Following years of often contentious debate, a major free trade agreement between Canada and the EU has been finalized. The President of the European Commission, Jose Manuel Barroso, and the Canadian Prime Minister, Stephen Harper, both signed the Comprehensive Economic and Trade Agreement (CETA) on October 18th.
The first bilateral trade agreement ever between the EU and a G8 country promises to have historic implications for commerce for its signatories, as well as for the US. The EU and Canada have long been close trading partners; in 2011, the EU was Canada’s most important trading partner after the US, accounting for 10.4% of the nation’s overall trade portfolio. In total, the EU and Canada trade more than $82 billion in goods each year; as a consequence of the recently settled CETA, that number should increase by 23 percent to $117 billion.
The central feature of the bill, and the component that generated the most controversy, is the aggressive elimination of duties and tariffs. Reportedly, nearly 99 percent of previously existing barriers to trade will now be eliminated, a move forecast to provide significant stimulus to both economies, especially in the crucial agriculture sector.
The CETA will also have a considerable effect on the intellectual property rights arrangements between Canada and the EU’s 28 members, especially regarding copyrights and trademarks. The measure is meant to increase mutual protections, thereby strengthening mutual trust.
There will also be a liberalization of trade that specifically deals with the services industry. This will open up the exchange of services between Canada and the EU, especially with respect to investment, energy, transport and telecommunications.
Also, CETA will make it much easier for European firms to physically operate out of Canada and vice versa. This will particularly affect firms that use consultants to move quickly over these borders in engineering, architecture and accounting.
Barroso spoke enthusiastically about CETA. He said, “This is a highly ambitious and far-reaching trade agreement of great importance for the EU’s economy. This agreement will provide significant new opportunities for companies in the EU and in Canada by increasing market access for goods and services and providing new opportunities for European investors.”
Harper seconded the sentiment, saying that “this agreement is vastly positive for the Canadian economy across the board…this is not just a big deal, it is a very, very positive deal for Canada.”
This is a time of great transition for Canada in terms of trade, undergoing massive revisions of its trade relations with numerous countries. In addition to CETA, Canada is eliminating trade preferences for 72 countries, beginning in 2015. These special designations are maintained under its General Preferential Tariff system. Russia, Turkey, Thailand, Singapore and South Africa are among the nations that will be impacted.
Many are viewing the two announcements in tandem as evidence of a historic pivot for Canada towards Europe economically. Canadian economists predict that the EU’s $17 trillion economy is a veritable gold mine of opportunity, potentially generating as much as 80,000 new jobs, adding $12 billion to its GDP.