A way forward for Canadian-EU trade

The Canadian-European Union Comprehensive Economic & Trade Agreement (CETA) was officially adopted and signed in October 2016.  After several false starts and delays, all parties expressed optimism that implementation will be smooth and the benefits felt early for European and Canadian small and medium entreprises.

Stops & starts: The adoption and signing of CETA at the EU-Canada Summit on 30 October 2016, represents a major victory for advocates of trade and investment liberalisation between developed countries.  The agreement, which the EU says will save European exporters half a billion euros annually on tariffs, has been under negotiation since 2009.

Robert Fico, Prime Minister of Slovakia and present President of the EU Council, was quoted in the Council’s official page on the agreement: “I am delighted to confirm that the EU is ready to sign the comprehensive economic and trade agreement with Canada. It represents a milestone in the EU’s trade policy and our commitment to it.  The CETA represents a modern and progressive deal, opening the door to new opportunities, while protecting important interests. Moreover, it has the potential to set the way forward for future trade deals.”

Making a case: Canada indicated that CETA was a progressive step “for a strong middle class,” highlighting 12 sectors from aerospace to clean technologies to oil and gas where Canadian businesses stood to benefit from the special regime.

Among the emphases of CETA are a drastic reduction in trade tariffs between Canada and the European Union, giving EU companies access to Canadian government tenders and allowing both parties’ companies to furnish after-sales services more easily, protecting intellectual property rights, and increasing consumer choice while maintaining high regulatory standards.

After recent opposition by several regions and national governments in Europe threatened to scuttle the deal on Europe’s side, Canadian Prime Minister Justin Trudeau asked, “If … we see that Europe is unable to sign a progressive trade agreement with a country like Canada, well, then with whom will Europe think that it can do business in the years to come?”

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Addressing concerns: Oppositional voices, and the Belgian region of Wallonia in particularly, had objected to the possibility of Canadian agriculture overtaking local farms on the back of cheaper production costs. To this end, as reported by The Guardian, a special four-page addendum was added to the 1,600 page agreement at Belgium’s behest, with Wallonia’s minister-president Paul Magnette saying, “Wallonia is extremely happy that our demands have been heard.”

Romania and Bulgaria were also reticent about the deal, using their veto leverage to push for inclusion in the EU-Canada visa free regime to which all other EU countries are subject. They were granted visa free status when the deal was adopted.  Concerns linger among the public and governments of these countries, and others on the less-industrialised spectrum of the European Union, about such agreements suppressing their ability to build local value-adding industry bases.

Consumer advocacy groups in both Canada and the EU predicted an erosion in consumer protections on agricultural, medical, pharmaceutical, and other products, as well as the degradation of individuals’ and nations’ ability to hold corporations to account in local legal venues and uphold environmental laws.

Outlook: A successful implementation of CETA will likely lead to stronger trade flows and human capital movement between the EU and Canada. Protectionist and ecological voices of opposition have not diminished in the wake of the deal, however, and all parties will be monitoring economic and environmental externalities closely.  

The deal, coupled with other recent EU trade agreements with Ecuador and Vietnam, also looked likely to pave the way for faster negotiations of the Transatlantic Trade and Investment Partnership (TTIP) with the United States. Negotiators of TTIP had targeted 2017 as the year in which the deal would finally be concluded. However, with the administration of President Elect Donald J. Trump in the United States set to take over in January, doubts have been raised about the viability of that timeline.  Mr Trump has taken a protectionist stance and will likely place large obstacles in the way of that deal.

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