Opinion of the Economic and Social Committee on 'Relations between the EU and Canada` (97/C 66/16)

On 23 November 1995 the Economic and Social Committee decided, in pursuance of Rules 23(3) of its Rules of Procedure, to draw up an opinion on 'Relations between the EU and Canada`.

The Section for External Relations, Trade and Development Policy, which was instructed to prepare the Committee's work on this matter, adopted its opinion on 17 October 1996 (rapporteur: Mr Rodriguez Garcia-Caro).

At its 340th plenary session held on 27 and 28 November 1996 (meeting of 27 November 1996), the Committee adopted the opinion set out below by 89 votes to two with seven abstentions.

1. Introduction

1.1. Canada and the European Union share a considerable joint heritage (in the historical, cultural and other fields) and relations between the two have traditionally been good. Furthermore, Canada is a member of G7 and NATO. In its role as member of NATO, Canada stationed troops in Europe until 1994. Canada also plays an active role in the various UN peace-keeping missions, for instance the recent mission in the former Yugoslavia.

1.2. Against the background of consolidation of the Uruguay Round Agreements and establishment of the World Trade Organization, a major boost was given to trans-Atlantic relations in Madrid in December 1995 with the adoption of a political declaration and a joint action plan by the EU and the United States. At the European Summit in Madrid, which followed on from this bilateral meeting, the Council expressed the hope that other Atlantic-coast democracies would share the aims of the new trans-Atlantic agenda.

1.3. It is however interesting to note that it was in fact Canada which initiated the revival of the trans-Atlantic debate. In 1992 the Subcommittee on External Trade of the Canadian House of Commons' Standing Committee on Foreign Affairs and External Trade issued a report on Relations between Canada and the New Europe. This report called for closer economic ties with Europe, including a form of free trade. Furthermore, after several declarations in support of free trade had been made by the then Canadian Minister for International Trade, Roy MacLaren, the Canadian Prime Minister, Mr Jean Chrétien, proposed, in an address to the French Senate on 1 December 1994, that an agreement be reached to liberalize trade between the European Union and the Nafta states. This initiative however fell victim to the disagreement on fisheries between the European Union and Canada in the spring of 1995 which led to a temporary freezing of bilateral relations.

1.4. In the wake of the fishing crisis, the Commission adopted, on 28 February 1996, a communication calling for the establishment of closer ties with Canada in order to bring about improved cooperation on economic, political and security matters. On 25 March 1996 the General Affairs Council asked the Council presidency and the Commission to enter into talks with the Canadian Government with a view to drawing up an EU-Canada political declaration and a joint action plan.

1.5. The EU and Canada were unable, despite many intensive discussions on the matter, to reach agreement on a political declaration and a plan of action at the last EU-Canada Summit, held in Rome on 27 June 1996. The main point of contention was the interpretation of the concept of 'extraterritoriality`, an issue linked in part to the fishery problem.

2. The political situation in Canada

2.1. Canada is a federal state comprising two territories and ten provinces, the three main ones being Ontario, Quebec and British Columbia. The provinces have important powers in the fields of, for example, health, taxation and a variety of other regulations.

2.2. Canada is a parliamentary democracy (of which the Queen of the United Kingdom continues to be the Head of State) based on a House of Commons (which has a 5-year mandate) and a Senate whose members are appointed by the Prime Minister. Each province also has a legislative assembly, at the head of which stands a prime minister drawn from the majority party.

2.3. The present federal prime minister, Jean Chrétien of the Liberal Party, came to power following the elections in November 1993 which brought to an end two terms of office of the Conservative Party (Prime Minister: Brian Mulroney). The opposition comprises the Bloc Québécois (the pro-independence party whose members are drawn solely from the Province of Quebec) and the Reform Party (whose members are mainly drawn from the west of the country and which is seeking to bring about a considerable reduction in the role played by the State).

2.4. The main political event in Canada over the last year was the Quebec independence referendum of 30 October 1995. The outcome was a slender majority in favour of the 'No` campaign (50,6 % of the electorate voted 'no` as to opposed to 49,4 % voting 'yes`, representing a majority of 53 000 votes from a total electorate of some 5 000 000). The turn-out for the referendum was a remarkable 93,5 % and some 60 % of French-speaking population of Quebec supported the 'yes` campaign. 15 years after the 1980 referendum (when 60 % of voters voted 'no`) and a little more than one year after the accession to power in Quebec of the Parti Québécois, this result by no means puts an end to the debate; it rather leaves the province of Quebec more divided than ever over the question of independence.

2.4.1. Two developments took place in the wake of the referendum. First of all, the prime minister, Mr Chrétien, successfully introduced in the House of Commons a motion recognizing Quebec as a distinct society, giving Quebec, Ontario, British Colombia, the western region and the Maritime Provinces a veto on all future constitutional changes and awarding jurisdiction to the provinces in respect of occupational training. These measures were criticized by supporters of independence for Quebec who expressed doubts over their implementation and considered that they fell far short of Quebec's traditional demands.

2.4.2. A second consequence of the referendum was the resignation of the prime minister of Quebec, Mr Jacques Parizeau, and his replacement by the charismatic leader of the Bloc Québécois, Mr Lucien Bouchard. Mr Bouchard has clearly stated his intention to lead Quebec to independence and to hold a new referendum at a later date. The Quebec Government intends to serve out its full term of office (which has to come to an end by 1999 at the latest) and, if it is re-elected, to hold a further referendum in the ensuing months.

3. The economic and social situation in Canada

3.1. With a total surface area of approximately 10 million km², Canada is, in terms of surface area, the second largest country in the world. Its population, concentrated in an approximately 250 km wide strip running along the frontier with the US, does, however, number only 26 million. Canada is also the seventh most important economic power (GNP of CAD 750 billion in 1994). It has considerable natural resources, which vary from region to region and which have played a decisive role in the economic development of the country. Alberta is the main producer of oil and gas. There is a large mining industry in the western provinces, forestry is important in Alberta and British Colombia, whilst agriculture is the main activity in Saskatchewan. The Maritime Provinces, for their part, are rich in fishery resources and minerals. Ontario and Quebec, the two richest and most highly industrialized provinces, specialize in manufactured products (Ontario accounts for some 40 % of the national output) and British Colombia, too, is highly industrialized.

3.2. Canada has been a victim of the recession in recent years and has recorded negative growth rates (-1,2 % in 1992). In 1994 however it had the highest level of growth of all the G7 states (4,6 %). In 1995 a number of factors adversely affected the rate of growth (which was approximately 2 %), namely the measures which were taken to reduce the deficit, the slow-down in US economic growth and the uncertainties following the referendum in Quebec.

3.3. The fact that both the Bank of Canada and the Canadian Government have committed themselves to pursuing the goal of price stability by taking action, inter alia, in the field of interest rate policy, has kept inflation low, the rate for 1995 being 2,2 %

3.4. One of the main problems facing Canada is the size of its debt and PSBR. The level of the federal public debt increased from CAD 20 billion in 1971 (19 % of GNP) to over CAD 545 billion in 1995 (73 % of GNP). If the debts of the provinces are added to this figure the amount is equivalent to the overall level of GNP. 30 % of federal expenses currently go towards servicing this debt.

3.4.1. With a view to resolving this situation, which constitutes a threat to the country's future, the government has sought to reduce the fiscal deficit by privatizing a number of publicly-owned companies (Air Canada, Petro Canada), cutting back or cancelling a number of subsidies, reducing transfers to a number of other tiers of government and reducing the number of state employees. These reforms have had encouraging results since the fiscal deficit has fallen from 5 % of GNP in 1994-1995 to 4,2 % in 1995-1996, thereby making it possible to achieve the goal of a 3 % deficit in the 1996-1997 financial year. The ultimate goal is, of course, to achieve a balanced budget.

3.5. The Government's declared priority does, however, continue to be combating unemployment. In contrast to the situation in the US, Canada has for several years been faced with a level of unemployment of the order of 10 % (10,4 % in 1994 and 9,6 % in 1995). The main aims of the Federal Government in this field are (a) to bring about economic conditions which are favourable to a revival of employment in the private sector by reducing the public deficit and interest rates, (b) to assist innovation and small businesses, and (c) to promote the expansion of Canada's foreign trade. The fourth pillar of government action is the reform of the social programmes, in particular the unemployment insurance programme, which has been changed into an 'employment insurance programme`. This latter programme places greater emphasis on helping people to resume employment, whilst at the same time providing improved assistance to low-income individuals and families.

3.6. The combined effect of the impact of budgetary cutbacks on the population, economic uncertainty as a result of the unfavourable situation on the labour market and the lack of institutionalized machinery for social consultations and social dialogue are the reasons for the development of a degree of social malaise in Canada. Even though opinion polls, have shown that most people support the drive to cut the deficits, the Federal Government's proposed tightening of the conditions of the unemployment insurance scheme has given rise to considerable protests. An even more demonstrative phenomenon has been the social unrest which followed the introduction of the policies of the new Conservative Prime Minster of the Province of Ontario, Mike Harris, which involved reducing social assistance and grants to municipalities and streamlining the health system.

3.7. When faced with the same financial difficulties the Government of Quebec opted for a different approach before embarking on difficult decisions. It introduced a consultation process (under the slogan 'Having the courage to take joint decisions`) involving representatives of the full spectrum of society in Quebec with a view to reaching a consensus on the reform of the taxation system and ways of reviving employment. At the first conference, held in March 1996, which was given over to the economic and social future of Quebec, agreement was reached on the goal of eliminating the public deficit by the year 2000. A second conference (to be held in October 1996) will seek to draw up a new social pact in the autumn. Thereafter, it is likely that the consultation bodies which have been set up will continue to operate, in a way which has yet to be decided.

3.8. Economic and social interest groups in Canada

Companies

3.8.1. The National Business Council on Issues is the main body speaking on behalf of large companies in Canada on the subject of government policy at national and international level. The Council comprises the heads of 150 of Canada's leading companies. These companies operate in all of the main sectors of the economy and they are responsible for the bulk of private sector investment, exports, vocational training and R& D in Canada. The Council was a strong supporter of the free trade agreement with the US and the extension of that agreement to cover Mexico.

3.8.2. The Canadian Chamber of Commerce, the Manufacturers' Association of Canada (together with their various provincial branches) and the Canadian Federation of Independent Businesses also represent Canadian employers. There are also a number of representative organizations at provincial level, such as the Council of Quebec Employers.

Trade unions

3.8.3. The Canadian Labour Congress (CLC), which in Quebec also embraces the Fédération des travailleurs et travailleuses du Québec (FTQ), is the main trade union in Canada (the Canadian Federation of Labour is the second largest trade union). The CLC is the umbrella organization for a large number of federations with members working in many sectors of the economy. The CLC also has very close links with the New Democratic Party of Canada and a large number of associations, such as women's groups and environmental groups.

3.8.4. The CLC has spoken out against the deterioration in the social situation in Canada and expressed its virulent opposition to the Free Trade Agreement with the US and the subsequent Nafta accord. Although the CLC is represented throughout Canada, including Quebec where it is represented by the FTQ, a further general trade union operates in the latter province, namely the Confédération des Syndicats Nationaux (CSN).

3.8.5. Canada does not have the same tradition of consultations on labour matters as the EU. Collective bargaining generally takes place at plant level, with the exception of a number of sectors such as the motor-vehicle industry. Nevertheless, with a view to salvaging this situation, a number of sectoral councils, comprising representatives of the social partners, have been set up in recent years.

Farmers' organizations

3.8.6. The Canadian Federation of Agriculture (CFA) comprises provincial agricultural organizations and a number of associations of specialist producers (cereals, poultry, cattle, dairy products etc.). The CFA is obliged to include amongst its membership a number of highly contradictory interests ranging from cereal growers in the west of Canada, whose operations are very competitive and geared towards exports, to egg producers, whose market is extremely protected and covered by a supply-management system.

Consumer organizations and other citizens' groups

3.8.7. The Consumers' Association of Canada is the only such organization operating at national level. Although it has a significant influence, in view of the level of awareness of Canadian consumers, the Association nevertheless suffers from a lack of funds.

3.8.8. In addition to the consumer movement, there is also a number of other citizens' movements, for example in the field of the environment, an area in which Canadians are particularly active. An additional sector, known as the 'community sector` has also emerged, especially in Quebec. The aim of this sector is to provide citizens with increased opportunities to participate in a large number of areas of the 'social economy` (health and social services, education, training, culture etc.).

4. Canadian external trade

4.1. Canada is highly dependent upon external trade for its growth since in excess of 30 % of Canadian GNP is linked to exports. Hence the particularly active role which Canada has always played in GATT and, more recently the WTO.

4.2. Canada is rich in natural resources and its main exports are wheat, crude oil, timber, pulp, paper and metals. As the result, in particular, of a long-standing agreement on motor-vehicle products with the US, which exempted bilateral trade in these products form customs duties, Canada is a major exporter in this field. It also exports considerable amounts of telecommunications equipment, aircraft and rolling stock. The main Canadian imports are finished goods, machinery, capital goods, electronic products and consumer goods. In 1995 Canada had a record trade surplus of CAD 28,3 billion which was triggered by a strong growth in exports brought about by the economic revival in the US.

4.3. There is a considerable imbalance in Canadian external trade since the US is far and away the leading trading partner. 70 % of Canadian imports come from the US and over 80 % of its exports go to its southern neighbour. There has been an increase in these percentages in the last few years as a result of the entry into force in 1989 of a free trade agreement with the US. Canada's main aim at the time was to achieve a degree of security in respect of its trade with the US, in the face of increasing US moves towards protectionism.

4.4. On 1 January 1994 the North American Free Trade Agreement (Nafta) came into force, linking Canada, the United States and Mexico. The main aim of the agreement is to remove customs' barriers and most non-customs' barriers over a period of 10 years, to liberalize investment flows and to establish a mechanism for settling disputes over dumping and countervailing duties.

4.5. With a view to circumventing the lack of urgency on the part of the US to bring Chile within the scope of Nafta, Canada entered into talks at the beginning of 1996 on a free trade agreement with Chile. Furthermore, as a member of Apec (Asia Pacific Economic Cooperation) and the Organization of American States, Canada is involved in the measures to promote trade liberalization initiated by these two bodies.

5. Canada enjoys good relations with the EU ...

5.1. In 1976 the Canadian Prime Minister of the day, Mr Pierre-Elliot Trudeau, was instrumental in the conclusion of a framework agreement for economic cooperation between Canada and the European Communities. Under this agreement the two parties committed themselves to increasing and diversifying their trade, promoting economic cooperation and encouraging and facilitating the establishment of joint ventures.

5.1.1. The above agreement, which was regarded at the end of the 1970s as an important stage on the road towards closer relations between Canada and the European Communities, did not however produce all the anticipated commercial benefits and did not prevent disputes. It did however make it possible to set up lines of communication on economic and trade issues, in the form of a joint cooperation committee and a number of working parties (on commerce and investment, telecommunications and information technology, minerals and metals and timber products and paper).

5.2. The basis for trade between the European Union and Canada is the 'most favoured nation clause`. Canada is the EU's ninth ranking trading partner whilst the EU is Canada's second most important trading partner. In 1994 the value of total EU imports (goods and services) from Canada was ECU 12,1 billion whilst EU exports to Canada totalled ECU 13,2 billion.

5.2.1. In recent years there has been a degree of stagnation in trade (as regards trade in goods but not trade in services) between the EU and Canada because of general economic conditions and also undoubtedly because of the diversion of trade flows in the wake of the signing of preferential agreements. In 1994 exports by the 12 EU Member States represented 1,75 % of the EU's total exports (as opposed to 2,23 % in 1990) and imports into the EU from Canada represented 1,7 % of total imports (2,05 % in 1990).

5.2.2. The main EU exports to Canada are machinery, rolling stock, manufactures and chemical products. The EU's main imports from Canada are wood pulp, aircraft, aluminium, newsprint and timber used in the construction industry. The UK and Germany have the closest commercial ties with Canada.

5.3. Although the level of trade between the EU and Canada remains somewhat disappointing, foreign investment trends are more satisfactory. Overall direct investment by Canada in the EU is in excess of ECU 15 billion. The European Union is the second most important beneficiary of Canadian foreign investment (after the US), accounting for a share of 20 % in 1994, as against 12,5 % in 1985. Total EU investment in Canada amounts to approximately ECU 20 billion. The EU is the second most important source of foreign investment in Canada (some 20 %).

5.4. Political relations between the European Union and Canada are defined by the Transatlantic Declaration of November 1990. The Declaration is in similar vein to that signed a little earlier by the European Union and the United States; it sets out the joint objectives and challenges and points to the need to strengthen cooperation in the scientific, economic and cultural fields. In particular, the 1990 Declaration provides for regular contacts at the highest level, namely between the President-in-Office of the EU Council, the President of the EC Commission and the Prime Minister of Canada. The mechanism established in 1990 has worked quite well and has made it possible to consolidate the ongoing dialogue at both political and administrative levels.

6. ... but EU-Canada relations are confronted by a number of problems

6.1. A number of long-standing problems continue to mar bilateral relations, sometimes leading to periods of considerable tension.

6.2. The fisheries dispute is of course the most well-known, following the crisis in spring 1995 over the fishing of Greenland halibut in international waters. This issue has been poisoning bilateral relations for a number of years. In 1981 an agreement was signed following four years of negotiations. In December 1992 a further agreement was concluded with the aim of finding a satisfactory solution to the issues of conservation, optimal use and prudent management of stocks within the area regulated by the Northwest Atlantic Fisheries Organization (Nafo) and in Canadian waters.

In this connection Canada has not ratified the memorandum of understanding derived from this agreement. This is harmful to the Community fishing sector, mainly as regards:

a) authorization for EU fishing vessels to enter Canadian ports and use their facilities;

b) availability to the EU of Canadian fish surpluses from its exclusive economic zone, bearing in mind the interest which the EU has always shown in surpluses of certain species;

c) authorization for EU vessels to participate with Canadian firms in trade agreements concluded under development programmes and other fisheries programmes.

6.2.1. On the occasion of the 1995 dispute the EU condemned as illegal the measures taken by the Canadian authorities, namely the boarding of a Spanish trawler in international waters - thus violating fundamental and universally accepted precepts of international law - and the unilateral application of a moratorium on fishing for Greenland halibut in the area covered by Nafo. After a period of heightened tension an agreement was concluded on 16 April 1995.

6.2.2. This agreement, which was accepted by the twelve other members of Nafo in September, regulates the allocation of fishing quotas for 1996 and establishes new conservation and monitoring measures. In a further development Canadian ports were re-opened to EU fishing vessels in June 1996.

6.2.3. Even though the tension which prevailed in 1995 has subsided, the fishing issue has not been finally settled. There has been a sharp reduction in Canadian fish stocks; this has brought about economic consequences for the population of Newfoundland and introduced a domestic policy element which will make it difficult to reach any compromise in the long term. Furthermore, following the boarding of one of its fishing vessels, Spain has brought an action against Canada in the International Court of Justice. Pending the Court's ruling (which is expected to be delivered by the end of 1997), it is doubtful whether Canada would enter into any commitment which could damage its cause.

6.3. A number of problems have also arisen over the issue of the use of leg-hold traps. Council Regulation No 3254/91 prohibits the use of these traps in the European Union with effect from 1 January 1995. With effect from that date it also bans imports of furs and fur products from countries which authorize the use of leg-hold traps or which use trapping methods which do not correspond to international animal welfare criteria.

6.3.1. In 1995 implementation of these provisions was postponed with respect to Canada. Canada opposed the implementation of these measures on the grounds that its native peoples, in particular the Inuits, were highly dependent upon fur trading. This issue will arise again if no international standard is laid down by the International Organization for Standardization (ISO) or if the working party established by the European Union, Canada, the US and Russia fails to come up with tangible results. In its Opinion on the proposal for a Council Regulation, under which there would be a further one year delay in the implementation of the 1991 Regulation, the Committee expresses its concern over the fact that the Commission failed to pay adequate attention to defining the surveillance procedures for ensuring that animals were trapped humanely. The Committee also makes a number of other requests, namely:

- that a binding timetable be drawn up for negotiations with non-EU countries;

- that the Commission consider the issue of providing technical assistance to populations which use traditional methods of hunting with a view to getting them to agree to introduce humane methods of trapping;

- that the negotiations include a 'transparency clause`, which would provide for the attachment to imported products of a declaration in respect of the methods employed in capturing and slaughtering the animals concerned and the place of capture;

- that, on a more general note, the Commission should agree to amend the existing agreements with non-EU states and to negotiate future agreements with a view to the inclusion in the agreements of a jointly binding clause on cooperation in the field of environmental protection.

6.4. A number of disputes over agricultural products, in particular wheat, boned beef and pasta products have been resolved in the course of the negotiations on offsetting the negative consequences for Canada of the enlargement of the European Union (Article 24.6 of the WTO rules).

6.5. Other problems remain, however, such as the presence of nematode worms in pinewood, clear-felling in Canadian forests, which has prompted protests from Europe, designations of wine and spirits and commercial practices pursued by provincial organizations dealing with sales of alcoholic products.

7. Finding a new impetus to relations between the EU and Canada

7.1. The Committee welcomes the initiative taken by the Commission in respect of Canada. In the Committee's view comprehensive and balanced transatlantic relations are inconceivable without full participation by Canada.

7.2. There is a need to recognize the special character of Canada, which to some extent represents a half-way house between what some refer to as the 'US model` and the 'European model`. It is also necessary to take account in bilateral relations of the internal diversity of Canada - in particular the co-existence of the English-speaking and French-speaking communities.

7.3. The Committee shares the assessment of both the Commission and the Council that the similar nature of the challenges inherent in EU-US relations and EU-Canada relations call for the same procedural approach to be adopted in respect of both of these links. A new institutional framework is thus not necessary. The Committee also shares the Commission's view that the approach adopted will have to be tailored to the scale and specific nature of EU-Canada relations.

7.4. The Committee regrets that at the Rome Summit it was not possible to conclude the negotiations on the formulation of an action plan involving the EU and Canada. The Committee calls upon the Council Presidency and the Commission to resume as soon as possible the negotiations with Canada on the plan of action so as not to lose the momentum generated at the beginning of the summer. The Committee urges that a firm stand continue to be taken in respect of the interpretation by Canada of the concept of 'extra-territoriality`. It is unacceptable, for obvious reasons of principle, for Canada to interpret this concept in differing ways, depending on whether the issue involved is, on the one hand, the application of the Helms-Burton Act or, on the other hand, the boarding of a foreign vessel in international waters.

7.5. Whilst maintaining a firm stand as regards ensuring that international principles and regulations are respected, agreement on the plan of action should not, however, be dependent on achieving a definitive settlement of the fishery dispute. The Committee also considers that failure to agree upon a plan of action must not jeopardize the ongoing negotiations on certain issues or the initiation of discussions on other matters.

7.6. In the light of the Communication issued by the Commission, the EU-Canada plan of action is to comprise four main parts: foreign policy and security; international problems; trade, cooperation and investment; and a section dealing with the intensification and broadening of the dialogue between the EU and Canada.

8. Foreign policy and security

8.1. The Commission points out in its communication that:

'the developing role of the European Union in international affairs and the international stance of Canada on global issues, coupled with their shared values, makes an improved level of coordination and cooperation between Canada and the EU in areas of foreign policy desirable.`

Mention is made of a number of areas where there is a potential for increased cooperation, such as European-Atlantic security, human rights in the newly independent States (NIS) and the reform and strengthening of the UN.

8.2. Closer cooperation is also proposed in connection with humanitarian goals. In this context, attention is drawn to the fact that the measures taken by Canada to reduce the government budget deficit regrettably bore particularly heavily on public development aid programmes, the budget for which has been cut from CAD 3 billion to CAD 2,2 billion over the last three years. Nonetheless, the EU and Canada largely share the same objectives in the field of humanitarian aid and contribute an essentially equivalent proportion of their GNP (0,4 %) to development aid. The Committee would encourage the Commission to strengthen cooperation with Canada in these important fields. The establishment of a mechanism for promoting coordination and staff exchanges between the Commission and the Canadian International Development Agency might also bring about improved coordination of work in this field.

8.3. The Committee has frequently expressed its concern over increasing poverty in Africa and the isolation of that continent. Canada shares this concern since Africa is the main recipient (44 %) of state development aid provided by Canada. There is scope for joint action in this regard.

9. International issues

9.1. Justice and internal affairs

9.1.1. The Commission points out in its communication that since the EU Treaty, and in particular Title VI of the Treaty, dealing with cooperation in the areas of justice and internal affairs, came into effect, many non-EU states, including Canada, have expressed interest in actively collaborating with the EU in these areas. The potential areas for such collaboration include: immigration matters and the right of asylum; organized crime at international level; drug trafficking and money laundering; measures to combat terrorism and the smuggling of illegal immigrants.

9.1.2. The Committee fully shares these concerns. It is however convinced that effective transatlantic cooperation - which is essential if we are to meet the above-mentioned world-wide challenges - will only be achieved once the EU is in a better position to put forward a common front on these matters. This is one of the issues which should be addressed at the Intergovernmental Conference.

9.2. The environment

The Committee supports closer cooperation with Canada in the field of environmental policy, an area in which Canada has considerable experience. Joint action could be taken by the EU and Canada to promote the conclusion of international environmental agreements. By way of an example, Canada and the European Union, unlike the US, have adopted a similar approach in the field of eco-labelling which provides good grounds for intensifying the dialogue and the search for joint solutions.

10. Trade, cooperation and investment

10.1. Multilateralism

10.1.1. The Committee reiterates its commitment to a multilateral approach and to the consolidation of the World Trade Organization. Against this background, it welcomes the talks rightly being planned with Canada on the issues which were not finalized in the Uruguay Round talks, public contracts, direct foreign investment and new trade policy issues.

10.2. Transatlantic context

10.2.1. Canada's leaders have on a number of occasions proposed that talks be held on a transatlantic free trade agreement or even an EU-Canada free trade agreement. The Committee recognizes that these proposals were very useful inasmuch as they stimulated reciprocal consideration of this issue by the various parties. The Committee does however share the views of the Commission that such a step would be premature, inasmuch as it could jeopardize consolidation of the achievements of the Uruguay Round agreements and there could also be considerable difficulties standing in the way of the realization of such a measure. Furthermore, the level of trade between the EU and Canada is clearly relatively low and stagnant and the Canadian economy is geared to a very large extent to the north American market; no agreement, not even a free trade agreement, will be able to change this latter situation.

10.2.2. The Commission proposes that Canada and the EU carry out a joint study on ways of facilitating trade in goods and services and reducing or even removing tariff and non-tariff barriers. The Committee would ask the Commission to keep it briefed on progress made with this study and the outcome of the study. The Committee also asks for studies to be carried out into ways of increasing and facilitating investment, in particular investment in SMEs. The Committee does, however, wonder whether there is a linkage between the aforementioned joint study and the study which the EU has agreed to carry out with the US on the same subject. In this context the Committee wonders why the term 'new transatlantic market` does not figure in the definition of the policy towards Canada, since it constituted an important chapter in the collaboration agreed upon with the US. The Committee would once again draw attention to the need for an in-depth consideration of a joint strategy vis-à-vis the three members of Nafta.

10.3. Bilateral trade

10.3.1. Bilateral trade relations between the EU and Canada have frequently fallen foul of disputes, some of which could have lead to major conflicts. Even though several of these problems have recently been resolved, the potential for conflict remains. A large number of these conflicts are clearly linked to the different standpoints adopted with regard to environmental issues by Canada and the EU. Cases in points are the approaches adopted with regard to baby seals, fisheries, forest-based products and leghold traps. In this context the Committee calls for more emphasis to be placed on seeking to establish a dialogue on environmental matters and the link between these issues and trade.

10.3.2. The Committee welcomes the Commission's intention to seek ways of avoiding a repetition of these problems by making more effective use of the mechanisms to provide early warning of impending disputes. It does however regret that this proposal seeks only to strengthen the existing mechanisms which have by no means demonstrated their effectiveness in the past. The establishment of a 'conflict prevention` system is something which the Committee has called for on several occasions in the past. Recognizing that most of the bilateral disputes can be traced back to action taken by interest groups in the EU or Canada, the Committee suggests that the transatlantic dialogue be extended to embrace these groups in order to involve them in a dispute prevention mechanism.

10.4. Cooperation in the field of regulations

10.4.1. The Committee supports the Commission's approach of giving priority to achieving cooperation in the field of regulations as a means of promoting trade.

10.4.2. The Committee supports the conclusion, as soon as possible, of an agreement on the mutual recognition of standards and conformity assessments (which include certification and testing procedures). The Committee would also reiterate its call for the greatest possible use to be made of international standards. All the interest groups concerned should be involved in the process of establishing standards.

10.4.3. Negotiations are underway with a view to sealing agreements in the field of competition policy and customs cooperation. The Committee also calls for increased cooperation with a view to facilitating access to the financial services markets.

10.4.4. Increased cooperation in the field of regulations should cover a broader field - it should embrace consultations with the interest groups which are concerned by these regulation policies. Consultations should cover not only commercial interest groups but also trade unions, consumer organizations and non-governmental organizations.

10.5. Cooperation in the fields of employment policy and social policy

10.5.1. The promotion of areas of joint interest relating to employment policy and social policy are two of the aims of the process of giving a new impetus to relations with Canada. The exchange of experience and ideas with regard to (a) measures to combat unemployment, (b) job-creation, (c) the links between employment and new technology, (d) vocational training, (e) life-long education and training, and (f) health and the safeguarding of social provisions could be highly beneficial. At the present time Canada and the EU both have to face very similar problems.

10.5.2. The Committee urges that dialogue should not be restricted to representatives of the administrations but be broadened to include the social partners. Bearing in mind its experience in these fields, it would be helpful for the Committee to play a part in the talks designed to bring about better mutual understanding and to find common solutions, whenever possible.

11. Broadening and intensifying the dialogue

11.1. The final part of the Commission's strategy is to broaden the scope of the transatlantic dialogue to include the business world and civil society and new areas, such as education, culture and science. The Committee does, of course, fully support this goal. In its earlier Opinion on EU-US relations, the Committee pointed out that:

'By extending the commercial dialogue currently being promoted, transatlantic cooperation between economic and social interest groups would have the beneficial effect of placing upon a broader footing a dialogue which has so far largely been carried out by a relatively small group of experts drawn from political and security circles`.

11.2. The Commission thus proposes to establish a dialogue between businesses, based on the dialogue between EU and US businesses. It is also planned to strengthen cooperation activities in the field covered by the recently concluded bilateral agreement on science and technology and in the field of joint programmes relating to the information society, in particular in the area of multi-media use in education and culture. The Committee welcomes these plans.

11.3. The Committee also welcomes the proposed joint examination of regional policy issues as the European Union and Canada have to face similar challenges in this field.

11.4. The Committee urges that full use be made of the cooperation mechanisms provided for under the recently concluded agreement on higher education and vocational training, although it would question whether the conditions of participation laid down in this agreement (participating institutions have to be drawn from two different EU Member States and two different Canadian Provinces) are not too restrictive. The Committee also calls for the speedy introduction of mutual recognition of courses of university study and university qualifications.

11.5. The Committee urges that the scope of the dialogue between the EU and Canada be extended to include the interest groups operating on both sides of the Atlantic. If there is to be full participation in the bilateral dialogue, there is a need to include in the dialogue groups representing workers, farmers, consumers and environmental organizations. A constructive dialogue could be held on a large number of issues, such as

- economic and monetary issues;

- the promotion of sustainable development; public development aid; and the situation in Africa;

- the comparison of experiences and policies with regard to job-creation, vocational training, health and social services;

- environmental protection policy and the links between trade and environmental issues;

- consumer information and protection;

- the differences between the agricultural policies pursued by the two parties; reciprocal reductions in subsidies; support for agriculture; and environmental protection;

- the comparison of experiences in the field of regional policy;

- innovatory measures taken by NGOs and the involvement of civil society - the form of such involvement and the areas in which it could take place; and

- cultural exchanges and contacts between young people.

11.6. Bearing in mind the dynamism of civil society in Canada and the very enthusiastic welcome given to the idea of a broader dialogue in Canada, the Committee calls for the holding of an annual meeting to debate a number of the abovementioned issues. The aim of these meetings would be to improve mutual understanding, to provide a means of preventing disputes and, finally, to involve civil society - and consequently the population at large - in the transatlantic dialogue which has all too often been the prerogative of specialists. The Committee hopes that the conclusion of the joint EU-Canada action plan will stimulate the Committee to continue its work in this field.

Brussels, 27 November 1996.

The President of the Economic and Social Committee

Tom JENKINS

APPENDIX to the Opinion of the Economic and Social Committee

The amendment set out below, which was supported by at least a quarter of the votes cast, was rejected during the debate:

Point 7.5

Replace the text with the following:

'In any case, the necessary firmness concerning the respect of international principles and regulations implies that achieving a plan of action should not hinge upon the absolute need to resolve the anomalous situation currently arising from Canada's failure to ratify the Fisheries Agreement it signed in 1992, which encompassed opening Canadian ports to EU vessels, the creation of joint EU-Canada companies and access to fish surpluses. This would represent a major step forward, through mutual understanding, in normalizing EU-Canada relations in which fishing aspects have assumed vital importance, bypassing - without in any way underestimating - the dispute currently before the International Court of Justice.`

Reason

The proposed amendment, although basically saying the same thing as the original version, is more specific and concise.

Result of the vote

For: 31, against: 50, abstentions: 19.