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The CETA and Nova Scotia: Oversold benefits, Untold Costs

October 23, 2012

3-minute read

A new report on the Comprehensive Economic Trade Agreement (CETA) concludes that the agreement's benefits for Nova Scotia are being oversold, while its costs and consequences are minimized or even ignored.

Indeed, EU officials are in Halifax right now selling the benefits of the CETA for Nova Scotia. Media report the officials as reassuring Nova Scotia that our fisheries industry will benefit, and that Halifax will benefit from extra port traffic. As for the costs, media report that Nova Scotia shouldn't worry too much about the patent term extension for brand name drugs, or about removing municipalities' ability to consider local benefits in procurement contracts. The evidence to support why Nova Scotia shouldn't worry was not reported in the media nor, in fact, has it ever been reported anywhere else.

The only official Canadian government report about the CETA was unbalanced and left out critical economic factors or assumed full employment (eg. anybody who loses a job will find one elsewhere). An increase in port traffic may result in a handful of dockyard jobs, but the wear and tear on infrastructure and impact on our environment is not even considered in the unbalanced assessment. Moreover, since the negotiations got underway in 2009, the value of the Canadian dollar relative to the Euro has increased by 19%, calling into question many of the conclusions made in the federal government’s report about benefits. Once real economic factors are taken into account the picture is quite different.

In reality, the CETA could result in between 510 and 2587 net job losses in Nova Scotia. While there may be small increases in jobs in the fisheries sector, these will be more than offset by losses in manufacturing.

The CETA also threatens to restrict the authority and autonomy of democratically-elected governments to enact public policy in support of local economic benefits or even respond to their citizens' needs. The recently awarded shipbuilding contract is one example. Irving Shipbuilding was able to bid for the shipbuilding contracts competing only against other Canadian suppliers because of Canadian sourcing rules for military procurement. In addition, the federal government could include consideration of local benefits as part of the selection criteria. If either of these measures were prohibited, the success of the Irving Shipbuilding bid would have been very uncertain. While military procurement will be excluded from the CETA, the threat posed by the CETA against any kind of 'buy-local' initiative is a serious one.

Public procurement in Nova Scotia is estimated to amount to $3.64 billion per year. Losing the ability to focus on local procurement is a lost opportunity for Nova Scotian communities: opportunities to decrease the economic and environmental costs of shipping, boost local economies by allowing more money to circulate in the local economy longer, facilitate local employment, and generate income that contributes to the local tax base.

Under pressures to open up more of our local economy and public services to the private sector, government decisions may be increasingly subject to claims through the investor-state dispute resolution systems proposed for the CETA. Our experience with NAFTA raises red-flags.

Take for example the case that is being brought by Bilcon against the government of Nova Scotia. Bilcon is particularly displeased that the Environmental Review Panel that decided against the company's proposal for a quarry included consideration of whether it fit with the community's 'core values'. With more than $188 million on the line in this one case, the possibility of serious social and financial repercussions exists.

As for the drug costs that Nova Scotia shouldn't worry about: the CETA threatens the province's ability to enact fair drug pricing policy because the proposed changes to Canada's drug patent system could add approximately $70-million annually to Nova Scotia's prescription drug costs. These costs have also been confirmed by a leaked government study.

A cornerstone of Nova Scotia's renewable energy strategy is support for local producers, but this could be interpreted as an unfair advantage by the Europeans. This has, after all, just happened  to Ontario's Green Energy Act,which was brought before the WTO by Japan.

It is also too risky to assume that Nova Scotia farmers, in particular dairy operations, can withstand an increase in European imports or be able to increase their access the European markets. Rather, European imports could effectively undermine supply-management and do significant damage to our dairy sector.

The CETA could also open up post-secondary education to greater numbers of private companies. This means, for example, a privately-funded, for-profit business or medical school could be set up in Nova Scotia, and the government would be powerless to prevent it or exercise any control over how it operates.

All of these sectoral examples provide evidence that the CETA could have serious implications for our province.

Undertaking this analysis was difficult because of the lack of transparency about the specifics of the CETA, and the lack of up-to-date specific data related to Nova Scotia. Without further evidence to the contrary, our report concludes that the probable costs of the CETA greatly outweigh the benefits for Nova Scotia. Merely opening up the possibility for greater competition in Europe will not automatically create economic benefits for Nova Scotians. It is more likely to mean that European companies have easier access to Nova Scotia consumers and public spending.

There are costs associated with trade and investment treaties, especially ones as sweeping in coverage as the CETA. Nova Scotians deserve information and data weighing the full economic and social costs and benefits. We deserve more than evidence-lacking reassurances.

Christine Saulnier is Nova Scotia Director of the Canadian Centre for Policy Alternatives.


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