensive Economic and Trade AgreementREPORT TO:
Finance and Corporate Services Committee
DATE OF MEETING:
May 5, 2012
SUBMITTED BY:
Dan Chapman, Deputy CAO
PREPARED BY: Larry Gordon, Director of Supply Services
WARD(S) INVOLVED:
N/A
DATE OF REPORT:
April 27, 2012
REPORT NO.: FCS-12-085
SUBJECT: Canada-EU Comprehensive Economic and Trade
Agreement (CETA)
RECOMMENDATION:
WHEREAS the Government of Canada and the European Union have been negotiating a trade
agreement known as the Comprehensive Economic and Trade Agreement (CETA);
AND WHEREAS the Canada-European Union relationship holds great potential for growing
Canada’s trade and collective prosperity;
AND WHEREAS the Council of the City of Kitchener has been made aware that some members
of the community have concern regarding the impact of CETA negotiations currently underway
between Canada and the European Union;
AND WHEREAS the City of Kitchener supports the guiding principles as set out by the
Federation of Canadian Municipalities (FCM) and endorsed by the Association of Municipalities
of Ontario (AMO);
BE IT RESOLVED THAT the City of Kitchener requests the Federal Government and the
Province of Ontario to continue to ensure that the municipal sectors’ interests are represented in
the ongoing negotiations; and
THAT the federal government’s negotiations ensure that the FCM guiding principles will be fully
reflected in any trade agreement reached between Canada and the European Union; and
THAT the federal and Ontario governments provide FCM and AMO with regular, detailed
updates on the status of the European Union trade negotiations to the fullest extent possible
AND FURTHER THAT this resolution be forwarded to the Minister of International Trade; local
MPs, the Premier of Ontario, local MPPs, the Ontario Minister responsible for Trade and
Economic Development, FCM and AMO
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BACKGROUND:
The Comprehensive Economic and Trade Agreement (CETA) is a proposed free trade
agreement between Canada and the European Union (EU). CETA is intended to replace the
former Canada-EU Trade and Investment Enhancement Agreement (TIEA).
The TIEA moved beyond traditional market access issues to include areas such as trade and
investment facilitation, competition, mutual recognition of professional qualifications, financial
services, e-commerce, temporary entry, small and medium-sized enterprises, sustainable
development, and sharing science and technology. The TIEA established a Canada-EU
regulatory cooperation framework for promoting cooperation on approaches to regulatory
governance, advancing good regulatory practices and facilitating trade and investment. The
TIEA continued until 2006, at which time the Government of Canada and the EU agreed to
negotiate a much broader and ambitious scope trade agreement known as CETA.
REPORT:
This report outlines the potential municipal impacts of CETA, identifies stakeholder concerns
and provides a rationale for the proposed Council resolution.
Potential Municipal Impacts of CETA
Staff has conducted preliminary research on CETA’s proposed increased scope. The expanded
agreement appears to open up the EU’s ability to:
access natural resources
bid on national, provincial and municipal government contracts; and
open up public municipal water systems across Canada to privatization
Members from the Ontario Public Buyers Association (OPBA) are participating with the
Association of Municipalities of Ontario (AMO) as municipal advisors to the EU Negotiating
Team. The OPBA has identified the following specific items of concern as it relates to municipal
procurement processes:
The proposed spending limits for when a bid would need to made available to the EU
are:
$340,600 for general goods and services;
o
$8.5 M for construction projects; and
o
$681,187 for Utilities goods and service contracts
o
The procurement processes would include firm rules surrounding mandatory posting
periods and bid dispute processes. It has been suggested that the associated time
frame could be up to six weeks. The current time requirement in the Inter Provincial
Trade Agreement is 15 calendar days.
There would be specific rules around sourcing, standards and the acceptance of
equivalents. Currently this has not defined.
There would be a shared depository for advertisement of bids that fall within these
categories. How this would be managed, who would manage it and the associated
value and cost have not been discussed or defined. Discussions have also commenced
regarding a requirement for periodic reporting.
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Other identified gaps include the differing terminologies that are used from country to
country and the lack of equivalent standards for such areas as water and wastewater,
etc.
Stakeholder Concerns
Many groups such as the Waterloo Regional Labour Council, the Waterloo Region Food
Systems Roundtable, the Council for Canadians, the Union of B.C. Municipalities, the Canadian
Auto Workers Union, the Sierra Club Canada, the Canadian Union of Postal Workers, the
Canadian Union of Public Employees, the Canadian Community Economic Development
Network, the Canadian Centre for Policy Alternatives, the Centre for Civic Governance and the
National Union of Public and General Employees have raised concerns about CETA. There has
been increased pressure on Ottawa to either fully or partly shield the municipal sector from
government procurement of goods and services. Giving the EU full access to sub-national
purchasing and contracting in Canada may also impact local school boards, universities,
hospitals, as well as other provincial agencies.
Concerns have also been raised that the negotiation of CETA by the Government of Canada,
and more recently the Provinces has not included much, if any, public consultation especially
with respect to input from local municipal governments.
In reaction to the above information, the Waterloo Region Labour Council and the Waterloo
Region Food Systems Roundtable have initiated efforts to seek support from area municipalities
for a greater level of disclosure from the Government of Canada and greater involvement from
local municipalities. To this end, representatives from the Waterloo Region Labour Council and
the Waterloo Region Food Systems Roundtable appeared before the Committee on April 16 to
seek a resolution requesting a permanent exemption from CETA for municipalities (refer to
Appendix A).
Proposed Council Resolution
Given the lack of public information provided by the Government of Canada, City of Kitchener
staff does not have enough information about CETA to recommend that City Council pass the
resolution as requested. However, it is staff’s opinion that there appears to be enough public
information from non-government sources that the City of Kitchener should be concerned about
CETA and its potential local impact. The staff recommendation in this report is based on the
proposed resolution as outlined by AMO (refer to Appendix B) and calls for increased
transparency, municipal consultation and support for FCM’s guiding principles as trade
negotiations progress. FCM’s guiding principles are detailed below:
Reasonable procurement thresholds: Inappropriately high or broad procurement
1.
thresholds may force municipalities to tender projects when tendering is neither practical
nor financially justified.
Streamlined administration: Ensuring that municipal procurement policies are free-trade
2.
compliant will likely create new costs and may require specialized expertise. The
administrative design of these rules must be as streamlined as possible and developed
in close cooperation with municipal procurement practitioners.
Progressive enforcement: Enforcing provisions of any deal should be progressive,
3.
starting with verbal or public warnings before moving to financial penalties, and should
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recognize and not penalize inadvertent non-compliance, particularly in cases where
municipalities do not have the expertise to appropriately apply the rules.
Canadian content for strategic industries or sensitive projects: A trade deal must
4.
recognize strategic and public interest considerations before barring all preferential
treatment based on country of origin. There may be industries of strategic significance to
a particular region, such as transit, or projects where considerations of quality, public
benefit, environmental protection or business ethics means that a local government may
wish to implement minimum Canadian-content levels. This should be allowed, within
reason.
Dispute resolution: A dispute-resolution process, like the one in NAFTA, may require a
5.
careful review of the municipal role in that process so they can appropriately defend their
policies and by-laws as an order of government.
Consultation and communications: Consultation and communications during
6.
negotiations are required to ensure any resulting agreement responds to municipal
concerns.
Reciprocity: Canada´s negotiating position must support reciprocity in Canadian and
7.
foreign municipal procurement practices.
On April 27, Federal Minister for International Trade Ed Fast delivered a speech at which time
he underscored the Federal Government’s commitment to respect FCM’s guiding principles in
any future trade agreement, which is a positive development.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The City’s Strategic Directions for Financial Management seek to ensure responsible
stewardship of public funds within a supportive policy framework. The City’s purchasing policies
are structured to obtain the best value in the procurement of goods and services for the City
with guiding principles focused on ensuring that the procurement process is effective, objective,
fair, transparent, accountable and efficient. The City has an interest in ensuring that the impacts
of any trade agreement do not compromise these principles.
FINANCIAL IMPLICATIONS:
n/a
COMMUNITY ENGAGEMENT:
A copy of this report has been provided to the delegations which previously appeared at
Committee on this matter.
ACKNOWLEDGED BY:
Dan Chapman, Deputy CAO
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