Mr. Speaker, trade between Canada and Europe is already free. There are very view tariffs between Canada and the European Union, which raises the question of why we need this comprehensive economic and trade agreement. However, if we are to evaluate it as a trade agreement, then a logical starting point is to look at the current pattern of trade between Canada and the European Union.
In 2015, Canada exported $38 billion of merchandise to the EU and imported $61 billion of merchandise from the European Union. That meant a trade deficit of $23 billion. This imbalance means that if CETA functions as advertised and increases two-way trade, it will also aggravate our trade deficit. For example, a 10% increase in bilateral trade would increase our exports by $4 billion and would increase our imports by $6 billion. That would make our trade deficit with the European Union $2 billion higher, a subtraction from output and employment in Canada.
The economic models that were used to argue for CETA simply assume balanced trade and full employment, but we know that those assumptions are unrealistic in the real world. Furthermore, these models do not take into account, and indeed the government has made no effort to take into the account, the consequences of Brexit. The United Kingdom was the only major European economy with which Canada ran a trade surplus.
In 2015, we exported $16 billion to the U.K. and imported $9 billion from the U.K. Of course, the United Kingdom is no longer part of the European Union. Therefore, if we look just at the remaining EU countries, we find that Canada exported only $22 billion of merchandise to them, but imported $52 billion. What this means is that taking the United Kingdom out of the equation, we imported more than twice as much as we exported to the rest of the European Union. Indeed, with those countries, we suffered a trade deficit of $30 billion.
In this new scenario without the U.K., a 10% increase in bilateral trade would boost Canada's exports by only $2 billion and would increase our imports by $5 billion. That would make our trade deficit with what remains of the EU $3 billion higher, an even larger subtraction from Canadian output and employment.
In terms of trade flows, it is not at all clear that this agreement could deliver a benefit to Canada. Even if we imagine that CETA does boost Canadian output and employment, we should remember that it will also make it easier for European companies to bring in temporary foreign workers. There is absolutely no reason to expect that any potential increase in employment would actually benefit Canadian workers.
Another major problem with CETA is that, as I suggested at the start of my speech, it is not really about trade. In fact, one of the negative consequences of this deal would be to extend the duration of patents on pharmaceuticals. Now this is the opposite of free trade. Extending patents is actually more restrictive of trade and it would have the consequence of driving up the price of pharmaceuticals for provincial health insurance plans as well as for individual Canadians.
Perhaps the most controversial element of CETA is the investor-state provision. In order to try to get the deal through, the government did water down these provisions somewhat, but the question we need to ask is why there is any need for investor-state provisions in CETA. Do Canadian investors not have confidence in the European court system? Do European investors not have confidence in the Canadian judicial process?
Of course, investor-state provisions have their origin in the North American Free Trade Agreement. Canadian and American investors had doubts about the Mexican judicial system. Those doubts may have been well founded, but what is important to note is that since NAFTA came into effect, its investor-state provisions have not been used principally against Mexico. They have been used principally against Canada, against our country.
I think it is worth reviewing some of the NAFTA chapter 11 cases that have been brought against Canada. If we go back to the 1990s, there was the famous Ethyl case, in which an American corporation sued Canada for trying to ban a gasoline additive, MMT, that was already banned in the United States. Ultimately, the Government of Canada gave in on this. It had to pull the regulation and also pay the company $13 million U.S.
There was the more recent case of AbitibiBowater, which had received rights to water in Newfoundland and Labrador to operate pulp and paper mills. When the company closed the last of those mills, the provincial government tried to retake those water rights. AbitibiBowater sued Newfoundland under NAFTA. How could it do that? AbitibiBowater is a Canadian company. It simply registered itself in the United States so that it was then able to avail itself of NAFTA's chapter 11 to sue our Canadian government.
In the end, the federal government paid AbitibiBowater $130 million to resolve the case, essentially to compensate it for the loss of water rights that it was not even using.
The most recent case I will mention is Lone Pine Resources. This is an Alberta oil and gas company that registered itself in Delaware and is suing Canada under NAFTA over the Province of Quebec's ban on fracking. It is claiming $250 million in compensation.
We see that in all of these cases, and there are many other examples, what is happening is that a foreign company is using the investor-state provisions to challenge a democratic law, regulation, or public policy that might arguably impinge on some opportunity to generate future profits.
However, the full extent of the damage cannot really be captured by specific cases, because for every case where there is actually a dispute under NAFTA, there are many other cases where the government has decided not to go ahead with a new regulation or not to strengthen a public safety standard for fear of one of these investor-state challenges, so these investor-state provisions also have a chilling effect on public policy in our country.
We have had all these problems with investor states in NAFTA. We do not have any problems or any real objections to the European judicial system, so why would we try to put investor-state provisions in the Canada-European Union trade agreement? It just does not make sense.
It remains possible that the European Union will not be able to fully ratify the deal for this reason. However, I think the point we should be considering is why Canada would want to impose more of these investor-state provisions on ourselves.
To wrap up, there is absolutely no case for CETA as a trade deal. If we look at it in terms of trade flows, it really would not be advantageous to Canada. Furthermore, the agreement has a number of other negative provisions, such as temporary foreign workers, such as extended pharmaceutical patents, such as investor-state disputes that have nothing to do with trade. That is why the NDP is opposing this bill.