Michael Taube: Carney’s EU mistake is nearly complete

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Prime Minister Mark Carney described Canada as the “most European of non-European countries” at a joint summit in Brussels last summer. This eye-raising remark led some political pundits and columnists (including me) to speculate that his personal mission wasn’t to improve relations with the U.S., but to jump into the “waiting arms” of the European Union.

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If that was his ultimate goal, it seemed rather unrealistic from the very beginning.

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The EU has the world’s second-largest economy (behind the U.S.) and third-largest GDP (behind China and the U.S.), whereas Canada is a middle power at the best of times. Our country’s water, energy and natural resources may have real value in the free market economy, but the EU’s 27 member states wouldn’t want to pay hefty premiums to purchase them when many options exist in a closer (and cheaper) location.

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Meanwhile, Canada and the EU already had a trade deal in place, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), which was signed in 2017. CETA removes 99 per cent of all tariff lines on products from the two trade partners.  What more did Canada have to offer? You can only lower the price of back bacon and maple syrup by so much, after all.

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And yet, it appears that a full-fledged Canada-EU alliance may be in the works.

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Bloomberg published an exclusive story this week that revealed Canada and the EU are “working toward a new, all-encompassing relationship that will range from trade to security.” European Commission President Ursula von der Leyen will reportedly address this matter at her state of the union address in Strasbourg, France on Sept. 16. Carney will attend this speech and he’ll then “address European lawmakers the following day.” While the final details haven’t been unveiled, the arrangements will reportedly “aim to cover all areas of the relationship, including trade, security, supply chains and critical raw materials.”

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Bloomberg reporters Andrea Palasciano, Alberto Nardelli and Brian Platt pointed out that “It’s not clear whether new legal tools would be needed to formalize the partnership.” This will largely depend on what’s covered in the arrangement, of course.

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This announcement coincided with the very same day Canada placed counter-tariffs on various U.S. products in the midst of the ongoing trade war. Which obviously means it was no coincidence! It may also help explain why Ottawa didn’t place the counter-tariffs for more than two weeks after negotiations fell apart to prevent the implementation of U.S. President Donald Trump’s 50 per cent tariffs. This made no logistical sense at the time, but the EU and Canada were evidently putting some finishing touches on the current round of discussions.

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To be clear, building or increasing trade with other countries, trading blocs and economic unions is a perfectly acceptable strategy. Canada certainly needs to look at Europe, along with Asia, Africa and other regions in the world, to diversify our trade interests and build additional economic growth. It’s a strategic decision that many previous prime ministers, including Stephen Harper, firmly believed in.