Junior Partner Canada

Abstract

We know that the friendly ties between Europe and the United States and Canada are unique and without alternative. There is no lack of shared challenge. I believe they are more likely to increase than decrease. But we know together as partners we are strong.1During the course of Germany's EU council presidency in 2007, Canada was mentioned often in official speeches, government documents, and petitions. Nonetheless, EU-Canadian economic integration was not a serious priority for Germany-or for that matter the European Union. The EU-Canada economic partnership project remained vague in design and scope; there was no mention of free trade or a transatlantic marketplace. Instead, Chancellor Angela Merkel concentrated on an EU-US-centred transatlantic marketplace. This article outlines and explains the dominance of the United States in Merkel' s transatlantic market place initiative. The first part analyses official documents and speeches from Germany's EU council presidency to show how and when Canada appears on Merkel' s transatlantic agenda. The second part of the article explains Canada's role in transatlantic economic relations by evaluating commercial ties, interests, and strategies. The article concludes that the fate of the EU-Canada economic partnership project depends very much on high-level support on both sides of the Atlantic, as well as the development of a clear vision. Otherwise the initiative is destined to fail, as have many of its predecessors.GERMANY'S EU PRESIDENCY: APUSH FOR DEEPER TRANSATLANTIC INTEGRATION? EU-US ECONOMIC INTEGRATION AND THE TRANSATLANTIC MARKETPLACEOn 1 January 2007, Germany took over the six-month rotating presidency of the European Union. During its tenure, Germany proved to be a strong strategic leader with regard to transatlantic economic integration. The initiative for a transatlantic marketplace came directly from the chancellery and was driven at the highest political level from fall 2006. In contrast to other trade issues on the presidency's agenda, the chancellery was in charge of Merkels transatlantic initiative, with the groundwork being carried out by the federal ministry of economics and technology (BMWi) and the federal foreign ministry, via their respective country desks.The chancellor announced her idea to create a transatlantic free trade area in September 2006, reacting to the lack of progress in the WTO Doha round of negotiations and rising global competition due to the economic emergence of China and India. At first Merkel's initiative, which was at the time still vague, caused reactions in Berlin and Brussels that ranged from the reserved to the outright critical. It was not clear what she had in mind, a free trade area along the lines of previous proposals or deeper internal market integration. The idea of using a European-US free trade area as a bulwark against the leading emerging economies was particularly strongly criticized. Bernd Pfaffenbach, state secretary in the BMWi, described the initiative as the deathblow of the Doha round. EU Commissioner Peter Mandelson warned that the rest of the world would react with dismay if the two largest economic powers agreed to exclusive trade preferences.2.Above all, the idea of a transatlantic FTA met with resistance because it is no longer deemed appropriate, given that free trade agreements have hardly any effect on non-tariff barriers (FTAs, by definition, focus on the elimination of tariffs). Average customs duties in transatlantic trade, with the exception of some areas with high import tariffs, such as trade in agriculture and textiles, are now extremely low-less than four percent. The problem lies with non-tariff barriers, which continue to represent a serious impediment to market access. These barriers are to be found in standards set for industrial goods-in testing, licensing, and accounting-as well as in customs systems and in the area of government procurement. According to the OECD, liberalizing transatlantic trade could therefore result in considerable growth of up to three percent of GDP for both trade partners. …