Pact makes Canada the first country in the world with preferential access to U.S. and EU markets
By Chris Freimond
It was many years in the making and still has a way to go before full implementation, but Canada’s historic Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU) will mean substantial benefits for both sides, including expanded trade in goods and services and new investment opportunities.
“CETA will provide long overdue trade diversification to a Canadian economy that is almost overwhelmingly reliant on the U.S. market.”
Jason Langrish is executive director of the Canada Europe Roundtable for Business (CERT)
Since CETA was announced last November, officials from Canada and the EU have been negotiating the final text and working through technicalities, but the overall impact of CETA is clear according to Jason Langrish, executive director of the Canada Europe Roundtable for Business (CERT).
“CETA will provide long overdue trade diversification to a Canadian economy that is almost overwhelmingly reliant on the U.S. market,” he says.
Once implemented, the agreement is expected to increase bilateral trade in goods and services by 23 per cent or $38-billion. It will also remove more than 99 per cent of tariffs between the two economies and create new market access opportunities in services and investment.
“Once signed, Canada will be the only country in the world to have a preferential trade and investment agreement with both the U.S. and EU, the world’s two largest marketplaces,” says Mr. Langrish. “This will not only increase trade, but attract investment, as companies locate their activities in Canada to take advantage of duty-free, barrier-free access to close to one billion wealthy consumers.”
Jean Charest, former Quebec premier who has long been a champion of a Canada-EU trade pact, says CETA’s basic premise is simple: Canada is heavily dependent on trade; it has a population base of only 35 million and needs access to new markets because it is too dependent on the U.S. market.
“Strategically, CETA is also an opportunity for us to position Canada as a place to invest and then from here deploy elsewhere in the world, such as in the mining and oil and gas sectors,” he says.
Being the first country to have preferential trade agreements with both the U.S. and the EU is also extremely important, adds Mr. Charest.
“This allows us to strategically put ourselves in the middle of NAFTA, the biggest market in the world, and Europe with its 500 million people and the most mature consumer market in the world.”
Roy MacLaren, CERT co-chair and former Canadian Minister of International Trade, says virtually all Canadian business sectors will benefit from CETA, including manufacturing, service industries and agriculture.
“Meat exports are just one example of where growth will come,” says Mr. MacLaren. “Service industries, which account for an increasing proportion of our total trade, will be opened in a way that’s not been seen before. Services have generally been set aside or regarded as too complicated to tackle. Training services, including financial services, are going to be a lot easier in future.”
Mr. Charest agrees that the service industry will have more opportunities than ever before.
“We usually don’t associate services with free trade, but for service firms such as engineers and architects, there will be more opportunities, especially in the area of government procurement on both sides of the Atlantic,” he says.
Mr. Charest says CETA is also an opportunity for Canada to distinguish itself relative to the rest of the world on labour mobility.
“We are a country of immigration. We should use this opportunity to define ourselves as a place where people will want to study, work and do research,” he says. “We need skilled labour. We even need unskilled labour. It’s something that I believe in strongly.”
Mr. Langrish says that while the benefits of CETA will only start being felt in about 12 months when the agreement is ratified and becomes law, companies are already preparing to take advantage of its provisions and expanding their presence in Canada and the EU in sectors like fish, seafood and agricultural exports, engineering and other professional services.
He agrees that CETA should benefit all sectors of the Canadian economy.
“While there are opportunities across the board, at first blush I see compelling prospects for expanded trade and investment in the agricultural and resources sectors; auto and industrial goods; innovative, research-based industries including health sciences and pharmaceuticals; processed foods; engineering; transport and any area that deals with public procurement markets,” adds Mr. Langrish.
“Trade agreements open doors, but it’s up to businesses to walk through them,” he says. “Canadian exporters and investors need to commit to the EU market for the long term and be aggressive in grabbing market share.”
By the numbers
12 Canada’s ranking among the EU’s most important trading partners
2 The EU’s rank among Canada’s most important trading partners
1.8% Canada’s share of EU’s total external trade
10.4% EU’s share of Canada’s total external trade
€61.8 billion The value of bilateral trade in goods between the EU and Canada in 2012
€220 billion EU investment stock in Canada in 2011
€140 billion Canadian investment stock in the EU in 2011.
23% Expected increase in bilateral trade in goods and services when CETA is implemented
€26 billion Value of expected increased two-way bilateral trade in goods and services when CETA is implemented
Source: The European Commission
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