Group 38@Sophia EU and Canada set out trade agreement


The Canada-EU trade pact could boost trade by $20bn a year

The European Commission and Canada have unveiled the details of a new trade liberalisation agreement.

Under the deal almost all customs tariffs will be eliminated and markets for services will be opened up.

But the agreement still needs approval from the EU parliament and faces particular opposition from Germany.

Critics say the deal restricts the power of democratic governments in relation to big business.

Business benefits

It’s not just maple syrup. Traded products, in both directions, range from machinery, chemicals and transport equipment to services such as insurance and communications.

The European Commission has said the deal would boost bilateral tradeby 23%. And a A joint EU-Canadian study has put the combined annual economic gains at about 20bn euros although those figures were published six years ago.

However a provision included in the deal to bolster the rights of foreign investors, known as Investor State Dispute Settlement (ISDS) could still prevent the deal being approved.

Campaigners say it gives big business too much power in relation to democratically elected governments wishing to introduce new policies.


Analysis: economics correspondent, Andrew Walker

One thing could still derail the deal.

The Germans don’t like the proposal that’s included for a new system of tribunals, under what’s knows as ISDS. If foreign investors feel they’ve been mistreated they can turn to these tribunals and even in some cases apply for compensation.

ISDS has actually been around for years. But recently campaigners have begun to argue that it is undemocratic because of the constraints it puts on elected governments.

For example the tobacco company Philip Morris is taking legal action against Australia over its plain packaging laws – there has been no ruling yet on this case.

Other cases have involved regulation of energy prices, disputes over patents and alleged wrongful criminal prosecution.

The German economy minister Sigmar Gabriel has said he would reject the Canada deal if the ISDS elements remain.

That has cast new doubt on whether the deal will ever come into force and it suggests an uphill struggle for other trade negotiations still being hammered out behind the scenes.


Campaigners have called the ISDS “a powerful corporate weapon to delay, weaken and kill regulation.”

Nick Dearden, director for the World Development Movement says of the EU Canada deal: “If it is agreed, it will undermine the power of democratically elected governments to make decisions in the public interest”.

Supporters of ISDS say it provides foreign investors with protection against discriminatory treatment and that means they are more likely to take the plunge and invest.

The EU’s top trade official, Commissioner Karel de Gucht rejects the complaints against ISDS, although he has acknowledged concerns about some agreements.

He told the European Parliament: “On investment, the agreement establishes a system that sets a new standard for investor-to-state dispute settlement procedures”. He said the deal with Canada “directly addresses all the concerns that have emerged so far”.

The controversy about ISDS led the European Commission to launch apublic consultation earlier this year about its inclusion in trade liberalisation negotiations with the US.

Group72@Sophia, John Hoffmire: Black markets are bigger and closer to home

The words “black market”usually refer to illegal business activity. The biggest and most notorious markets relate to illegal drugs, human trafficking and piracy-counterfeiting. Combined, these markets are valued at $1.2 trillion worldwide. The global economy as measured by the World Bank produced a gross combined national product of $72 trillion in 2012.

One has to remember that it is extremely difficult to estimate illegal economic activity figures because of the market’s own nature, it wants to be hidden. Actually, this $1.2 trillion figure is probably underestimated. Rough calculations from Havocscope, The Economist and the United Nations state that the drug market is worth about $550 billion, human trafficking $250 billion, and piracy-counterfeiting $412 billion. Also, these figures don’t include an estimate of money laundering activities, which alone add up to no less than $1.5 trillion.

Where are black markets most prominent? Most particularly, the answer is here in the U.S. According to Havocscope, ours is the biggest illegal market in the world, with about $625 billion in revenue. According to the CIA World Factbook, we are the net largest illegal drug consumers on the planet. The second biggest illegal market is in China where $260 billion in illegal goods are consumed and next largest is in Mexico, where $125 billion worth of illegal activity is transacted.

The next question is why the black markets are so important? First, it’s because millions of people are affected. It is also important because most of its activities end up harming people. Worldwide, around 200,000 people were killed by drug abuse in 2012, of which 41,000 were living in the U.S. Regarding human slavery and trafficking, the FBI reports, about 293,000 youths in the U.S. are in danger of becoming victims of sexual exploitation as they become runaways or are abandoned. Another 17,000 people are trafficked into the U.S. every year. Moreover, according to the Polaris Project, there are around 27 million people in slavery conditions worldwide as of today.

Additionally, regarding piracy and counterfeiting, their importance lies in the immense losses companies face. Just imagine how many more dollars of revenue Apple or Nike products would create if their products weren’t being constantly pirated. Moreover, this lost business activity means that millions of workers in developing countries who often make clothes, shoes, electronic goods and other products end up working for less scrupulous manufacturers. While not all the manufacturing firms used by U.S. companies overseas are perfect, it is generally accepted that they are better employers than those that specialize in pirated goods.

How did the black markets grow so big? According to Moises Naim, former director of foreign policy, when global trade began to take off in the 1980s, trade barriers were falling and a wider range of products flowed in and out of countries. Given that this flow was so vast, it was impossible to check every container for illegal goods. Taking advantage of these new opportunities, black market entrepreneurs grew with ease.

Finally, money laundering has a predominant role in todays’ black market economy. Of the $1.5 to $2.5 trillion that is laundered every year, some is related to the same products that are named above. But another large part of the laundered money flows as a result of illegal arms trade, tax evasion and supporting terror. Globalization made free capital movements possible, now we are all paying the price of the freedom that we have gained.

The U.S. is known as the country with the tightest regulations around money laundering. This is partly because of the use of the dollar as a predominant currency. Related to this, U.S. government entities fined HSBC $1.9 billion recently over alleged funds funneled from Mexico’s cartels.

While trade, globalization and cross-border movement of monies are all positive parts of the world economy, they all come with costs when black markets are concerned.