The inside story of Canada's trade deal with the European Union

Jean Charest reveals how courtship began with a bluff

MONTREAL – Like so many other courtships throughout history, this one began with a little embellishment on the first date.

Jean Charest has described in an interview with The Canadian Press how he pursued the European Union in the early stages of a process that was to culminate Friday in the announcement of an agreement in principle for a landmark free-trade pact.

His passion for the project was piqued in the penthouse of a Quebec City skyscraper. Things blossomed weeks later, in a quiet room in the Swiss Alps. Now the former Quebec premier proudly predicts it will bear fruit with the most wide-ranging free-trade agreement in Canadian history.

In late 2006, global trade talks were stalled, as were plans for an investment agreement with the European Union. But Charest was informed by Quebec’s envoy to Brussels, Christos Sirros, of a constituency keen on pushing for a trade deal with Europe, led by Roy MacLaren, a former federal trade minister and head of the Canada Europe Roundtable.

He invited them both to supper in the premier’s residence in the 14th storey of the Price Building, the art-deco skyscraper towering over the old quarter of Quebec City. Also present were a European diplomat, an executive from Bombardier, and Alcan vice-president Dan Gagnier, a longtime political aide who would soon become Charest’s chief of staff.

The premier agreed over supper to broach the subject at the upcoming Davos summit. They subsequently booked a private room at that World Economic Forum, in January 2007, where he raised it with Peter Mandelson, who was the European trade commissioner at the time.

Mandelson set one immediate condition.

“He said to me, ‘Mr. Charest, I want to ask you a question first before we go any further: I want to know whether or not the provinces will be at the table because, if the answer is no, there is no point in us pursuing the conversation. We’re not interested,'” Charest recalled in a Friday morning interview.

“‘If the answer is yes, I’ll hear you out.'”

So Charest did what ardent suitors often do.

He bluffed.

Of course, Charest replied, Canadian provinces were ready to talk.

“I didn’t have a mandate to do that,” Charest now admits with a chuckle.

“But I took it upon myself to convince my colleagues to do this.”

He wasn’t finished pleading his case with Mandelson. Charest argued that a deal with Canada would give the EU better bargaining position should it ever seek a more lucrative prize: a trade pact with the U.S., which is now under discussion. He also suggested it would be easier to find an agreement with Canada, than the U.S., because of what he described as closer shared “values.”

To this day, he credits the British diplomat with having a better grasp of Canada’s federal system than some people in this country: “Mandelson understood that Canada is a very decentralized federation and that a real deal, one that was substantive, required that the provinces be at the table.”

Charest then went about making his bluff a reality.

He raised the issue within the Council of the Federation, the interprovincial body he’d helped create upon taking office in 2003. Pierre Marc Johnson, the former Parti Quebecois premier, was soon tasked with briefing the other provinces, who jumped aboard.

The next target was Ottawa.

High-ranking forces in the federal bureaucracy were keen on the project and they convinced a rookie government to get involved. The Harper government was initially skeptical, Charest said, but it gained interest as it realized the Europeans were serious and the goal was attainable. It soon became a staunch ally, he said.

“To the credit of the Harper government, they took it up and said, ‘Fine, we’ll do it. Let’s do it.'”

If there was one potential irritant early on, one element that might have snuffed out the initiative in its infancy, it was the question of how many voices should be allowed at Canada’s negotiating table.

In an early session with their Canadian interlocutors, he said, the Europeans again insisted that a make-or-break condition was the involvement of provincial governments — who have ultimate jurisdiction over so many of the areas up for discussion, from labour mobility to public procurement.

Canadian negotiators protested that it would be too complicated to involve so many negotiating parties, he said. But the Europeans came back with an obvious retort: “The Europeans’ response,” Charest said, “was it can’t be more complicated than having 27 countries (in the EU). And it was game over.”

Meanwhile, Canada got help from friends in different places.

Mexico had signed a trade deal with Europe in 1997. Charest said he sought the counsel of former president Ernesto Zedillo, and asked him how he’d managed to keep the EU interested.

Zedillo’s advice: Keep going to the Davos summit every year, and buttonhole every European leader you can find.

There was no trouble getting access to one European leader — former French president Nicolas Sarkozy. Charest and Sarkozy shared common friendships, notably the recently deceased businessman Paul Desmarais. The interest of France’s leader, who held the rotating EU presidency in 2008, helped clear a major hurdle, Charest said.

“I’ll tell you why the French were pivotal: Because, typically, they would have been opposed to this. But because of the relationship we had with the French, they took a position contrary to what people would have expected and they were promoters of this deal.”

Canada declared a couple of no-go areas in the talks: culture, and supply management in agriculture, Charest said. That’s why the impending deal will relax some cheese-import quotas, but not do away with them.

The increased openness to European cheese is now spurring a backlash from Quebec producers, as the deal awaits ratification. But Charest predicts that a gradual phase-in, with possible federal assistance, will quell concerns.

Also, the deal won’t allow for the free movement of workers between Canada and Europe. But Charest said it will make it easier for provinces and countries to strike labour-mobility deals.

Having lost last year’s provincial election after three terms as premier, Charest is observing this week’s events from a distance, during a business trip to China in his new post-political career.

But he’ll see to it that these negotiations conclude, as they began: with a bit of bravado.

He casts the deal beyond economic terms, seeing it as more than a mere battering ram that could knock down 98 per cent of the European Union tariffs — 9,000 in all.

Charest also describes it in nation-building terms, as a source of Canadian unity, and purpose.

He said the involvement of provinces has been a valuable lesson in Canadian federalism, and how a flexible approach to federal-provincial co-operation can produce a better result for all.

“This is the most comprehensive trade deal that Canada will ever sign,” Charest said, describing it as far deeper than NAFTA.

“It puts Canada right in the middle of the biggest trade zone in the world — with NAFTA and 450 million people on one side, and Europe on the other.

“This is a game-changer for our economy, for investment, and for jobs.”

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