Canada’s Free-Trade Deal With Palestinians: A Smokescreen to Help Israel’s Economy?

By Faisal Kutty

Canadian and Palestinian authorities are reportedly in the preliminary stages of negotiating a free-trade deal. According to an exclusive exposç in the National Post, there have been a number of meetings and a preliminary understanding could be signed as early as February of this year. A spokesperson for International Trade Minister Sergio Marchi confirmed that these talks are under way and may result in a framework agreement being tabled soon. “It’s really old news for us,’’ said spokesperson Leslie Swartman. “We’re not breaking any new ground, but this is certainly part of our contribution to the peace process.’’

The contemplated deal comes two years after the Canada-Israel Free Trade Agreement (CIFTA) signed with great fanfare on July 31, 1996. The regulations passed to implement CIFTA were adopted on Dec. 30, 1996, and came into force on Jan. 1, 1997. The Canada-Israel pact removed tariffs from industrial products of Canadian or Israeli origin. Only women’s swim wear, at Canada’s request, and certain cotton fabrics, at Israel’s request, were to continue to be subject to tariffs; even these were to be phased out over the first two and a half years.

The agreement also called for duty-free access or low duties on a variety of agricultural and fisheries products exported by both countries. For Canada, such items include grains, grain products, beef, maple sugar, alcoholic beverages and various processed foods. Both sides have excluded dairy, poultry and egg products. The countries also agreed to hold discussions on further liberalizing agri-food trade.

Since the agreement, two-way trade between the two countries has grown by 34 percent to $750 million. Israel attracted a record $3.7 billion in foreign investment last year, and despite the political risks, investors are still bullish. If not for the Palestinian thorn in the side, according to some observers, trade and industrial growth could be even higher. David Israelson wrote last year in the Toronto Star that “the troubled relationship between Israel and the Palestinians remains a stumbling block to even more growth in Israel’s trade with countries such as Canada.” This may explain the move toward the Canada-Palestinian Authority agreement.

The new agreement would cover the areas under the administrative “control” of Yasser Arafat’s Palestinian Authority—the West Bank and the Gaza Strip. According to Swartman, the deal would be signed by Canadian and Palestinian officials. Canada has never recognized Israeli claims over territory illegally annexed in the 1967 Six-Day War. Nevertheless, when the Canada-Israel free-trade pact was ratified on Jan. 1, 1997, Israeli settlers in the occupied territories benefited from the preferential economic relationship, but the Palestinians were left out. The new pact is supposedly aimed to remedy this situation. In fact, Swartman pointed out that it was explicitly stated when Canada and Israel agreed to free trade two years ago that similar treatment for Gaza and the West Bank would follow.

“We don’t want to put anyone in an embarrassing position.”

As expected, the news has elicited conflicting reactions from Arab/Muslim leaders and their Jewish counterparts. Bakr Abdul Munem, the Palestine Liberation Organization (PLO) representative in Canada, said that the pact would be another step closer toward nationhood. “Economically it will not benefit much for the time being,” he told the National Post. “The most important [meaning] is a political one.” This feeling is echoed by Atif Kubursi of the the National Council on Canada Arab Relations who feels that “It’s not significantly substantive in terms of trade but it’s extremely important in terms of symbolism.’’ They may be jumping the gun. There is some indication that the deal will merely be an extension of CIFTA.

Israeli advocates counter that the pact only signifies economic support and not political recognition. “We do not see an agreement between Canada and this other entity as a free-trade agreement between two states,” said John Ritter, executive director of the Canada-Israel Committee. He added “there is no Palestine, so there can be no agreement between states.” Moshe Ronen, president of the Canadian Jewish Congress, said it was “regrettable that there’s an attempt here to use this for political advantage as opposed to economic advantage.’’ He also urged Canadians to reconsider and “assess the manner in which we deliver our support.”

Monitoring Developments

The Israeli government is also closely monitoring the developments. The Netanyahu government has reportedly been given assurances by Canada that the agreement will be in line with the Oslo accords. According to Israeli Embassy spokesperson David Cooper, this means that Canada would recognize the Palestinian Authority in its current status. “As it stands now the Palestinian Authority is not a state,” he said.

The bickering over the intent and symbolism behind any such deal has not been lost on the Canadian government. A spokesperson acknowledged “what we’re trying to come up with is something that everyone can use. We don’t want to put anyone in an embarrassing position.”

The balancing act will prove extremely tricky. Palestinian advocates will not be satisfied if the new agreement is merely an “extension” of the existing Canada-Israel agreement. Meanwhile Israeli advocates are prepared to bring to bear their powerful lobby to challenge anything remotely smelling like political recognition. “It is not acceptable for them to pretend to be something they’re not [a state],” said Ritter. “We wouldn’t be happy and we’d make our position clear.” This must cause some sleepless nights at the Department of Foreign Affairs and International Trade.

Some analysts expect the minister to unveil the new pact during his trade mission to the Middle East—during which he will visit Israel, the West Bank, Saudi Arabia and the United Arab Emirates—from Feb. 22 to 28. By the sounds of what’s coming out of the minister’s office and Israel, the agreement isn’t worth holding your breath over. It may not be anything more than a ploy to help Israel overcome the Palestinian “thorn” to its trade and economic aspirations.

According to John Kirton, a political science professor at the University of Toronto, Canada has a long and successful history of working around such diplomatic minefields. “Canadians are perfectly capable of doing a deal while fully respecting the existing Canadian position on the Middle East,’’ noted the expert in international trade. If that’s the case, then once again the Palestinians will get the short end of the stick.

Canadians Protest American/British Assault on Iraq

The U.S. Consulate in Toronto was the site of a number of protests in the wake of American and British bombing raids over Iraq in December. More than 300 people gathered in front of the consulate to hold a candlelight vigil on Dec. 18. The vigil, organized by the Canadian Arab Federation, was intended to show support for Iraqi civilians who have suffered from the attacks as well as from eight years of crippling sanctions. There were also other protests held throughout the country.

In the wake of the bombings, Prime Minister Jean Chretien, and Foreign Minister Lloyd Axworthy extended their unconditional support for the bombing. Now, public opinion appears to be shifting. Numerous letters in the print media and talk show callers have questioned Canada’s support of U.S. policy on Iraq.

In fact, some commentators have even pointed out Canada’s hypocrisy on the issue of Iraq. Haroon Siddiqui, Toronto Star editorial page editor emeritus, recently wrote: “In fact, Ottawa’s position runs counter to Canada’s traditional opposition to unilateralism and also the emerging Axworthy [Canadian foreign minister] doctrine of ‘sustainable human security’—saving citizens in areas of conflict through peacekeeping, banning and removing land mines, slowing down traffic in light arms, and bringing to trial those committing crimes against humanity. He could not find a more deserving people to bat for than the long-suffering civilians of Iraq.”

A number of Canadian organizations have followed the lead of Ramsey Clark’s International Action Center in New York and launched a campaign to highlight the plight of Iraqi civilians and to call for an end to the sanctions. Many are hopeful that Canada’s new seat on the Security Council—as of Jan. 4, 1999—will force it to rethink and re-evaluate its blind acceptance of American policy on Iraq.

Faisal Kutty is a Toronto-based lawyer and free-lance writer.