What could EU associate membership look like for Canada?

Prime Minister Mark Carney working towards an unprecedented alliance with the European Union on a lightning speed schedule. We are working towards the deepest possible partnership short of accession because of our geography. With Canada becoming the European Union's first associate member. Carney has set a June deadline for Canada's associate membership bid. What comes with that title is actually not known, as Canada and the EU work out the details. Now, at last week's summit, Canada and the EU committed to an alliance of the future. That includes a new digital trade agreement, supply chain integration, and allows the European Investment Bank to... Fund major critical minerals projects in Canada. After the summit wrapped, I spoke with the Minister of International Trade, Maninder Sidhu. Minister Sidhu, hello. Hello, David. How are you? I'm very well. Minister, the EU summit has now wrapped. It now moves towards a process where negotiations will continue, and eventually the EU's 27 member states will have to agree to all of this. Some of them do not like the term associate member. Nine of them haven't even gone ahead with the free trade deal that we negotiated a decade ago. Why will this effort be any different? Well, I think first off, context matters. In terms of the free trade agreement out of the 27 member countries, yes, there are some that haven't ratified yet, but that doesn't mean it's not provisionally applied. And so all 27 members are able to utilize the CETA trade agreement and the benefits that come along with it. And trade has flowed. In fact, trade is up significantly since we signed CETA, 75% increase in goods, 90% in services. Is there more work to be done? Sure, we continue to encourage the member countries that have not ratified, but 99% of trade is flowing. The ratification would mean that when you get to 100% and everyone's ratified, it unlocks the investment protections. And so trade, it's not hindering trade. It actually increased trade between our two countries, $175 billion roughly last year. And they're our second largest export market in terms of receiving Canadian goods. So we need to continue to engage with a market of this size. And this is why this summit was very important to explore additional opportunities to bring home more results for our workers. There have been a number of areas of shared concern where there could be alignment in policy. One of those areas that's been suggested is around carbon policy. And I'm going to bring you to the steel industry in this country, which has been battered considerably. It, under EU rules, would face a levy because of the carbon that's involved in the process of making that steel. Could Canada's negotiations with the EU avoid those tariffs? Yeah, so it's the CBAM provisions that I think we're talking about. And so those are on our radar. We've been discussing that with my counterpart, the European Union Commissioner of Trade, Maro Šefčovič. And so if you look at our industrial carbon pricing mechanism that we have in Canada, we actually have an advantage compared to other countries around the world that will be hit with heavy levies. And so right now we're working with them to identify and recognize our industrial carbon pricing mechanisms. In Canada here, we're building up that capacity with the European Union in advance of the December 31st date. And so we hope to come to a conclusion, a positive conclusion for our industries. I understand it's on their minds. It's something that I study at Trade Committee. And so we'll continue working with them. But we're in a good position in terms of what we have in place. The industrial carbon pricing mechanism will actually give Canadian companies an advantage when they're shipping to the European Union compared to other emitters around the world. Could the outcome of that be that? Our steel industry does not face the EU levies, or is it that they would be minimized given our existing infrastructure or existing framework? The goal is to minimize and to ensure that we have competitive access to the European Union market. Of course, that's the ongoing conversation. As we know, there could be impacts on the steel, aluminum, fertilizer sectors and others across Canada. And so the goal is to minimize them, to bring them down to zero and continue those conversations. And so that's what we're doing between our officials and negotiating teams. Canada's trade with the U.S., while being tested right now, is still much, much larger than it is with all 27 members of the EU. Thank you. Is there progress in that department at getting even a partial deal? Well, the conversations are ongoing, as you know. We're not going to sign any deal. We want to make sure it's a fair deal for our workers and for our industries. And so are there pressures on both sides of the border because of the trade war? For sure. I mean, as you know, I'm an MP in Brampton East where there's thousands of workers that are laid off, 3,000 of them in the auto sector. And so we need to continue standing with our industries as we work through this with the Americans. But at the same time, as we promised Canadians, we're focused on diversifying. And this is exactly what we're doing with the European Union. You know, earlier this week, we signed the fastest trade agreement in Canada's history, 47 days with the UAE to unlock a market of 700 billion. But also here, what we're doing at the summit with the European Union. I see a lot of opportunities. They're the second largest market in the world. And so these discussions here were about signing the digital trade agreement, which will unlock about $10 billion of opportunities between our two economies. This is something that we didn't do in a vacuum. We sat down with industries, with the Shopify's of the world, with Lightspeed of the world. They have a lot of SMEs, small and medium-sized businesses on their platform that are doing a lot of e-commerce. And so what the digital trade agreement will do is reduce that friction, the administrative burden on those businesses the European Union, and so that's progress in the right direction. You mentioned the deal with the United Arab Emirates. Part of the money that is coming from that deal will go to fund expansion of the port of Churchill in northern Manitoba. What else could it be used to invest in? What other projects? Yeah. So we're talking to, to the UAE. They brought the largest overseas delegation to the investment summit. That was a success in Toronto where we committed, where we secured a commitment of roughly $500 billion. And so, uh, from my conversations earlier this week with the delegation was about, uh, energy was about mining was about logistics. In fact, I'll be going there, uh, and next month, actually at the end of November, early December to continue those conversations. Uh, there's a lot of projects being discussed right now. A lot of commercial sensitivities, the commercial due diligence that's going on right now. I hope to go there And of course, keep building on that momentum to see more unlocked within the $70 billion. They've already committed some, and we want them to do more in Canada. And they want to do more, and the motivation is there to do more. And so we'll continue having those conversations, and we'll have more to say soon. Now, Minister, not to knock you, but when a minister goes somewhere, it's not as big a deal as when a prime minister goes somewhere. And Narendra Modi, the leader of India, is coming to Canada in December. Surely he will expect to have a deal ready for him to sign by that point. Is that on track? It's going well. I'll be back in India in two weeks for round six of negotiations with my negotiating team. You know, it is a tough negotiation. But of course, this is this is a negotiation that was started way back with Prime Minister Harper. And so Off and on through many different administrations, but I believe the momentum is there and the willpower from both sides is there right now. Businesses are excited. This builds on my recent trade mission to India. I took 300 Canadian delegates to India, the largest in over 30 years, and that speaks volume. It speaks that the government is not doing this alone. We're doing it with businesses behind our back. And so I hope to get that accomplished by the end of the year. What's your toughest file right now? I would say, look, the toughest file, I mean, there's always trade irritants up and down. You know, even the perfect trade agreement will always have something to talk about. I think just moving, continue to moving at a speed. I mean, we need to continue to move at speeds never seen before. Continue that momentum. I need to lock down India, ASEAN, Philippines in the coming months. Those are big markets for Canada with the European Union, of course. But also attracting those investments to Canada to build those projects. Here in Montreal, I took the EU Trade Commissioner out to the Port of Montreal, where you know that the Contrecœur project is being expanded. That will increase the port's capacity by about 60%. This port here in Montreal is the largest service provider to the European markets for Canadian exporters. And so we need to continue investing in our port infrastructure to get these goods out. But it's also about good paying jobs. 8,000 folks. Building that expansion project here at the Port of Montreal, that's very important as well. Okay, you're talking a lot about deals that are either made or in the process of being made. We have a budget coming up in a week. What impact will these potential deals have on that budget? Well, I think it's the budget, but it's also what we've done in terms of permitting, in terms of speeding up some of that processing timelines of working with Indigenous communities and provinces. And so we need to continue on that path. The budget will be about, you know, tax provisions. We'll be about making sure that there's opportunities for workers and businesses. And so that's what we're exploring in the budget and what we can do more for Canadians and continue building on the momentum that we've already been doing. And coming back to your question about projects, these projects are live on the ground, Shovels in the ground. Here at the Port of Montreal, the Contrecœur project, there's construction workers on site supporting 8,000 workers. But also here in Quebec, you have the Nouveau-Mont graphite mine that's supporting close to 1,000 workers. It's the largest graphite mine in the G7. And so that's very important. We're not doing it alone. We're doing it with European partners. Italy has invested into this mine. In fact, Italy has, well, the European Union has invested in close to 25 different projects across Canada in terms of mining. And so we need to continue working with our partners. And this is what this summit was all about, finding collaboration and partnership opportunities for our workers and for our businesses here in Canada. Minister Sidhu, thank you very much for your time. Thanks for having me. Joost Korte is the European Commission's special envoy on that partnership. He was at the summit, and I spoke with him on Friday about this and what Canada gets out of it. Joost Korte, hello. Hello. I do want to start with you on this question of associate membership. And it's because it's been a bit of a roller coaster. Use this term, don't use this term, then use this term again in the aftermath of the summit. What does it mean? What is associate membership? Well, associate membership means as close you can get to the European Union without being a full member. That's the text that was agreed among the 27 member states with Canada and the interpretation that's given here by in fact all three, so both by your prime minister as by President von der Leyen and President Costa, he said it's the same as an associated membership. The words don't really matter so much. But I would only say because it is a term that has not previously existed, and so trying to compare it to something else, we can't really do that. And we know that there has been some resistance, certainly here in Canada, but also in Europe, Germany, Greece, France, objecting to the term itself. How do you interpret those objections? Is it about Canada? Is it about a relationship? Is it about the words? What is it? I think the confusion and the discussion comes from the fact that we're doing something that is completely new. The intention is to give Canada a place close to the European Union that nobody else gets and may even have in the future. That's why it's a bit confusing. It's new. We're doing something we've never done before. It's not membership because Canada cannot become a member state of the European Union and we want to make sure that Canada is as close as possible, as short of full membership. What this means in practice It's something that we're going to develop over the next six months. And by the time of June next year, we will know a lot better what the contents will be. There are three pillars, policies, programs and governance. So try to agree on policies as much as we can with Canada, which in fact a lot of it happened already today at the summit. If you read the joint statement, there are many, many agreements already found. Programs, meaning access to Erasmus program, access to the Horizon Research program, access to the supercomputer program of the European Union, developing undersea cables, digital cables together, and many, many other things. And then the governance side of things means that Canada will be associated also up to a certain level in the decision making in areas where we have joint interests. And for that, you may have heard that President Costa of the European Council invited... Prime Minister Carney to come to the European Council for our summit of 27 leaders in June. And there will also be a meeting of the College of Commissioners led by Ursula von der Leyen and the Federal Government of Canada probably in the month of March. So those are the three pillars in the way of this associated membership concept. But of course it's fair enough to say that a lot of work is still needed. I mean it's not that it's fixed and written. It's something that we're going to do. You speak about June being sort of the final meeting where all of this could be signed off on. That's eight months away. Can you talk about the ambition or perhaps optimism of trying to achieve something that is not easy in such a short span of time? Absolutely right. The timing is extremely short. What was decided today at the summit is to establish six groups composed of officials of the Federal Administration of Canada and the European Commission in the six key areas that have been defined. And those groups will come up with suggestions, maybe sector agreements, projects, and we'll put a lot more flesh on the bone. So that by June next year we will be able to say okay this is what we have achieved and that is the way to go towards this associated membership. One of the areas as you speak that there has already been agreement is around the European Investment Bank being able to look at mining firms and those who are connected to rare earth minerals, critical minerals here in Canada to help those European firms invest and ... derive critical minerals, but also giving Canadian firms... The actual capital. So that is an example of a concrete thing that I think Canadians can see what this relationship, whatever it is to become, what the kinds of things it might be. But we are still, I think, a little bit confused about exactly what it is that's going on here. We understand what's in it for Canada to the extent of broadening to a market that is not the United States. But what's in it for Europe? What's in it for Europe? We need friends. And Canada is a great friend to be near and you have a lot of resources and a lot of we are complementary in many regards our economies and you are you are an extremely important strategic partner of the European Union and the geopolitical changes in the world only make it more important for the. For both of us to go together. It's this, as your prime minister so eloquently says, it's how do we protect our sovereignty better together. Not against somebody or against somebody else, but just to make sure that we can protect our societies, our model of welfare, our beliefs, our democracies together. That's what the stakes are about. And that is a feeling which is very, very strongly felt on the European side as well. On top of that, of course, you have all the, as you mentioned, you have the critical raw minerals, you have the energy potential of Canada, you have your industry, a cooperation in the area of defense. There's still a lot we can do also in breaking down obstacles for trade, It's a cross-Atlantic trade in both sides, so it's an extremely ambitious agenda. You talk about needing friends, and perhaps Canada is that friend, but is this in part because what was once a good friend in the United States has now become an adversary under President Trump? Well clearly I think there is a feeling on both sides of the Atlantic that the world order that was established 80 years ago is no longer very solid and that we need to get closer together. Those who believe in democracy, in multilateral system, in the global world order need to work much closer together. The United States clearly is an element of that process but also others. I mean is, of course, a big economic rival as well. So it's much broader than only the United States. And it's also important, and I think all three leaders today in the press conference said that we're not doing this against anybody. We're doing this because it's in our own interest. Jos Corte, thank you very much for your time. Thanks a lot. It was a real pleasure.